A model of promotion and relegation in league sports |
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| Authors: | John Jasina Kurt Rotthoff |
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| Affiliation: | (1) School of Business, Claflin University, 400 Magnolia St., Orangeburg, SC 29115, USA;(2) Stillman School of Business, Seton Hall University, JH 621, 400 South Orange Ave, South Orange, NJ 07079, USA |
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| Abstract: | Sports leagues in different parts of the world are set up in different ways, some as open leagues and some as closed leagues. It has been shown that spending on players is higher in open leagues (Szymanski and Ross 2000; Szymanski and Valletti Rivista di Politica Economica 95:3–39, 2005). This paper extends these studies, finding that sports leagues that practice promotion and relegation will have unambiguously higher aggregate spending on player talent than closed leagues. This will lower profits in the open league, but increase fan welfare. |
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