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Revenue sharing in a sports league with an open market in playing talent

Dobson, Stephen; Goddard, John


Stephen Dobson

John Goddard


In this paper we develop an economic model of a professional sports league, in which the teams acquire playing talent in an external market. There have been several earlier formulations of this open model and all rely upon an inappropriately specified revenue function. Team revenues should depend upon the absolute quality of the teams, as well as their relative quality measured by win-percent. An inference that has been cited widely in this literature is that revenue sharing increases competitive inequality. We show that this analysis is flawed. If the revenue function is specified appropriately, gate revenue sharing always reduces competitive inequality.


Dobson, S., & Goddard, J. (2014). Revenue sharing in a sports league with an open market in playing talent. Theoretical Economics Letters, 4(6), 410-414.

Journal Article Type Article
Acceptance Date Apr 23, 2014
Publication Date 2014
Deposit Date Jul 7, 2017
Publicly Available Date Jul 7, 2017
Journal Theoretical economics letters
Print ISSN 2162-2078
Electronic ISSN 2162-2086
Publisher Scientific Research Publishing
Peer Reviewed Peer Reviewed
Volume 4
Issue 6
Pages 410-414
Keywords Professional team sports; Revenue sharing; Competitive inequality
Public URL
Publisher URL
Additional Information This is a copy of an open access article published in Theoretical economics letters, 2014, v.4 issue 6.


Published article (296 Kb)

Copyright Statement
Copyright © 2014 by authors and Scientific Research Publishing Inc.This work is licensed under the Creative Commons Attribution International License (CC BY).

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