Limitations of the relative standard deviation of win percentages for measuring competitive balance in sports leagues

The relative standard deviation of win percentages, the most widely used measure of within-season competitive balance, has an upper bound which is very sensitive to variation in the numbers of teams and games played. Taking into account this upper bound provides additional insight into comparisons of competitive balance across leagues or over time.PublishedBajo, O., Salas, R., 2002. Inequality foundations of concentration measures: An application to the Hannah-Kay indices. Spanish Economic Review 4, 311-316. Fort, R., 2006a. Competitive balance in North American professional sports. In: Fizel, J. (Ed.), Handbook of Sports Economics Research (M.E. Sharpe, Armonk, NY), pp. 190-206. Fort, R.D., 2006b. Sports Economics (Second edition) (Pearson Prentice Hall: Upper Saddle River, NJ). Fort, R., 2007. Comments on “measuring parity”. Journal of Sports Economics 8, 642-651. Fort, R., Quirk, J., 1995. Cross-subsidization, incentives, and outcomes in professional team sports leagues. Journal of Economic Literature 33, 1265-1299. Fort, R., Quirk, J., 1997. Introducing a competitive economic environment into professional sports. In: Hendricks, W. (Ed.), Advances in the Economics of Sport, Volume 2 (JAI Press, Greenwich, CT), pp. 3-26. Goossens, K., 2006. Competitive balance in European football: comparison by adapting measures: national measure of seasonal imbalance and top3. Rivista di Diritto ed Economia dello Sport 2, 77-122. Horowitz, I., 1997. The increasing competitive balance in Major League Baseball. Review of Industrial Organization 12, 373-387. Kringstad, M., Gerrard, B., 2007. Beyond competitive balance. In: Parent, M.M., Slack, T. (Eds), International Perspectives on the Management of Sport (Butterworth-Heinemann, Burlington, MA), pp. 149-172. Leeds, M., von Allmen, P., 2008. The Economics of Sport (Third edition). (Pearson Addison Wesley: Boston, MA). Noll, R.G., 1988. Professional Basketball, Studies in Industrial Economics Paper No. 144. Stanford University, Stanford, CA. Owen, P.D. et al., 2007. Measuring competitive balance in professional sports using the Herfindahl-Hirschman index. Review of Industrial Organization 31, 289-302. Quirk, J., Fort, R.D., 1992. Pay Dirt: The Business of Professional Team Sports. (Princeton University Press, Princeton, NJ). Scully, G.W., 1989. The Business of Major League Baseball. (University of Chicago Press, Chicago, IL). Utt, J., Fort, R., 2002. Pitfalls to measuring competitive balance with Gini coefficients. Journal of Sports Economics 3, 367-373