A Model of Promotion and Relegation in League Sports

23 Pages Posted: 23 Nov 2009 Last revised: 25 Jun 2012

See all articles by John Jasina

John Jasina

Claflin University

Kurt W. Rotthoff

Seton Hall University - W. Paul Stillman School of Business

Date Written: November 1, 2009

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 and Szymanski and Valletti 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.

Keywords: League Structure, League Spending, Team Strategy, Promotion and Relegation, Fan Welfare

JEL Classification: L83, P51

Suggested Citation

Jasina, John and Rotthoff, Kurt W., A Model of Promotion and Relegation in League Sports (November 1, 2009). Journal of Economics and Finance, Volume 36, Issue 2, Pages 303-318, Available at SSRN: https://ssrn.com/abstract=1512144

John Jasina

Claflin University ( email )

400 Magnolia St.
Orangeburg, SC 29115
United States

Kurt W. Rotthoff (Contact Author)

Seton Hall University - W. Paul Stillman School of Business ( email )

400 S Orange Avenue
JH 674
South Orange, NJ 07079
United States
973-761-9102 (Phone)

HOME PAGE: http://pirate.shu.edu/~rotthoku/

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