Efficient Use of Talents and Competitive Balance in the Top European Football Leagues

In this paper we analyse the efficiency of investments in talents in the top 5 European football leagues and the Scottish league, and its impact on competitive balance in the leagues. Potential inefficiencies in the use of talents are evaluated by using the input-oriented DEA with variable returns to scale. The value of players is the input variable, and the number of goals scored, inverse of the number of goals received and the number of points are used as output variables. With this approach, we can identify the most efficient teams and calculate input slacks for other teams. For each season and each league, the input slacks of all teams are divided by the total value of players in a league. Competitive balance is measured by the adjusted normalized HHI that is an unbiased estimator of a true level of competitive balance. In Serie A, La Liga, Bundesliga and the Premier League, there is an inverse relationship between efficiency and competitive balance, which means that when teams use talents more efficiently, competitive balance decreases. On the other hand, in France and Scotland there is no significant relationship between input efficiency and competitive balance. What is common for French and Scottish leagues is that they have one dominant team in terms of value of players and sports results (PSG, Celtic) that is efficient in each season, and in one team dominated leagues, the inefficiency in the use of talents has no significant impact on CB.