Winning the Lottery: Measuring the Effect of Changes in the NBA Draft Structure on Competitive Balance and Attendance
Weidenbaum, Adam S.
- Professional sports are often thought of as a game, but in reality they are also a business. Like most other business, professional sports leagues are trying to maximize their profits. While there are many components that affect a league's profitability, one aspect is the competitive balance of the league. Studies have generally shown that a greater level of parity in a sports league generates gre... read moreater attendance and therefore greater league profits. Even as this is the case, professional leagues have a very difficult time creating a more competitive atmosphere. Some teams will inherently have more economic resources at their disposal, either because of a wealthy owner, a strong location, or simply a long-standing history that has spawned a large fan base. Nonetheless, leagues utilize any means they can of affecting a more balanced environment. But how effective are their efforts? / In this paper, I analyze the effect that rule changes in the draft procedure have had on competitive balance in the National Basketball Association (NBA). To do this, I look at the changes in the NBA draft, including the adoption of the draft lottery and the weighted draft lottery, and look at the impact those changes had on the competitive balance in the league. From there, I will look at the effect that these changes had on overall league attendance for lottery teams as opposed to non lottery teams. I find that some models show that the introduction of the lottery led to a significant decrease in competitive balance and most models show that the change to weighted lottery led to a significant decrease in balance. Attendance does appear to have been affected differently for teams participating in the lottery versus those not in the lottery. /read less