Publication: Southern Economic Journal
Publication Date: 2007
Link to Article
Do professional sports leagues design revenue-sharing rules primarily to help financially weaker teams, or do such organizations view revenue-sharing rules as ways to reward teams for being competitive? Baseball’s National League and the National Football League provide evidence from the 1950s that revenue-sharing plans may have surprising effects. If strong teams draw well on the road, revenue-sharing plans may provide modest succor to teams in smaller cities and may benefit teams in larger cities The two leagues’ experiences also suggest that owners are willing to enact regressive aspects in their revenue-sharing plans, possibly to forestall moral hazard possibilities arising from automatically helping teams that remain poor draws or that fail to improve.