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Comparing Competitive Balance in Australian Sports Leagues: Does a Salary Cap and Player Draft Measure Up?

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  • Ross Booth

Abstract

In the period following the introduction by the Australian Football League (AFL) of the team salary cap in 1985 and the player draft at the end of 1986, within-season competitive balance (measured by the seasonal distribution of team win percentages) has increased. This paper continues the investigation into whether the improvement in competitive balance in the AFL can be attributed to these labour market changes by examining competitive balance outcomes and labour market changes in two other Australian sports leagues, the National Basketball League (NBL) and the National Rugby League (NRL). The measurement of competitive balance in this paper is extended to include a simple measure of between-season competitive balance, namely the distribution of championships/ premierships amongst teams/clubs. The evidence suggests that since 1985 within-season competitive balance, as measured by actual standard deviation/idealised standard deviation (ASD/ISD) ratios, has increased slightly in all three leagues. The NRL has been the most balanced and the NBL the least balanced, both pre- and post-1985. The distribution of championships/premierships is, in general, also more even in the post-1985 period in all three leagues. The most significant labour market change in both the NBL and the NRL post-1985 is their adoption of a team salary cap. Thus, the evidence on competitive balance is consistent with the view that the introduction of a team salary cap in all three leagues has improved competitive balance since 1985. However, since 1985 there has also been net expansion in the number of clubs/teams in all three leagues, and a considerable turnover in both the NBL and the NRL, but not the AFL. The expansion and contraction of the leagues is compared with changes in their competitive balance, leading to the conclusion that the number and, in particular, the location of teams/clubs also affects competitive balance.

Suggested Citation

  • Ross Booth, 2005. "Comparing Competitive Balance in Australian Sports Leagues: Does a Salary Cap and Player Draft Measure Up?," Sport Management Review, Taylor & Francis Journals, vol. 8(2), pages 119-143, May.
    • Handle: RePEc:taf:rsmrxx:v:8:y:2005:i:2:p:119-143
    DOI: 10.1016/S1441-3523(05)70036-X
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    Cited by:

    1. Daniel Read & Aaron C.T. Smith & James Skinner, 2021. "A Comparative Analysis of Competitive Balance Between a Closed and an Open League in Rugby League," Journal of Sports Economics, , vol. 22(8), pages 871-892, December.
    2. Fort, Rodney & Maxcy, Joel & Diehl, Mark, 2016. "Uncertainty by regulation: Rottenberg׳s invariance principle," Research in Economics, Elsevier, vol. 70(3), pages 454-467.
    3. Ross Booth, 2009. "Sports Economics," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 42(3), pages 377-385, September.
    4. Brian M. Mills & Steven Salaga, 2015. "Historical Time Series Perspectives on Competitive Balance in NCAA Division I Basketball," Journal of Sports Economics, , vol. 16(6), pages 614-646, August.
    5. Jakee, Keith & Kenneally, Martin & Mitchell, Hamish, 2010. "Asymmetries in scheduling slots and game-day revenues: An example from the Australian Football League," Sport Management Review, Elsevier, vol. 13(1), pages 50-64, February.
    6. Lenten, Liam J.A., 2011. "The extent to which unbalanced schedules cause distortions in sports league tables," Economic Modelling, Elsevier, vol. 28(1-2), pages 451-458, January.
    7. Meletakos, Panagiotis & Chatzicharistos, Dimitrios & Apostolidis, Nikolaos & Manasis, Vasilios & Bayios, Ioannis, 2016. "Foreign players and competitive balance in Greek basketball and handball championships," Sport Management Review, Elsevier, vol. 19(4), pages 391-401.

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