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Revenue Sharing and Owner Profits in Professional Team Sports

University of Antwerp, University of Leuven

In the sports economics literature, little attention has been paid to the impact of revenue sharing on club owners' profits. In particular, it is unclear how the profits of the large-budget clubs are affected. In this article, the relationship between one specific revenue-sharing arrangement and owner profits is investigated for clubs in a profit-maximization league using two different models. In a Walrasian equilibrium model, revenue sharing will lower profits, whatever the value of the share parameter, if the profits of a large-budget club are higher than the average club budget in the league. In a noncooperative Nash equilibrium model, the impact turns out to be theoretically indeterminate.

Key Words: professional team sports • profit maximization • revenue sharing • owner profits • Walras equilibrium • Nash equilibrium

Journal of Sports Economics, Vol. 8, No. 5, 519-529 (2007)
DOI: 10.1177/1527002506294942


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