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Economic Analysis of the Factors Influencing the Competitive Balance in MLS

Student: Aleksey Titkov

Supervisor: Ivan V. Rozmainsky

Faculty: St.Petersburg School of Economics and Management

Educational Programme: Economics (Bachelor)

Year of Graduation: 2019

Over the years, sporting events have become a big world economic phenomenon, covering all large markets and affecting large sections of the population every year. Sports leagues have become major sources of income, and football has not stood aside. One of the important components of any football league is a competitive balance, on which the entertainment of the league directly depends, and consequently, the profit of the organizers. Competitive balance or competitiveness is the ability of each team in a football league to fight on equal terms with rivals for a long period of time. Since competitive balance is an unobservable value, there are many ways to measure it. The purpose of this work is to identify the factors associated with the competitive balance, both in terms of the league as a whole, and in terms of each individual team. To achieve this goal, it is necessary to perform the following number of tasks: determine the method of measuring the competitive balance, collect the necessary data about the seasons of the league and all teams participating in them, build a regression model and identify statistically significant associations. After completing these tasks, I obtained the following conclusions: using macro (looking at the seasons) and micro (looking at teams) approaches, the same conclusion was obtained about the positive effect of cash rewards on the competitive balance. From the point of view of the seasons, the number of privileged players whose work can be paid in circumvention of the general rules, as well as the salary ceiling and revenue distribution policies, had a significant impact. From the point of view of the teams, the success of the performances is positively influenced by the average level of remuneration, including compensation, and the distribution of this reward does not have any significant effects on the team results.

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