From a past entry from Dave Berri's Wages of Wins Journal:
The statement about competitive balance reflects an argument offered in The Wages of Wins. Specifically, we argue – following the lead of the late evolutionary biologist Stephen Jay Gould – that competition in sports is driven by the size of the underlying population of talent. As the talent pool expands, sports leagues become more competitive.
Economists sometimes use the Noll-Scully measure of competitive balance, the actual standard deviation of win percent divided by the "idealized" standard deviation of win percent. This measure tells us how spread out wins and losses are within a league. The closer this measure gets to one, the more balanced the competition in the league.
Because it is adjusted for the length of the season in terms of games, we can make comparisons between leagues. Comparing this measure between the NBA, the NFL, MLB, and the NHL, the NFL has the most balance, followed closely by MLB and theNHL. Why the competitive imbalance in the NBA? Dave Berri again:
At the other end of the extreme lies the NBA and the ABA. Each of these leagues is less competitive than any other league considered. At first this seems odd, since basketball is possibly the second most popular sport in the world. The problem with basketball, though, is not the population of people who are interested in playing. To play basketball you can’t just be interested. To play basketball at the highest level you generally have to be tall.
And there just are not that many people that tall and that athletic, relatively speaking.
But as has happened in other sports, the talent pool is growing. The hot region now is Latin America:
"You just didn't see many kids from Latin America then," Chaney said. "There were a few around — I think (N.C. State's Jim) Valvano had one — but there just weren't many Latino kids around. Now, you see them popping up all over."
I remember watching the Oklahoma Sooners basketball team back in the late 1990's when they had Eduardo Najera and Victor Avila, both Mexican natives, on their roster. Najera was the second Mexican drafted into the NBA and has had a good career in the NBA.
The article notes the US Olympic Dream Team as the start of the interest in basketball in Latin America. It will be interesting to see, as these some of these players filter into the NBA, if competition becomes more balanced as we've seen in other sports.
Addendum: here's a little more Noll-Scully goodness, applied to the NHL, from Stacey Brook, one of Dave Berri's co-authors (along with Martin Schmidt) on the Wages of Wins.
Update: missing Stacey Brook link is now there. Thanks tp reader Phil!