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Different Owner Motivations of Sports Teams

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Zimbalist proposed that no leagues exist with the team owners possessing similar objectives and motivations; thus, such generalizations were defective. Alternatively, he argued that the motivation and objective of team ownership depend on the effects of the extra assets that the team owners possess. Team behaviors and league performance are potentially influenced by the team owners’ objectives. Team owners motivated by profit maximization are, for instance, more inclined to invest in the success of the team up to the profit-making levels. In contrast, the team owners motivated by maximizing wins invest further than the point where additional wins generate the invested costs.

The marginal revenue required to recruit talent may vary in league teams, resulting in competitive imbalance. This may be because fans in various locations may have the capacity to acquire expensive tickets to witness the winning teams besides certain areas reporting loyal fans who, irrespective of the team’ s outcome – either a win or a loss, are not influenced in their ticket payments. Moreover, competitive imbalance may be created through the establishment of free agency in which the players have the freedom to choose their preferred teams, accepting less pay to be in the team.

This practice has effects on the marginal cost of acquiring talent in certain teams, translating into a competitive imbalance in the sports league. The motivations for team owners in a particular league may differ so that certain team owners are motivated by the desire to maximize their wins whereas others are motivated by the desire to maximize profits. This aspect creates a competitive imbalance in the league competition among the teams. In order to achieve a greater and enhanced competitive balance in such leagues, the team owners of small teams should maximize the wins, although the owners of the large teams maximize the profits.

Zimbalist asserts that sports league with team owners motivated by the pursuit of making profits has the potential to maintain some level of competitive balance; thus, they are more contained in their spending.

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