First off, I need to congratulate the New York Yankees on their 27th World Series championship (I will admit, I am a Yankees fan, but I always try to keep my views here neutral and unbiased). Anyway, with their victory, I was thinking about what type of economic impact there will be from their 27th title. Then low-and-behold, I see this video on my daily Wall Street Journal email:
Now in all seriousness, this “statistic” about a 5% growth in GDP during the year after a Yankees victory is just a correlation. And as any statistician will tell you, a correlation does not tell you anything about causation (another famous example of this is the statistical correlation between the results of the final Washington Redskins game of the year and the U.S. presidential election). Thus, even if this growth has been seen in the past after Yankees’ championships, there’s no evidence to say the victory itself has a direct impact on economic improvement.
This isn’t to say there will not be some impact from the victory – it just won’t be on the scale of the national GDP. Here are some results that you can expect to see:
- Merchandise Sales: The Yankees are still the most prominent and popular brand in baseball, and New York is the largest market in the country. Combine this with nearly a decade between titles, and you can probably expect the largest World Series merchandise sales numbers since the first Boston Red Sox title in 2004.
- 2010 Ticket Sales and Prices: The Yankees had to overcome some bad publicity and poor initial sales with their original premium seat ticket prices, leading to an early-season price cut. Even with this victory, I’d be surprised to see anything beyond a basic 3-5% annual increase to the adjusted prices, and in turn, I think the team will see a nice uptick in these premium locations next year (especially if the economy does improve by 5%!)
- Postseason Secondary Market: The secondary market started off a little slow this postseason, with several weather-related issues keeping prices on the low side. However, having the World Series in New York and Philadelphia ended up being a big boon to StubHub and other ticket resellers, with tickets being sold for 5x to 20x the face value. In fact, since less tickets were available for resale in Philadelphia than New York, prices for games 3-5 were driven even higher than games 1-2.
- Team Spending: After a few years of “relative” struggle, the Yankees have proven that a large payroll can lead to the title. Will other teams try to up the ante next year to compete with the Yankees? Baseball experts have written that this year’s free agent list is one of the weakest in a while. In addition, the Yankees themselves have a few key players that could test the market. If the economy really is on the upswing, maybe team payroll could increase again next year.
Again, congratulations to the Yankees. I already can’t wait for the 2010 season to get here!
Update: I also just saw this article on Bloomberg.com that reports the Yankees postseason run generated almost $60 million of economic impact for the city of New York, primarily based on increased spending at local business by out-of-town residents.