The Competition Balance Policies in the Models of Sport Evidenced in North America and Europe - Essay Example

Essay Question: How effective are the competition balance policies in the models of sport evidenced in North America and Europe? ment of Authenticity: I confirm that this submission is all my own work. Any quotations are properly cited using the Harvard referencing method. All errors and omission are my responsibility alone. Word count: 1,524 Academic research has grown a great deal in the recent past. A wide range of academic subjects have had scholars carry out research on them, but this has not been the case in the relatively new field of economics that focuses on the team sports for professionals. Also compared to others it is a small academic field altogether. The pioneer of this economics’ field is said to be S. Rottenberg, who happened to be working at the renowned University of Massachusetts as an economist. He focused on the market of baseball players and did a journal in 1956 entitled, “Journal of Political Economy.” 1(Kasenne, 2007 p1) This is a study which seeks to put its entire concentration on the aforementioned field of economics and it will go on to discuss the field in detail. The write out will vividly make a comprehensive and an unbiased look at the team sports’ economics. To this it will answer the study question, “How effective are the competition balance policies in the models of sport evidenced in North America and Europe?” Examples to make this topic more understandable and interesting to read will be given from the current professional leagues in these two nations. The study will start by looking at the North American case and then continue to have a look at the European case. Many are the times that leagues have not portrayed the best interests of the set policies by the bodies responsible. This has left the loyal fans of various clubs disappointed. European football has not been spared by negative scandals that strike leagues off the competitive balance. The study sets out by tackling of the North American scenario portrays a good number of professional leagues with the inclusion of National Basketball Association commonly known referred by the initials NBA, Major League Baseball- MLB, National Football League (NFL) and also the hockey league- National Hockey League (NHL). The leagues in entirety are privately owned with regards to individual teams involved. Thus, the league is a private team ownership kind of league run together with the administrators they use their discretion to choose. Administrators are commonly referred to as Commissioners. Apart from their being the sole determiners of the plays taking place for the branded league, these leagues also take part in ample activities like definition of territories, their protection, making decisions on the location of teams by way of relocation and expansion as well as making negotiations of players, players’ unions, location of teams and TV contracts. Besides these responsibilities the leagues may be with the competitive balance’s future interest. By way of default or from another perspective the owners’ of the teams’ agendas, the policies made by the league enhance level balance in the upholding of competitiveness. Expounding on this view, the Rottenberg’s sentiments are going to be cited. According to him, team fans would rather their teams won in close kind of games than any other outcomes. Fans also have another preference in their list and that is; there should be occasional hopes brought about by the form portrayed in the post-season plays by the teams that they support. Imbalanced games are, therefore, a counter-expectation on the preferences by fans. In other words, competitive balance is what is most preferred by team fans. In a case where in a league there are problematic imbalances the fans of this league that harbors losers will experience a decline in the interests they had for the teams they support. If the same fans continued supporting the league with the same level of thrill as before despite the losing team’s suffered lower support, the other owners of the league’s teams would not mind. However, if the losing team went on and fell out of the league in totality, owners in entirety would be left in a worse situation. Thus, this argument brings the study to an observation that leagues have high interests when it comes to the level shown in competitive balance terms. Other scholars have different views, though. Thus, there is efficiency in the policy formulation as regards competitive balance in professional sport’s leagues, but by default. This is since neither party is in a position to lose. According to Fort, in his study, he mentions optimal kind of competitive balance which he goes on to say that competitive balance is basic to leagues unlike in any other type of production. Though not a major league issue, at least each and every fan has worries focused on competitive balance. Optimal balance comes in where for instance; there is a given favorite league. One considers whether the level of balance is preferable or not. However, if this was looked at critically, optimal balance would be in a case where fan welfare and owner’s interest maximization is reached. This is quite a complicated issue and one that is empirical, though. Optimality levels differ with the contexts at hand. For instance; a situation where tickets of a single game are most common just as witnessed in MLB games, it becomes very complex. Owners’ surpluses and fan changes as well as larger and smaller market revenues are a handful of other variables that may determine optimality. 2(Fort, 2010 pp1-3) Michie and Oughton write in their research that competitive balance means that balance achieved between teams sporting capabilities. Where such are evenly balanced competitive strengths with regard to the league’s teams, uncertainty is very present as these teams play their matches. If there is even-balancing of the teams, then all teams in entirety should have equity when it comes to winning the title attached to the league in question. Therefore, if a league is in a perfect balance, then making predictions about which team is highly likely to take the title in any given season would be a totally impossible task. Competitive balance is looked at from a three dimensional point of view. These are; seasonal uncertainty, dominance and match uncertainty. All the dimensions mentioned have a equal role in determining the competitive balance associated with each team as well as outcomes’ uncertainty per match played. Ultimately, a scenario where matches remain uncertain would lead to an uncertain current season as well as future seasons. While this is looked at from the economics point of view, a competitive balance is essential in that uncertainty as concerns outcome creates more interest from the fans as well as escalated demand levels for match watching both on TV and at the matches’ grounds. A rise in competitive balance has an effect on the demand curve where it shifts to respond to the changes in the viewing of matches. An unbalanced league cannot achieve maximum revenues from farm, therefore. 3(Michie and Oughton, 2004 pp11, 12) Figure 1: illustration of a shifting of demand curve dependent on the level of competitive balance Price shift D2 D1 Number of spectators To ensure competitive balance in sporting leagues in the entire of the globe have, there are various cross-subsidization types of policies that are being applied. The sporting market of labor has been the major target of this. These policies are aimed at impacting on the player’s dues and also making reforms on the market of transfers. 4(Bougheas and Downward, 2007) One of the major sporting leagues in the European market is the very popular UK premier league which is the biggest in the whole of the continent of Europe. The other is the French league, besides Serie A of Italy. These leagues are all football leagues. Despite the fact that these leagues, and especially the English Premier league are raking big amounts of revenue currently, they are said to be sitting on a landmine if they make bad policies, which would lead to total imbalance. The formation of the separate Super league, for example, may have been due to the interest of avoiding the power sharing and revenues’ broadcasting together with other smaller clubs, this was a proposal tabled in 1998. This would lead to a super league that would have very negative effects on the competition’s frameworks. Eventually, the trend will not be avoided and this will lead to very high disparities in the earnings of clubs involved. 5(Cave, 2011 pp7,8) Garcia notes that in Europe, the tendency is not appealing. This is especially on the part of professional football. Best governance standards are not being witnessed, unsuitable ownership of clubs, and the principles with concerns to good financial management. Levels of transparency and democracy are also wanting. Thus, competitive balance at optimum is yet to be achieved. 6(Garcia, 2007) While concluding, it is good to note the strong point that the study tries to present. Yes, there is reasonable efficiency when it comes to competitive balance of professional sporting leagues both in North America, with most focus on the US and in Europe where the biggest chunk of interest is on the UK. The efficiency is not, however, due to good ways of governance but rather a default. This is since owners want to maximize revenues while fans want their teams to win every time. However, as Garcia notes, the situation may worsen in future if professional sporting stakeholders are not careful. This is while answering the study question, “How effective are the competition balance policies in the models of sport evidenced in North America and Europe?” Work cited: Bougheas, Spiros and Downward, Paul. The Economics of Professional Sports Leagues. Some Insights on the Reform of Transfer Markets. (2007). Retrieved 5TH May 2011 http://jse.sagepub.com/content/4/2/87.short Cave, Martin. Sports rights and broadcast industry. (2011). Retrieved 5TH May 2011 http://docs.google.com/viewer?a=v&q=cache:YMSbHCAhtagJ:bur a.brunel.ac.uk/bitstream/ 2438/850/1/00- 18.pdf+common+sporting+leagues+in+europe&hl=en&pid=bl&srci d=ADGEESis6Heij4ATBeIzi 57KqpdvDWHLq02n63njvWKBiZLHFQkb0TxIWiWvBjv9ifF2hgQsj VFnYmnnshGRm43dEyArRAI qYovWfc- LLgEkrEepi02nijzgLKv1H9wFX6wO2akpnh0J&sig=AHIEtbRJQUU PKmRtSuRuJgTkCfovzMrulQ Fort,Rodney. Competitive balance policies in North America. (2010). Retrieved 5TH May 2011. http://docs.google.com/viewer?a=v&q=cache:NYKTD1jfBuAJ:rodn eyfort.com/Academic/For thcoming/FortForLiam.pdf+efficacy+of+competitive+balance+polici es+in+the+European+an d+North+American+models+of+sport&hl=en&pid=bl&srcid=ADGE ESh_W2j2jVnCubwYUUOk N0xyfuO3RoHuouqxtI_2G_z4ygKs4aAeUA86L7- 9jJPJxzKflTdAc_wHQyZfkbS-PyRIEgU-rp7- wyL1Ypsc0BsfAbFB8AyZtCs2W0ZsLHN5jhsE6gzP&sig=AHIEtbQ UQfjojSIaxmgTjac2cpLIyX2TX w Garcia, Borja. The Independent European Sport Review: Half Full or Half Empty? (2007). Retrieved 5TH May 2011 http://www2.warwick.ac.uk/fac/soc/law/elj/eslj/issues/volume4/num ber3/garcia/ Kesenne, Stefan. The economic theory of professional team sports: an analytical treatment. Edition Illustrated. Edward Elgar Publishing, 2007. p1. Michie Jonathan and Oughton Christine. Competitive balance in football: Trends and Effects. (2004). Retrieved 5TH May 2011 http://docs.google.com/viewer?a=v&q=cache:efTf3htbxD4J:www.s portsnexus.co.uk/resourc es/12028/assets/football/CompetitiveBalance.pdf+EXAMPLES+F +UK+PROFESSIONAL+LEAG UES+PRACTICING+COMPETITIVE+BALANCE&hl=en&pid=bl&sr cid=ADGEESh8O2ZOeqULgZwT 7CnRFRx- dHNb19UG0KMQISshtmTJEUnYrl- OW3dFZiRTWGFU1qdWYYxx8akz0jDn1E3VQitqdmBrdL- 1dgNihNHqjLqemJPZ2XXNw6BpkbYNPK6iIhqHfviq&sig=AHIEtbT qD9PzPYHT7U7sm1ruJOBIs Ms9wQ Read More