TITLE:
Revenue Sharing in a Sports League with an Open Market in Playing Talent: A Comment
AUTHORS:
Stefan Szymanski
KEYWORDS:
Professional Team Sports, Revenue Sharing, Competitive Inequality
JOURNAL NAME:
Theoretical Economics Letters,
Vol.6 No.6,
December
27,
2016
ABSTRACT: Szymanski [1] and Szymanski and Késenne [2] showed that, in the standard model of
a sports league, gate revenue sharing will tend to increase competitive imbalance
between weak and strong teams, a seemingly perverse result. Dobson and Goddard
[3] claim that “this analysis is flawed. If the revenue function is specified appropriately,
gate revenue sharing always reduces competitive inequality.” This comment
points out the analytical error in their paper which leads to their erroneous conclusion.
Once their error is corrected, it is shown that the earlier results stand.