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Monday, October 01, 2007
Competitive Balance

For those who missed it, this past weekend was one of the wackiest weekends in a truly wacky college football season. On "Insanity Saturday," left and right, highly ranked and touted teams fell to lesser known and purportedly less talented opponents. Mighty Texas fell to Kansas State, defending champ Florida to unranked Auburn, West Virginia to (11-year-old) South Florida (on Friday), Rutgers to Maryland, Oklahoma to unranked Colorado, and Penn State to Illinois.

In a season that began with Appalachian State's unprecedented upset over Michigan, one can't help but observe the parity, or competitive balance present in college football.

The NCAA, a cartel if I ever saw one, has long argued that competitive balance justified its various restrictive trade arrangements, including limitations on broadcasts of television games as well as all manner of eligibility rules. The Supreme Court has endorsed the notion in the Oklahoma Board of Regents case:
Petitioner argues that the interest in maintaining a competitive balance among amateur athletic teams is legitimate and important . . . . We agree . . . . It is reasonable to assume that most of the regulatory controls of the NCAA are justifiable means of fostering competition among amateur athletic teams and therefore procompetitive because they enhance public interest in intercollegiate athletics.
This notion should induce skepticism on a number of levels. First, as a historical matter, competitive balance in college football has declined markedly since the NCAA began to flex its authority. While individual rules might arguably improve balance, the overall effect of NCAA regulation of college sports seems to have been to the contrary.

Second, the notion that competitive balance should justify restrictive business practices in an antitrust calculus depends on the critical assumption that, in the absence of competitive balance, college football would lose its appeal to fans as a "distinct" product. This assertion is a bit hard to swallow. Fans do like competitive balance, but only within a limited range. That is, college football fans like it when teams like Michigan, Notre Dame and USC are good enough to compete with one another. But do college football fans really value true competitive balance, where teams like Appalachian State beat Michigan (and South Florida is, somehow, more highly ranked than Florida, Florida State, or Miami)?

Admittedly, it certainly is fun to watch an unheralded team beat a favored opponent. Boise State's victory last year over Oklahoma was the game of the season; although very few fans actually watched Michigan's loss to Appalachian State this year, the highlights were certainly popular on TV for at least fifteen minutes. But, overall, does "true" competitive balance make college football a more attractive product to fans? After all, after Appalachian State beat Michigan, App. State went on to lose to Wofford, and fans stopped paying attention. And certainly the "big" games Michigan will play later this year -- against Ohio State and Wisconsin -- would have attracted more viewers and (probably) advertiser dollars were Michigan a top-ten team as expected rather than isolated to rankings purgatory.

Although I've yet to see a good explanation for why this season seems to be a showcase for competitive balance, it will certainly provide a nice opportunity to see whether competitive balance is something fans really value.



Although when I read about competitive balance in anti-trust or event retraint of trade decisions (mind you I'm european) I always think about maintaining some sort of balance, as we know it, and not really an absolute parity.

Restrictions are put in place to prevent the gap from widening and not so much to ensure that it is shorten.

Perhaps I'm way off here...

Anonymous Luis -- 10/01/2007 2:30 PM  


You raise a very interesting question, but I agree with Luis that “competitive balance” means different things to different leagues and associations. I don’t think the NCAA would want a world where the App States of the country regularly beat the Michigans (though, for about 30 minutes on Saturday, I did enjoy a world where Tulane led LSU 9-7 late in the second quarter). In fact, in the NCAA case, the Supreme Court recognized that the NCAA never indicated any “intent to equalize the strength of teams in Division I-A with those in Division II or Division III.” I think the competitive balance the NCAA seeks is more akin to a system where the “top” football schools can compete with each other, while the “lesser” schools have an outside shot of pulling off an upset (or putting together a “top” team on occasion-- I’ll leave it to others to define “top” and “lesser”) much like exists in NCAA basketball. The Supreme Court recognized this in the NCAA case, noting that “in the most closely analogous sport, college basketball, competitive balance has been maintained without resort to a restrictive television plan.” I realize that does not answer your question, but I’m not sure the NCAA truly wants a season full of “Insane Saturdays.”

And, in terms of antitrust scrutiny, I don’t think the NCAA uses the “competitive balance” argument the same way the professional leagues use it. The NCAA’s real arguments seem to be 1) that they need certain restraints—as do other sports leagues and associations—to “foster competition.” That is, they need rules, schedules, etc. to have a league; and 2) that they need certain restraints to maintain their unique identity as an association of amateur athletes competing in amateur sporting events. That is, they need restrictions on spending, coaching salaries, etc., not so that any team can win on any given Saturday, but to differentiate themselves from the professional sports, which is good for consumers, because it creates a new product. Most (all?) agree that the first argument is a legitimate justification, but the second one is certainly problematic on several levels…

Gabe Feldman

Blogger Gabe Feldman -- 10/01/2007 4:19 PM  

Great insights!!! I think sports fans do have equity invested in competitive balance because without it, there would be no reason to keep playing. It becomes too predictable and boring. The plainness would inevitably lead to disinterest for the fans, loss of revenues, and eventually sports leagues shutdowns. Please read my publishing on cartels and fan equity in relation to your post and comments.

Blogger rasdorfw -- 10/01/2007 4:42 PM  

Another problem, from a marketing/fan base perspective is the sheer number of teams in NCAA Div. I. If there was some kind of actual "competitive balance" where many smaller, 'unknown' schools could compete with the top schools, there then are just too many players, coaches, schools to keep track of.

How could you keep track of who is who in a world where 50 or 60 teams are all competitive

Anonymous Anonymous -- 10/01/2007 7:51 PM  

The competitive balance argument isn't just about fans having a preference for close games. Most, if not all fans, like their team/university/club to win. That creates a super-ordinate imperative for competition organisers to promote competitive balance.

Interesting post, there is a lot of economic research on this too.

Blogger Robert Macdonald -- 10/02/2007 9:39 PM  

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