Competitive Balance in the NFL
• Measuring Competition: HHI =  (MSi)2
• MSi = Market Share for a Team
= (Wins for that team / # of League Games)
HHI Over Time
0.048
0.047
0.046
0.045
0.044
HHI INDEX
0.043
0.042
0.041
HHI
0.04
0.039
0.038
0.037
0.036
0.035
0.034
1970
1972
1974 1976
1978
1980
1982
1984
1986
YEAR
1988
1990
1992
1994
1996
1998
2000
Factors Affecting Competition
• HHI = f (FA/SAL, EXPAN, EXPAN(1)
STRIKE, PLAYER TALENT, HHI(-1))
• FA/SAL = Free Agency/ Salary Cap Year
1993
• EXPAN= Expansion Year
• EXPAN (1) = Year after expansion
• STRIKE = Strike Year
• Player Talent Concentration
dHHI & Upper Bound
Figure 2
0.018
0.016
0.014
dHHI
0.012
0.01
Upper Bound of dHHI
Actual dHHI
0.008
0.006
0.004
0.002
0
1965
1970
1975
1980
1985
Year
1990
1995
2000
2005
• PLAYER TALENT = HHIPF + HHIPA
• HHIPF =  (Points Scoredi / Total Points
Scored in the League)2
• HHIPA =  (Points Scored Againsti / Total
Points Scored Against in the League)2
VARIABLE DEFS & STATS
Table I. Variable definitions and descriptive statistics
Variable
dHHIt
EXPANt
EXPANt+1
FA/SAL
STRIKE
HHIPAt
HHIPFt
Definition
Deviation from ideal concentration of wins
Dummy variable (1 = expansion year)
Dummy variable (1 = year after expansion )
Dummy variable (0 = pre free agency)
Dummy variable (1 = strike year)
Concentration of points scored against
Concentration of points scored for the team
Mean
0.005
0.121
0.125
0.303
0.091
0.036773
0.036956
Std. Dev.
0.002
0.331
0.336
0.467
0.292
0.002295
0.002202
Results
TABLE II. OLS estimation results
OLS Dependent Variable
(dHHIt)
Explanatory Variable
Coefficient/T-stat
FA/SAL
EXPANt
EXPANt+1
PLAYER TALENT
dHHIt-1
STRIKE
R2
Durbin’s h statistic
*indicates significance at 5% level
t-statistics are in parentheses
-0.0020
(-3.38)*
0.0006
(0.54)
0.0026
(3.72)*
0.0715
(6.57)*
0.0496
(0.38)
-0.0016
(-3.58)
0.53
-0.15
RESULTS
Table III. OLS estimation with standard deviation
OLS Dependent Variable (STDWIN%)
Variable
FA/SAL
STDWIN% t-1
PLAYER TALENT
STRIKE
EXPAN t
EXPAN t+1
2
R
*indicates significance at 5% level
t-statistics are in parentheses
Outcome
-0.018
(-2.59)
0.718
(6.21)
0.001
(2.65)
-0.014
(-3.14)
-0.027
(-3.41)
0.022
(2.97)
0.71