A COMPENSATING DIFFERENTIAL APPROACH TO VALUING THE SOCIAL BENEFIT OF MINOR LEAGUE BASEBALL

This research utilizes a compensating differential framework to measure the social benefits of minor league baseball teams. Consistent with findings at the major league level, individual housing observations from 138 metropolitan areas between 1993 and 2005 show that affiliated teams are associated with a significant 6 to 8% increase in rents in mid‐sized markets ranging from 0.4 to 1.4 million people. On the other hand, independent teams and stadiums are associated with insignificant effects on rents. The positive effect of affiliated minor league teams suggests they are a valuable urban amenity that can contribute to local quality of life. (JEL H23, H41, H71, R50, L83)     

The effects of labour strikes on consumer demand in professional sports: revisited

Previous research has concluded that the 1981 and 1994–1995 Major League Baseball (MLB) strikes have caused short-term losses in attendance but have not resulted in any long-term effects on attendance. While total attendance at MLB games following the 1994–1995 strike has recovered to its pre-strike levels, this has been done only through the construction of new stadiums at an unprecedented pace which cannot continue into the future. After accounting for stadium effects, average MLB baseball attendance has dropped significantly since the 1994–1995 strike.     

The Impacts of Promotions/Marketing, Scheduling, and Economic Factors on Total Gross Revenues for Minor League Baseball Teams

The purpose of this empirical study is to identify the key marketing and scheduling determinants of game attendance at minor league baseball games. Identification of such marketing and scheduling factors can provide the management of minor league teams in similar environments with information to more efficiently pursue the goal of game attendance maximization. To ensure greater comparability of data between teams and hence relevance of results, this study focuses upon a single grouping of teams, the Carolina League, and a single minor league baseball season, 2006. The Carolina League consists of eight teams serving eight metropolitan areas: Lynchburg City, VA; Winston-Salem, NC; Wilmington, DE; Salem City, VA; Myrtle Beach, SC; Prince William County, VA; Lenoir City, NC; and Frederick County, MD.     

Value of public goods from sports stadiums: the CVM approach

Many state and local governments have subsidized the construction of arenas and stadium for the use of professional sports teams. They often justify the subsidies by claiming the projects generate valuable public goods and positive externalities, though such benefits are difficult to measure. This article reports an application of the contingent valuation method (CVM) to measure the value of public goods generated by two proposed projects in Lexington, Kentucky: a new basketball arena for the University of Kentucky and a minor league baseball stadium. Neither project would generate sufficiently valuable public goods to justify public financing. Although the results cannot be generalized to other cases, they do shed light on some of the main issues involved, and they demonstrate the feasibility of applying CVM to the evaluation of the subsidized stadiums.     

NOVELTY EFFECTS OF NEW FACILITIES ON ATTENDANCE AT PROFESSIONAL SPORTING EVENTS

We investigate the effect of new facilities on attendance in professional baseball, basketball, and football from 1969 to 2001. We find a strong, persistent effect in baseball and basketball, and little effect in football. Size and duration estimates imply that baseball teams sell 2,500,794 additional tickets over the first eight seasons, basketball teams 293,878 over the first nine seasons, and football teams 137,792 over the first five seasons, implying an increase in revenues that could defray public subsidies that state and local governments provide for new sports construction projects. Rough calculations suggest that stadium subsidies are an inefficient method of subsidizing professional sports franchises. (JEL R39 , D12 , L83 )     

RATIONAL EXPECTATIONS AND PRO SPORTS LEAGUES

We put a new set of shoes on that old workhorse, the competitive talent market (CTM) model in sports economics. There exist unique rational expectations equilibria for both national football league (NFL‐type leagues) and major league baseball (MLB‐type leagues) under the CTM model. A cursory statistical test fails to reject the empirical implications for the NFL‐type league. The model also suggests empirical tests of whether or not talent demand (marginal revenues from talent), including induced effects, actually slopes down. But like all models, the competitive talent model should be applied in its context. It describes highly cooperative North American sports leagues that have a wealth of common information. But it may not do the same for other leagues if they lack this common information.     

Major league baseball’s Moneyball at age 15: a re-appraisal

In the 15 years since publication of the book Moneyball: The Art of Winning an Unfair Game in 2003, major-league baseball (MLB) has seen the embrace of analytics by both fans and teams. Using 45 seasons of MLB data, since the introduction of the designated-hitter in the American League in 1973, the present study validates the central premise in Moneyball regarding the importance of certain performance metrics, such as on-base percentage (OBP). The terms in our empirical model are constructed such that our results permit a straightforward comparison of the relative contribution of each factor towards MLB teams’ success in winning games. We also provide evidence indicating that MLB teams have moved to align their payrolls with Moneyball analytics in the years following the book’s publication.     

Location and attendance in major league baseball

This study uses a travel-cost model to analyse the attendance impacts on Major League Baseball (MLB) of the closest substitute MLB team. It is found that the closer two teams are, the lower attendance is at each team relative to two teams that are farther apart. In addition, when a new team moves into the area of an existing team, there is an additional initial reduction in attendance for the incumbent team. This has implications for actions aimed at changing the number of teams in MLB either by contraction or by possible antitrust approaches that would increase the number of teams, especially in megalopolis markets. Further, and consistent with past demand studies, pricing is in the inelastic portion of gate demand and fan loyalty is a significant contributor to the estimation of gate attendance.     

A case for complements? Location and attendance in Major League Soccer

As Major League Soccer (MLS) continues to award expansion franchises throughout North America, the league must be considerate of how new clubs may impact attendance levels at nearby clubs. Regardless of whether new MLS clubs are awarded to cities with strong North American Soccer League histories, league officials must be mindful of the effect that geographically close competitors can have on attendance. Perhaps stemming from the limited number of clubs in competition, MLS teams currently appear to operate as strategic complements to one another, increasing season-long attendance as teams locate closer to one another.     

Scouts versus Stats: the impact of Moneyball on the Major League Baseball draft

Michael Lewis’ influential book Moneyball (2003) discusses several sources of inefficiency in the Major League Baseball (MLB) labour market; one of these being the failure of baseball scouts to place a draft premium on college players. We test this implication of the Moneyball thesis – the superiority of college players – by measuring the productivity of players who were drafted in the first round of five MLB drafts covering the years 1995–1999. Employing a variety of specifications, we find that the performance of college draft choices is no better than those of high school picks and argue that this is consistent with Hayek's (1944) work on the economics of information and his emphasis on the importance of localized knowledge. Additionally, we utilize data on the first three rounds of the MLB draft from 1965 to 2010 to test whether Lewis’ book had any impact on teams’ draft strategies. We find no significant structural change in the draft following the publication of Moneyball.     

Competition format,championship uncertainty and stadium attendance in European football – a small league perspective

To increase the number of regular season games, small football leagues are often organized as quadruple round robin tournaments with teams playing each other four times. Theoretically, however, the more games played, the less uncertain is the championship race, reducing fan interest in the league. This article uses data from Austria and Switzerland to study the relationship between competition format, championship uncertainty and attendance demand empirically. Results suggest that a team still in contention to win the championship positively affects attendance, while it is not the specificity of the competition format that per se contributes to less championship uncertainty.     

Prospective measures of competitive balance: application to money lines in major league baseball

This study examines competitive balance in Major League Baseball (MLB) by looking at the money lines for the games during the regular season. The assertion is that the closer the money lines are to indicating that each team has an equal chance of winning each game, the more competitive balance there is in the league. This study extends the model developed by Bowman et al. (2012), which used point spreads to assess competitive balance in the National Football League (NFL) and the National Basketball Association (NBA). In this study, money lines for the 1999–2011 seasons were used to develop several measures of competitive balance. The results indicate that competitive balance increased rather substantially during this period. A by-product of this research is to identify the most highly rated team and pitcher. In 2002, New York Yankees were the highest rated team and from the year 2000 Pedro Martinez was the highest rated pitcher.     

Evidence on the rationality of expectations in the British manufacturing sector

Empirical support is shown for the propositionthat sports fans prefer the composition of their home team to remain the same from season to season. Controlling for price, income, population, team quality, league, year, the stadium effects, the regression results indicate that for each percentage point increase in the turnover of the composition of the team, attendance will fall by about 0.7%. The implications of this heretofore ignored tendency are briefly discussed.     

Reputation and the league standing effect: the case of a split season in minor league baseball

Split season league design resets standings at the midpoint of the season, thus allowing for two periods in which a team can potentially achieve success in a single season. This context allows us to test both the reputation of the first half winner and the league standing effect on demand. Examination of game-level data from the 2010 Southern League reveals fans are unaffected by measures of both team quality and league standing in the second half of the season. On the other hand, the first half winners saw an 11% increase in attendance as a percent of stadium capacity, suggesting that in the second half of the season winners matter more than winning.     

Our fans in the north: the demand for British Rugby League

This paper reports the results of estimating a single equation model of an attendance function for British Rugby League over the seasons 1982/83 to 1990/91. The data are panel data covering virtually every team which played in the two division league over the nine year time period. Diagnostic tests indicate that the appropriate model is a semilog random effects model, where the dependent variable is league attendance weighted by population. The major results are as follows: there are significant positive relationships between league attendance and various measures of team success (although the direction of causality is moot), team quality (as proxied by the two divisions) and the economic quality of team location (as proxied by the unemployment rate); but there is no discernible relationship between league attendance and either success in nonleague trophy competitions or measures of exceptional player quality.     

DOUBLING U.S. EXPORTS UNDER THE PRESIDENT'S NATIONAL EXPORT INITIATIVE: IMPLICATIONS OF SUCCESSFUL IMPLEMENTATION

President Obama's National Export Initiative (NEI) is targeted at doubling U.S. exports between 2010 and 2015. We apply USAGE to quantify what the NEI would need to do to foreign import‐demand curves and domestic export‐supply curves to achieve this target. USAGE is a dynamic economy‐wide model of the U.S. incorporating recession‐relevant factor market specifications including excess capacity and wage/labor‐demand elasticities that vary with the level of employment. In our central simulation, export‐promotion policies compatible with the President's target reduce the cost of the current recession from about 70 million 1‐year jobs for the period 2008–2020 to 45 million jobs. (JEL E17, C68, E62, E65, F16)     

Star quality and competitive balance? Television audience demand for English Premier League football reconsidered

The aim of this article is to investigate the determinants of television audience for English Premier League (EPL) football matches during the 2013–2014 season (n = 154). The model is adapted from Buraimo and Simmons (2015) who concluded that star quality was an important determinant of television audiences for the EPL over the 2000–2008 period, whereas uncertainty of outcome and championship, Europe and relegation contention were not. Their measures for contention are replaced by indicators based on Scelles et al.’s (2013b, 2016) competitive intensity. Results show a significant positive impact of star quality but also championship and Champions League intensity and no significant impact of Europa League, potential Europa League and relegation intensity. Based on these results, the article suggests that the EPL should encourage both star quality and competitive balance so that all teams can be competitive in terms of the title or qualification for the UEFA Champions League. Given the differences in revenue generation between English teams, the best way to achieve both star quality and competitive balance would be through the introduction of a European Super League. However, this conclusion based on television audience contradicts that of Scelles et al. (2016) based on stadium attendance.     

Market consumption and hidden consumption. A test for substitutability

Previous studies point to a generally efficient baseball betting market with no profitable betting strategies. However, failure to consider the time of year in which the bets are placed neglects differences in available information throughout the season. This analysis largely confirms the general efficiency of the major league baseball betting market by existing measures; however, incorporating the time of the year in which the bet is made generates persistent profitable betting strategies. The process by which information impacts returns is considered; increasing difficulties in determining the true favourite likely play the largest role, while assessing the exact favourite underdog relationship also has an impact.     

Put me in,Coach, I’m ready to play

This paper explores the connection between discrimination and entrepreneurship. To pursue this inquiry we focus on the integration of black players in Major League Baseball (MLB). MLB team owners, acting as entrepreneurs, had to weigh the benefits of integrating versus the costs of alienating consumers who had a taste for discrimination against hiring blacks. We find that the owners whose teams could profit by contending for the league pennant with the addition of black players were the ones who were willing to take the risk of integrating, although integration often stood in contrast to revealed consumer preferences. In addition to illuminating the mechanism through which integration took place, we offer a general understanding of how the costs and benefits associated with consumers’ taste for discrimination can change via entrepreneurial activities.

SALARY CAP REGULATION IN PROFESSIONAL TEAM SPORTS

This paper analyzes the effects of a percentage‐of‐revenue salary cap in a team sports league with win‐maximizing clubs and flexible talent supply. It shows that a percentage‐of‐revenue cap produces a more balanced league and decreases aggregate salary payments. Taking into account the idiosyncrasies of European football, our paper further highlights the potential conflicts between the league and society. From the perspective of a league governing body, a percentage‐of‐revenue cap always enhances financial stability of win‐maximizing clubs. A social planner, however, will not permit the introduction of such a cap if fans and players unduly suffer. This paper shows under which conditions the social planner accepts (rejects) a salary cap proposed by the league regulator. (JEL D02, D60, L83)