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In most of the world’s professional sports leagues, the worst teams in better leagues are demoted while the best teams in weaker leagues are promoted. This article examines the economics of promotion and relegation, using data from English football (soccer). The crucial findings are as follows:...
According to the invariance hypothesis, the allocation of players in sports leagues is the same, regardless of who owns their property rights. However, when a player moves to a new team, the absolute quality of the new team increases while the absolute quality of the former team decreases. This...
Discussions of competitive imbalance use Major League Baseball as a focal point, and proposed remedies center on redistributions of revenues from well-heeled owners to financially strapped franchises. However, there are also many additional aspects in sports that do not involve allocations of...
The most commonly used measures of competitive balance in sports leagues do not capture season-to-season changes in relative standings. This article describes an alternative measure of competitive balance, the Competitive Balance Ratio (CBR), that reflects team specific variation in winning...
The link between team payroll and competitive balance plays a central role in the theory of team sports but is seldom investigated empirically. This paper uses data on team payrolls in Major League Baseball between 1980 and 2000 to examine the link and implements Granger causality tests to...
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