Levi Bognar, Scott A. Brave, R. Andrew Butters, Kevin A. Roberts
Competitive balance is a contentious issue in professional sports to a large extent because there remains general disagreement on what constitutes a competitive league. We address this issue using a simple framework that encapsulates multiple viewpoints on competitive balance and argue that this unified perspective is essential for understanding how league policies shape competitive landscapes. Using this novel framework, we demonstrate how important structural shifts in the ability of teams to capture talent at below-market wages have influenced competitive balance over the longer run. Finally, we provide examples of rules that counterbalance the adverse incentives that can arise in these situations.