Large vs. Small Markets: Fixing the Power Imbalance

It’s no secret that big-market teams in professional sports leagues tend to have an advantage over small-market teams, largely due to their ability to generate more revenue and attract top players. This makes it difficult for small market teams to compete and succeed, as franchises in Utah or Wisconsin are forced to put their hopes in the draft year after year, while teams based in New York or Los Angeles can afford to throw money at eager superstars when things don’t work out. While it’s unlikely that this inequality will ever fully be fixed, there is a lot that has been done and can still be done to minimize market size as a major factor in team success.

Outside of policy and rule changes enforced by league commissioners, small market teams can take internal approaches to focus on team building in an attempt to fix market equity on their own. One tactic is to focus on building a strong team culture and emphasize the development of young players. By creating good team chemistry, small market teams can build a winning culture where each player fits in well and plays off of each other. In the past, such teams have proven successful over big market superteams where each player has their own agenda. Furthermore, strong team chemistry and player development allows small market teams to create a competitive environment that can attract top talent. For example, the San Antonio Spurs are a small market team that won five championships over a 15-year-span by emphasizing team cohesion and developing relatively unknown prospects like Tony Parker and Manu Ginobili, as well as hitting on top draft picks with the likes of Tim Duncan. In the same league, the Oklahoma City Thunder have also been successful in the past, drafting and developing players like Kevin Durant, Russell Westbrook, and James Harden, who all helped to create a winning culture that the team still takes pride in. Despite the inequality of the system, teams have taken advantage of the draft to bring in talent and compete without superstar signings. By investing in scouting and analytics, teams less open to spending can identify undervalued players and sign them to team-friendly contracts, helping them to compete without breaking the bank.

In addition to internal team-specific approaches, leagues themselves can take steps to balance the power dynamics. One approach is revenue sharing, where the league collects money from teams and distributes it fairly. This makes monetary distribution more equitable across the league. Leagues can also implement a salary cap, which limits the total amount of money that teams can spend on player salaries. This ensures that bigger market teams cannot simply buy up all the best players, giving smaller market teams a chance to build a competitive team. Currently, associations like the MLB and NBA have soft salary caps, which allow them to spend over the limit as long as a tax is paid, allowing wealthy teams like the Yankees and Warriors to spend freely. However, many other associations have already taken the initiative to implement hard salary caps. Furthermore, leagues can consider implementing a draft system that favors small market teams. For example, they can adopt a weighted lottery system that gives teams with the worst records the best chance of getting a top draft pick, which is already the case for the NBA and NHL. Sports leagues can also consider expanding revenue streams for smaller market teams, such as exploring new media partnerships, international expansion, or new merchandise sales.

While big market teams may have some advantages over small market teams, there are strategies that can be employed to help the less commercial teams compete and succeed. By implementing strategies, such as revenue sharing, salary caps, draft reform, and creating more revenue streams league commissioners can  help ensure that all teams have a fair chance to compete and succeed . Professional leagues need to continue to be proactive in addressing this issue to maintain a competitive and equitable environment for all teams.