Local Revenue Sharing and Competitive Balance

1040 Words Apr 28th, 2013 5 Pages
Local Revenue Sharing and Competitive Balance
Problem Statement
Your textbook shows the conditions that lead to increased competitive balance with an increase in local revenue sharing. Data exist on competitive balance and local revenue sharing so you can examine this for yourself. New local revenue sharing plans were put in place in MLB for the 1995 season and another increase in revenue sharing was in place for the 2001 season. These changes create a "natural experiment" for analyzing the impact of changes in local revenue sharing on competitive balance.
Procedure (Data File: Blackboard, Local Revenue Sharing_Competitive Balance_Project3Data.xslx)
A. The prepared sheet shows winning percent data for MLB, from 1990 to date.
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Explain fully. [Present the relevant chart and refer to it directly in your answer.]
The scatter chart looks like this:

Look first at 1995. In the NL, the SD had been falling since before the new sharing arrangement. In the AL, the SD fell for a couple of years only. So, maybe sharing made the difference in the AL, but not for long. Now look at 2000. Again, in the NL, the SD had been falling since before the new sharing arrangement. The same is true in the AL. But the SD jumped dramatically from there on in the AL. Most recently, it is true that the SD in both leagues has fallen. So, there is a bit of evidence that sharing enhanced balance, but it isn 't an unmitigated success.
4. Do the averages you calculated in Part B add anything to your conclusions about the impact of increased local revenue sharing on competitive balance. [Present the relevant table of averages and percentage changes and refer to it directly in your answer.]
The averages help us to see a bit easier: | | Averages | | | | League | 1990-94 | 1995-2000 | %Change | 2001-05 | %Change | AL | 0.061 | 0.071 | 17.0% | 0.092 | 30.1% | NL | 0.070 | 0.068 | -1.8% | 0.071 | 4.1% |
It looks like the only real evidence of enhanced balance is in the NL and then it really is just a "flattening out" for the first period of local sharing (1995-2000). Balance worsened dramatically in the AL for this first revenue sharing experiment. For the altered arrangment in 2000,