Global Scope: Competitive Balance

There has been many complaints coming from owners of small market teams here in the United States who are not pleased with the level of competitiveness in leagues such as the NBA. The league's bottom feeders have a much bigger challenge to build a competitive team with television deals that are nowhere near as lucrative as those of the franchises in the larger markets, like New York and Chicago. This isn't an issue that is specific only to the NBA and North American sports leagues. Competitive balance is a growing topic in the world of soccer. Prompting professor Cristiano Machado Costa, from the FUCAPE Business School, to lead a study based off of the Herfindahl-Hirschman index (HHI). Basically the lower the HHI, the more competitive a market is.




From top to bottom: Germany, Spain, Italy, France, England, Brazil. From left to right: Country, Average, Median, Maximum, Minimum, and Standard Deviation.


The study proved that the most competitive league out of the top soccer leagues in the world is the Brazilian league. If talking to a Brazilian journalist he/she would say that this isn't really news, because since the tournament's format changed in 2003 to a "consecutive points" style like all the top European leagues, local journalists have been claiming that the Brazilian league is the most balanced league competitively. They have been right on point, since 2003 Brazil has been at the top in terms of competitive balance, being surpassed by the French league only in 2007.


Yellow- Germany; Green- Brazil; Red- Spain; Blue- Italy; Gray- France; Black- England

 Now this may seem as if it is a positive outcome for Brazil and the local league, but some of the factors that create this balance are negative factors. Of course there is the issue of television deals, with teams at the top of the food chain (from large markets such as Sao Paulo & Rio de Janeiro) earning around $50 - $62 million while most teams are working with a quantity between $19 - $35 million. The best solution for this issue, at least one that has proven to work, is to follow the system implemented in the English Premier League (EPL). Where the tv deals are distributed in three ways: 70% distributed equally between the clubs, 15% distributed based on the return audience, and the other 15% based on the club's  position in the standings from the previous year.

To further dive into this topic of competitive balance throughout the world I would have to conduct a lot of research on each league specifically, with a focus on the Brazilian league which is the most intriguing case. A country with proven success in the international level, where some of the best and most expensive players in the world come from, and with the highest level of competitive balance in its local league, and yet has not yet reached its full potential. The Brazilian league is indeed the most entertaining and competitive league in the world, but unfortunately it is because of all the wrong reasons.