Comment The Pittsburgh Pirates offseason has gotten underway. However, yesterday there was an announcement about the draft next year. This is to benefit small market teams like the Pittsburgh Pirateswho rely heavily on homegrown players. This allows for smaller market teams to gain an extra high draft pick to bring in another quality prospect.
In this post, we will take the perspective of the university. Our next post will examine the issue from the individual athlete viewpoint. If they could do so, more licenses would be sold, which would theoretically produce a more competitive market for those licenses.
A more competitive market normally means more choices and better prices for consumers. For example, if former student-athletes could negotiate their own licensing deals, multiple video game publishers could publish games featuring ex-players.
More games could enhance technological innovation and lower prices for video game consumers. Branding Competitive balance in sports are fairly complex due to the nature of the sports product.
The key point is that sports products and brands are co-created by a collection of players, teams and leagues. What I mean by this is that while sports are inherently about competition, they also require cooperation between multiple entities.
This co-creation is important because while fans may gravitate to star players, it is also obvious that league and team structures are needed for individual athletes to become valuable brands. The vast majority of athletes only temporarily capture some share of the overall brand equity of the teams and leagues with which they are involved.
This is particularly true in the case of college sports. With a few exceptions, student athletes are relatively unknown prior to joining college football and basketball teams.
When a player puts on a college jersey, they immediately acquire a devoted fan base. Manti could have made money by endorsing products or licensing his image during his time at Notre Dame again, lets clarify that we mean before December An argument could be made that Manti had minimal impact on the revenues of the Notre Dame Football program.
Notre Dame has a long and storied history, and already possessed a devoted fan base along with a lucrative television contract.
Notre Dame has a record of consecutive sellouts dating back to the late s. Tim Tebow is another, and more extreme, example of a high profile college player that could easily have made significant dollars while at Florida.
A comparison between and shows that attendance dropped by about 1, people or 1. Also, we are not considering incremental merchandise sales.
Could Tebow have had similar success at another university? Of course, this is an incomplete example, as Florida may have benefited from increased donations from alumni or seen an increase in applications from prospective students.
The distinction between marginal revenues and total revenues is important if one is truly concerned with fairness. College athletic programs have significant and valuable brand equity.
This brand equity is maintained by current players. If a team stopped fielding competitive teams, its brand equity would diminish over time. From this perspective, allowing current individual players to market themselves to the highest bidder could be viewed as unfair to past athletes.
If college athletes were suddenly allowed to pursue endorsement deals, I would expect that current high school players like Andrew Wiggins could become instantly wealthy the fairness of Wiggins not being allowed to go directly to the pros is beyond the scope of this post.
Consider for a moment that the MLB draft takes place in early June. How well known are the players that are likely to be taken in the first few picks? Would not a more equitable solution involve compensating past athletes that helped create the pre-existing fan interest that the next generation of athletes would be able to exploit?
Sports and anti-trust laws have a long history, and likely will generate controversy long into the future. While competition between firms is typically the best way to improve consumer welfare, in the case of sports, sometimes pure competition may not be feasible.
All the major professional leagues now use some form of revenue sharing or salary caps to maintain some level of competitive balance.Of course, competitive balance or lack of balance is a mixed bag for fans.
If a fan roots for a high payroll, large market franchise, a lack of competitive balance may generally be a positive as the fan’s preferred franchise (sorry Cubs fans) will tend to win on average. Where the NBA has not looked as good in terms of "competitive balance" over the past ten years is in the variety of teams in the final four and later stages, with just 16 of 30 teams making the final four at least once in the last decade compared to 21 of 30 for MLB, 21 of 32 for NFL, 23 of 30 for NHL.
Furthermore, MLB hands out 14 Competitive Balance Lottery draft picks to small market teams each year. Those picks can be traded. The Twins sent one to the Padres in the recent Phil Hughes trade. Voted in place by the OHSAA member schools in May , Competitive Balance is a process which makes modifications to how schools are placed into tournament divisions in the team sports of baseball, basketball, football, soccer, softball and volleyball.
The competitive balance pick should be based on teams in the worst place organizationally. Like they should quantify the farm system and average it with the W/L %.
That way, teams with bad systems. How does the NBA compare to other major pro sports (baseball, football, hockey, soccer) in terms of competitive balance?