Abstract
Keywords: contest success function, sports leagues Introduction At least since Rottenberg (1956), economists have suggested that consumer demand may be influenced by competitive balance and therefore relatively equal markets for teams may be preferred. Since investment in talent is a function of market size, leagues may want relatively equal market sizes leading to balance. Interestingly, increasing the fan base of the small market team can hurt the leagues profitability. [...]when leagues expand or relocate, it is not obvious, at least theoretically, that one of the largest available markets should be chosen. Since a larger market may create higher costs as well as lower revenue, the optimal size of the market of an incoming team is not clear. [...]either the often used assumptions in sports league modelling are incorrect, or this has direct implications for league expansion and team relocation.