Over the past 45 years, a consensus has evolved among most sports economists that in a professional sports league, the free operation of market forces should maintain a reasonable degree of competitive balance among member teams. The interdependencies between teams inherent in the competitive structure of any sports league create disincentives for a wealthy team to attempt to accumulate talent to the extent that the league as a whole loses competitive viability. Contrary to widely held belief, measures such as a salary cap or maximum wage, a reserve clause restricting player mobility between clubs, or gate revenue sharing, are not expected to create closer competitive balance than would tend to emerge naturally as a result of the free play of market forces. Such measures may have implications, however, for the distribution of revenues between strong clubs and weak clubs and between clubs (in general) and players.

In this chapter, section 3.1 describes the North American model for the organisation and regulation of professional team sports, and draws some comparisons with the British and European models. This is followed by a review of the theoretical literature on competitive balance within sports leagues, most of which has been developed with North American team sports in mind. After the main findings of this literature have been examined, its applicability to European football is considered.