Competitive Balance in Major League Baseball

The nature of Major League Baseball (MLB) requires competition in order to keep the business alive. In any sports league, the presence of competitors allows for the livelihood of the game through producing an event with an uncertain outcome. The current state of the game lacks the competitive balance necessary for a thriving industry. Much of this competitive imbalance possesses the underlying problem of disparities in local revenue. Local revenue encompasses the revenue from ticket sales, local television, radio, and cable rights, concessions, parking, and team sponsorships. (Basically, those revenues associated with the location of the club comprise local revenue.) My thesis examines the evolution towards the current state of competitive imbalance in Major League Baseball. It also includes discussion of proposals for the future as well as data analysis of local revenue. Hotly debated, this topic probes at the root of an ever-growing problem in MLB, that of preserving the basis of the game. People lose interest in games if they feel that one team is extremely likely to win over others. Additionally, professional baseball in America experienced some rough times in recent years due to constant labor squabbles and disproportionate salary growth. The general public often voices concern over the apathetic and sometimes irritable attitudes of " overpaid " players on the field. Initially, I will cover the reserve clause, which provides a glimpse into the quarrels over power of the players and owners. The current state of the game reveals some causes for the fan dissatisfaction throughout the league. Probing into the structures of revenue sharing and the luxury tax results in a further understanding of the steps taken by MLB towards restoring competitive balance. I have worked on original empirical research that looks at the past five years of the industry, the period of the most recent collective bargaining agreement between players and owners. I chose seven independent variables with which I performed multivariate regressions. Running regressions allowed me to see if the independent variables possess explanatory behavior with regard to local revenue. These variables are population, per capita