Salary cap/luxury tax impact on competitive balance [NWT]

[Deacon923]

http://time.com/3479205/major-league-baseball-bud-selig-competitive-balance/

There is none. Interesting discussion.

 

[Wakeforest22890]

Well this is an interesting comment, not only for sports but for society in general:

"The owners’ focus on competitive balance predates Bud Selig. In fact, it first appeared in the 19th century. And across the decades it has paid off. Professional athletes in North America receive less than what Europeans are paid in a less restrained market. So when you hear people like Selig talk about balance, you should remember: This is not about the fan experience. It is really all about the owner’s bottom line."

 

[CheesePritchard]

It might be 100% true but that was a really unconvincing article, although I admit I didn't read any of the reference links.

 

[TBDeac]

I see what the author is saying, but that stat doesn't seem to tell the whole story. The metric he uses doesn't seem to take into account whether the teams who spend the most are the ones who end up with the best records. In other words, if the Red Sox and Orioles flip flopped records this year, it would have no effect on the metric. However, in terms of competitive balance, the Orioles winning the division is a positive outcome for competitive balance.

 

[avalon]

Here's a Sports on Earth article from last year, with more studies, but similar conclusions:

The Myth of Competitive Balance

Rather, the preferred method of measuring competitive balance is looking at the distribution of wins over time. When sports economists do this, they almost invariably find that salary caps, luxury taxes and revenue sharing have no effect on competitive balance. John Vrooman found in his 1995 study that salary caps ironically promote competitive imbalance because it allows the league to behave as one entity, rather than each team acting as an individual firm. Once a league is recognized as a single economic entity, it (shockingly) starts acting like one, and that isn't good from a competitive balance perspective. Once MLB, for example, is a single entity, it's primarily concerned with the health of the entire league. So it institutes policies that may shuffle money around to make unprofitable teams profitable, but it doesn't mandate they become more competitive, as has been the case with the Pittsburgh Pirates, who have (until recently) been lousy on the field for two decades, and yet quite profitable off of it.

But Vrooman's work was admittedly theoretical. For more analytical work, Martin Schmidt and Dave Berri conducted a 2001 study that analyzed competitive balance using a traditional measure of equality, the Gini Coefficient, to measure the relationship between attendance and wins in baseball. To their surprise, they found the 1990s were actually the most competitively balanced decade in baseball history, and there had been a steady trend in that direction for decades. The Gini Coefficient has its problems and limitations, but it's also not the only measure to come to the same conclusion. In his aforementioned book, Bradbury used the Noll-Scully Measure of competitive balance -- which uses the relationships between the average number of wins per team, the number of teams in the league and the number of games each plays -- to measure MLB's historic competitive balance. He found very much the same results as Schmidt and Berri: "Competitive balance today is about what it was in the 1980s, and it's the best it's been in the league's entire history. Recent attempts to improve competitive balance with policies such as revenue sharing and a luxury tax don't appear to have had much effect." Likewise, Berri stated unequivocally in a 2011 blog post: "We found that none of these institutions [salary caps, luxury taxes, etc.] had any statistically significant impact on balance in any of these leagues [NBA, NHL, NFL, and MLB]." These are but a few of a host of studies echoing the same conclusion: league policies don't affect competitive balance to any measurable degree.

Apologies for the wall of text.

 

[avalon]

Kind of an offshoot, but following the NHL lockout a few years back made me wonder if players unions would do better by their players if they disbanded, instead of negotiating systems that artificially suppress salaries.

No legitimate union could ever agree to a salary cap. In my mind, if a union did that, if would be grounds for decertification, for membership to go court. They were not representing their goal in the law: to improve the wages, hours and working conditions of its members.

Link

 

[TuffaloDeac10]

Seems obvious, no offense.

 

[PhDeac]

Players have more to lose than owners in these negotiations.