  Competitive balance in a football league is extremely important from the
perspective of economic growth of the industry. Many researchers have earlier
proposed different measures of competitive balance, which are primarily adapted
from the standard economic theory. However, these measures fail to capture the
finer nuances of the game. In this work, we discuss a new framework which is
more suitable for a football league. First, we present a mathematical proof of
an ideal situation where a football league becomes perfectly balanced. Next, a
goal based index for competitive balance is developed. We present relevant
theoretical results and show how the proposed index can be used to formally
test for the presence of imbalance. The methods are implemented on the data
from top five European leagues, and it shows that the new approach can better
explain the changes in the seasonal competitive balance of the leagues.
Further, using appropriate panel data models, we show that the proposed index
is more suitable to analyze the variability in total revenues of the football
leagues.
