MONEY TALK #7
Yes, I do concur with the author. For instance, the decrease in the competitive balance of Major League Baseball (MLB) since 1990 was due to the conundrum of variance in income from television as well as media rights. This variance increased over time and is among the primary sources of the gap in payrolls, which is typically linked to the gap in quality, which is thus cited as a problem to competitive balance (Haupert, N.d). This meant that other teams were more powerful and influential as they had the capacity to attract talented individuals, thus contributing to the competitive imbalance. This was the same in the NBA as teams were able to attract players via lucrative contracts. This was until revenue sharing was introduced to overcome the imbalance as it facilitated the redistribution of the funds from the wealthiest to the poorest teams.
It is also factual that there was a decrease in the competitive balance of the American League and a subsequent increase in the National League between 1975 and 1999 (Naghshbandi et al., 2011) because more concentration meant that there was less balance, as the team repeat their position as tail-enders or contenders. In the same manner, the National league perceived an increased competitive balance because of measures like salary caps (Humphreys, 2013) put in place to curb the issue of competitive imbalance.
Conclusively, it is apparent that the most significant variable that controls the competitive balance of different leagues is the capacity of the clubs to generate revenues. Smaller teams typically generate lesser revenues in contrast to the dominant teams, thus giving them the ability to attract talented prospects via lucrative contracts, thus giving them higher chances of winning. This creates an imbalance, and sports governing bodies ought to formulate policies that curb the imbalances in their leagues.
References
Haupert, J. Michael. The Economic History of Major League Baseball. Eh.net. Retrieved 30 November 2019, from https://eh.net/encyclopedia/the-economic-history-of-major-league-baseball/
Humphreys, Brad R. (2013). Economics of Professional Sports. BRH Publishing. ISBN 978-0-615-90935-6.
Naghshbandi, S., Yousefi, B., Etemad, Z., & Moradi, M. (2011). The comparison of competitive balance in Football Premier Leagues of England, Germany, Spain, France, Italy, and Iran: a case study from 2009-2010 season.