JOURNAL OF SPORTS ECONOMICS / May 2001Schmidt, Berri / COMPETITIVE BALANCE AND ATTENDANCE Competitive Balance and Attendance The Case of Major League Baseball

Both the popular press and industry insiders have claimed that the growing gap between the “rich ” and “poor ” teams in major league baseball has led to a greater disparity on the field of play and that the eventual outcome of this gap will be lower attendance. The pur-pose of this inquiry is twofold. First, an investigation into the level of competitive balance reveals that relative to major league baseball’s historical record and contrary to the con-tentions of the media, the 1990s was the most competitive decade on the field of play. Second, the previously unexplored link between aggregate attendance and league com-petitive balance is examined. This investigation suggests that a relationship between these factors does indeed exist, whether one explores the relationship strictly across time or with the use of a panel data set. The essential economic fact concerning professional team sports is that gate receipts depend cru-cially on the uncertainty of outcome of the games played within the league. As the probability of either team winning approaches 1, gate receipts fall substantially. Consequently, every team has an economic motive for not becoming “too ” superior in playing talent compared with other teams in the league. On the other hand, gate receipts of the home team are an increasing functio