Redressing competitive imbalance in sports leagues with matching theory

The problem

The sports draft – a process in professional sports leagues where teams take turns selecting from a pool of eligible players, as a way to distribute talent equitably and maintain competitive balance – is known to have a significant weakness. Namely, it incentivises participants to "game" the process – strategising their selections rather than picking their most desired players in a logical order. Despite this issue, the draft remains in use.

The research

Drawing on matching theory – the study of the allocation of goods and resources using mathematical models for analysis, Ivan Balbuzanov and his co-author Jacob Coreno undertook a project to analyse drafts and competitive balance.  Specifically, the pair analysed the draft, viewed as a formal matching mechanism, using an axiomatic approach. They established four fundamental properties of the draft. Through this, they identified which two properties are useful in achieving competitive balance, but also that it is impossible to completely preserve those in any strategy-proof mechanism.

The impact

As the first axiomatic characterisation of draft rules, the research (currently published as a working paper) provides a useful contribution to the literature. The findings are of course significant for professional sports teams, since lack of competitive balance is an important consideration across the board. With the sports draft widely seen as a way to strengthen less competitive teams and equalise relative abilities within the league, the work helps to explain and justify its continuing use. And, in highlighting the trickiness of entirely preserving competitive balance within this system, suggests that any improvement must be revolutionary rather than an incremental redesign.

Department: Economics 
Area: Professional sports, matching theory