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The Effect of Gate Revenue-Sharing on Social Welfare

Helmut Dietl and Markus Lang ()

No 12, Working Papers from University of Zurich, Center for Research in Sports Administration (CRSA)

Abstract: This paper provides a theoretical model of a team sports league based on contest theory and studies the welfare effect of gate revenue-sharing. It derives two counter-intuitive results. First, it challenges the "invariance proposition" by showing that revenue-sharing reduces competitive balance and thus produces a more unbalanced league. Second, the paper concludes that a lower degree of competitive balance compared with the non-cooperative league equilibrium yields a higher level of social welfare and club profits. Combining both results, we conclude that gate revenue-sharing increases social welfare and club profits in our model.

Keywords: Revenue sharing; competitive balance; social welfare; team sports leagues (search for similar items in EconPapers)
JEL-codes: C72 D6 L83 M21 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2006, Revised 2007
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http://repec.business.uzh.ch/RePEc/rsd/CRSA_WPS/12_CRSA_full.pdf First version, 2006 (application/pdf)

Related works:
Journal Article: THE EFFECT OF GATE REVENUE SHARING ON SOCIAL WELFARE (2008) Downloads
Working Paper: The Effect of Gate Revenue-Sharing on Social Welfare (2007) Downloads
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