competitive balance theory

Competitive balance theory suggests that sports leagues perform best when teams are relatively evenly matched in skill and resources. This balance makes competitions more exciting for fans, as outcomes are less predictable, encouraging greater attendance, viewership, and engagement. When a few teams dominate consistently, interest and financial growth can decline, potentially harming the league’s overall success. Therefore, leagues often implement strategies—like revenue sharing, salary caps, and drafts—to promote competitive balance, ensuring a more unpredictable and entertaining competition that benefits teams, fans, and stakeholders alike.