Professional Team Sport Leagues in Australia I

In this lecture, the first of three successive lectures on the 'Professional Team Sports Leagues in Australia', we set up a model that allows us to compare team behaviour in the Major Leagues (already considered as where the teams are modelled as profit-maximisers) with the Australian Football League (AFL), where the teams are instead modelled as win-maximisers who are willing to merely break-even. These modelling differences for the AFL are argued on the basis of very low average team profits, as well as the different history and ownership structure of the teams comparative to the Major Leagues. The ultimate aim is to find whether competitive balance policies, of both the revenue-sharing and labour market restriction types, are indeed effective (or ineffective) in maintaining competitive balance levels. To this end, today we describe many facets of the AFL as an (alternative) case study, then draw the basic unrestricted (free agency) equilibrium conditions under both team behaviour assumptions and compare those conditions. We will then proceed from this point to model various restrictions on the model next week. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.