Are NBA Policies that Promote Long-Term Competitive Balance Effective? What is the Price?

Abstract

This paper examines competitive balance in the most prominent basketball league in the world: the NBA. Two types of graphs are used. First, long-term competitive balance is studied based on actual positions achieved by the teams on the Regu-lar Season. On the other hand, the competitive balance levels for each season are analyzed using sport betting odds data and through the use of two alternative strategies. In the first approach, density functions for the number of victories for all teams within a season are known, whereas in the second approach, a kernel density function of team winning probability is deter-mined for each season. Thus, a prospective competitive balance analysis is conducted. The study period covers seasons 1993-94 and 2011-12. The results suggest that long-term competitive balance levels are high, as many teams change their classifications. At season level, competitive balance seems to improve along the period studied. However, there are still too many differences between the teams in the same season.