*This is a revised version of a paper presented at the Western Economic Association International 70th Annual Conference, San Diego, Calif., July 6, 1995 in a session organized by Lawrence Hadley, University of Dayton, Ohio. The author thanks James Quirk, John Fizel, and two anonymous referees for their helpful comments.
GATE REVENUE SHARING AND LUXURY TAXES IN PROFESSIONAL SPORTS
Article first published online: 29 JUN 2007
Contemporary Economic Policy
Volume 15, Issue 2, pages 114–123, April 1997
How to Cite
MARBURGER, D. R. (1997), GATE REVENUE SHARING AND LUXURY TAXES IN PROFESSIONAL SPORTS. Contemporary Economic Policy, 15: 114–123. doi: 10.1111/j.1465-7287.1997.tb00471.x
- Issue published online: 29 JUN 2007
- Article first published online: 29 JUN 2007
This paper examines the impact of gate revenue sharing and luxury taxes on professional sports leagues within the context of a less restrictive demand function than those used in prior models. In contrast to previous studies, the analysis finds that the increased sharing of revenues may enhance competitive balance. Consistent with other models, the analysis finds that player salaries will diminish as the percentage of shared gate receipts rises. The analysis also explores several variations of luxury taxes. All have the effect of lowering salaries. The impact on league balance depends on how the tax is implemented and on how its proceeds are distributed. As with salary caps, enforcement problems exist with the tax.