Revenue Sharing in a Sports League with an Open Market in Playing Talent: A Comment

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.