Review of Industrial Organization

, Volume 52, Issue 2, pp 231–251 | Cite as

Modeling Competitive Imbalance and Self-Regulation in College Sports

Article

Abstract

The principal-agent relationship between athletic directors and their university administration suggests a conference equilibrium of revenue-maximizing athletic directors. With smaller- and larger-revenue departments, revenue maximization predicts conference competitive imbalance. The larger the revenue dispersion, the greater the imbalance. Pooled revenue sharing increases the absolute level of talent and reduces competitive imbalance. That national championships are determined across conferences may explain the widespread adoption of nearly complete revenue sharing. The model also explains the form of the amateur requirement and predicts that competitive imbalance is invariant with respect to that amateur specification. This has obvious implications for balance-based arguments for or against increasing compensation to athletes.

Keywords

College sports Revenue maximization Competitive imbalance 

Notes

Acknowledgements

This work was supported by the National Research Foundation of Korea Grant funded by the Korean Government (NRF-2016S1A2A2912186).

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Copyright information

© Springer Science+Business Media, LLC 2017

Authors and Affiliations

  1. 1.Sport ManagementUniversity of MichiganAnn ArborUSA

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