Talent Allocation in European Football Leagues: Why Competitive Imbalance May be optimal?

Abstract Professional sports are part of the entertainment industry; as such, its business is developed based on the perceived interest in sporting events, which in turn depends on features like: the (i) degree of competitive balance that determines the uncertainty of the outcome; the (ii) concentration of gifted players in a team, whose interaction of talents on the field enhances the quality of the ‘product joint’ that is a sporting event; the (iii) joint aggregate quality of rival teams; the (iv) appeal of rivalries associated with fans’ feelings of empathy and loyalty; etc. This paper focusses on the first three points by modelling the success of team-sport competitions as the result of the overall quality, which encompasses more than the mere sum of individual talents. Sport economists and practitioners generally acknowledge that competitive balance must be fostered to protect uncertainty about the outcome and thus achieve greater interest in sport competitions by fans and the media. In this paper, we argue that certain degree of imbalance in allocation of talent between teams may be preferable – rather than a perfect competitive balance – to broaden the interest of fans on the sport events and, thus, maximise economic outcomes. The paper also examines the discrepancies across the main European football leagues in this regard.