THE EFFECTIVENESS OF COMPETITIVE BALANCE INTERVENTIONS IN US BIG 4 SPORTS LEAGUES

Abstract

This study examines the effectiveness of competitive balance interventions in the four major North American professional sports leagues (MLB, NFL, NBA, and NHL) from 1967 to 2023. Using multiple measures of competitive balance, including the Competitive Balance Ratio (CBR), Herfindahl-Hirschman Index (HHI), Gini coefficient, and a Playoff Repeatability Index, the research employs two-way fixed effects panel regression models to analyze how revenue sharing, salary caps, salary floors, and luxury taxes affect league parity across different market contexts. Competitive balance has generally improved over the study period, coinciding with increased intervention implementation across leagues. However, intervention effectiveness is significantly moderated by market size variation, underscoring the importance of tailored approaches to competitive balance that consider each league's unique structural characteristics. These results provide valuable empirical evidence for leagues considering policy adjustments to promote parity while maintaining economic viability.