THE ECONOMIC CONSEQUENCES OF FOREIGNER RULES IN NATIONAL SPORTS LEAGUES

Profitable and balanced domestic league sports are among the central prerequisites for attracting the right to host a mega-event like the soccer world cup as well as for the overall economic success of such events. This paper provides a contest model of a professional team sports league and analyzes the impact of a restriction on foreign players. It shows that a league with binding restrictions on foreign talent for all clubs is more balanced than a league without binding restrictions on foreign talent. Moreover, the wage level of domestic (foreign) talent is higher (lower) in a league with a binding restriction on foreign players. Finally, a tighter restriction on foreign players increases profits of all clubs.TEAM SPORTS LEAGUES, COMPETITIVE BALANCE, PLAYER SALARIES