The Economics of Sports

Research Assignment #1

Competitive Balance Due Date: March 20th

For this assignment I want you to pick a team sports league, any sport, pro or amateur, male or female, doesn't matter as long as you can find the necessary data and information. To keep the calculations to a reasonable level, in most cases you should pick a division or conference rather than the entire league - aim for a number of teams between perhaps 6 and 10. You should also preferably use a division or conference where the teams haven't changed over the decade of results you will need

I. For the division you've chosen, calculate the standard deviation of winning percentages for each year over a ten year period (preferably the last decade but that's flexible, actually historical numbers might be interesting). Calculate as well the "ideal" standard deviation and present your ten years of results as ratios of the actual to the ideal. Comment on any trend you might observe and on how the example you've chosen compares in terms of competitive balance to the results across the five pro leagues we looked at in class.

II. For three of the teams in your division (first, last, middle from last year) calculate the between season variation in winning percentage over the decade of results you have. By that I mean take their winning percentages over the decade and for each of the three calculate the standard deviation of their results. Comment on whatever pattern you find.

III. Provide a listing of the division winners over the decade. Depending on how the league works you can provide the regular season winner or if the playoff structure leads to a division champion, the champion list. Calculate the Herfindahl-Hirschman index for this and comment on the result.

IV. Drawing on what we've learned about factors (rules, financing etc.) that influence competitiveness, describe any efforts or actions taken by the League you've chosen over the decade chosen that might have influenced the degree of competitiveness in your league. Is there any sense in your data that such actions (or lack of them) might have had a result?

Note: in presenting your numerical results, including some of the calculations is a good idea, so if you go wrong I can see what happened. You should at the very least include the formulas you are using. In an appendix present the season by season standing results you are working with

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