View article

Most research on the economic design of sporting leagues has assumed that league managers, who are often club owners, seek an optimal mix of regulatory settings in the labour market, the product market and in the sharing of revenue between the league clubs (and league manager). From a normative perspective, the optimal league model identifies the regulatory settings that maximize a variable such as the aggregate profits or revenue of league clubs, or the social welfare of club owners, players and fans. From a positive perspective, such league models, as originally formalized by El-Hodiri and Quirk (1971), are generally solved to identify the equilibrium level of competitive balance and player wages given actual regulatory settings; with the profit, revenue or social welfare outcomes compared to the ideal normative models (Szymanski, 2003; Késenne, 2014). in contrast to this dominant walrasian equilibrium …