Balancing the Competition in Different Teams
The purpose of this article is to probe further the line of reasoning that the AFL‟s (Australian
Football League) introduction of a team salary cap in 1985 and the player draft after the 1986
season has helped to increase competitive balance. Booth (2000, 2003, 2004a, 2004b, 2004c &
2005 forthcoming) argues the theoretical case that a player draft and team salary cap (combined
with revenue sharing) in a conference comprised of one-maximizing clubs (such as the AFL) can
increase competitive balance.
Most measures of within-season competitive balance focus on the distribution of team‟s season
winning percentages, usually the (actual) standard deviation (ASD) of the distribution of win
percents, and sometimes their range. In this article we follow the recommendation of Utt and
Fort (2002) to continue to use “the tried and true standard deviation of winning percentages (and
their idealized values) for within-season competitive balance of winning percentages” (p. 373).
Following the approach suggested by Noll (1998) and first applied by Scully (1989), this
measure has been used in the US by Quirk and Fort (1992), Vrooman (1995), Berri (2001) and
others to compare the closeness of competition within seasons. A ratio is calculated which
compares the actual performance of the league, with the performance the league would have
achieved if all teams were of equal playing strength by measuring the dispersion of teams' win
percents over a season relative to the idealised dispersion when all teams are assumed to have
equal playing strengths. The less is the deviation of the actual league performance from the ideal
league, the greater is the degree of competitive balance.