Is Winning Everything?

Today’s post is courtesy of guest blogger Dr. Kirk Wakefield and was originally published in Volume 7, Issue 1 of the Migala Report. The Migala Report was launched in October 2003 to create an educational and idea-sharing resource for sports executives pursuing revenue-generating concepts. For more information or to subscribe, visit www.MigalaReport.com.

Is winning everything? When it comes to fan attendance and setting ticket prices, how much does winning matter? There’s plenty of anecdotal evidence and exceptions people like to throw out to prove the point one way or the other.  That’s what you do when you don’t really know. At least that’s what I do. But, since this is a research column, we thought we’d look at some data. And, who has more data than they know what to do with? Major League Baseball.

The real question isn’t really just about winning. We cannot look at winning and losing in isolation, because context matters.  What about the economy? What if the team has a new stadium? What if the team has a star player approaching a career milestone? What if there are other franchises in the same area?

Within the context of the factors listed below, which do you think has had the most influence on a team’s attendance for the past decade (2000-2009) in Major League Baseball?  Even though they  mirror the previous decade, the results might surprise you.

Influence on Attendance Data Available
Winning Current and previous season’s winning percentage
Star players Payroll of players for each team
Stadium quality Age of stadium
Ticket and concession prices Fan Cost Index (www.teammarketing.com)
The economy Annual per capita income for each MLB city
City population Population of Standard Metropolitan Area (SMA)
Direct competition Number of MLB and other pro franchises in SMA

When we include all of these factors together to predict annual attendance in MLB, we find that the stadium has the strongest effect, followed by star players, and then the winning percentage in the current season. Last season’s performance also has an influence on this year’s attendance. Statistical analysis shows that the order of the size of the effect on predicting attendance is as follows:

  1. Stadium quality
  2. Star players
  3. Current season’s winning percentage
  4. Last season’s winning percentage
  5. Population-related factors (SMA population, number of MLB and other professional franchises)
  6. Ticket and concession prices
  7. The economy (per capita income)

The surprise may be that winning has less influence on attendance than the stadium and players, but also interesting is the fact that population-related factors and ticket/concession prices are positively related to attendance.  Other economic studies have previously suggested that larger populations with more pro franchises hurt, not help, attendance in MLB. Further, because professional sports are more of a prestige good, higher ticket prices are associated with higher attendance. Also interesting is the fact that as much as we hear people blaming the economy, reduced earnings of consumers across MLB cities has a very minor effect. We’ll discuss each of these shortly, but let’s start with the strongest influence on attendance.

The Stadium. When analyzing the effect of the stadium, it’s important to account for the fact that vintage stadiums such as Fenway Park and Wrigley Field attract just as well as new stadiums.  One of the reasons that the stadium is so important to baseball is the length of the season.  With 81 home games, the potential amount of time spent at the game for season ticket holders is far greater than for basketball or hockey (41 home games), soccer, and, certainly, for football.  Other research shows that the facility is still important for those sports, but not as much as for baseball.

The advantage of investing in the sportscape is that it has a known, certain effect on attendance for at least ten years. Investing in players and managers, while obviously important, produce less certain outcomes. Investing in individual star players, however, may be worth it.

Star players. The reason that star players have such a strong effect on attendance is because fans identify with individual players on the team as much as with the team.  Fans build psychological bonds with star players that positively reinforce their own self images.  From management’s perspective, this suggests that signing key players with attractive leadership qualities is a critical part of building attendance.

Winning. For those that thought that winning now is everything, apparently it comes in third. The results show that winning during the current season should attendance. However, winning is unlikely to have a lasting effect without a good stadium and star players. The Florida Marlins proved this twice following World Series wins in 1997 and 2003. Fellow Floridians in Tampa Bay have witnessed similar problems.

The results from the MLB data show that last season’s performance has almost as much influence on attendance as the current year’s performance. Season tickets are sold primarily on the basis of the hope offered by last year’s performance on the field. So, teams that win from year to year are likely to sustain or maintain attendance.

Taken together, putting together a string of winning seasons should increase attendance. The problem is that compared to investing in the stadium and star players, winning is uncontrollable.  Of course, signing star players may help winning, but that’s also hard to predict.  From a marketer’s perspective, you are better off promoting what you can control and deliver—and winning is not one of them. If you’d like to read about some classic collapses by teams that thought they’d be big winners, see David Schoenfield’s article on ESPN.com.

Population and competition. Economists have studied these same factors in multiple studies dating prior to this past decade and have always shown that larger populations in cities like New York, Chicago, Los Angeles, and the Bay area with multiple teams have negative effects on attendance. Theoretically, teams located in these cities face more indirect and direct competition that might lure fan spending from MLB attendance. I don’t know if anyone’s noticed, but almost all of the teams in those cities (Yankees/Mets, Dodgers/ Angels, Cubs/White Sox, and Giants) have strong attendance.  The only exception is Oakland. The stadium and lack of star players and winning explain why.

The reason these previous studies showed different results are likely due to two reasons. First, the introduction of AT&T Park in San Francisco and the repeated renovations to improve Cellular Field in Chicago have boosted attendance. It didn’t hurt that the White Sox won the World Series in 2005. Further, the new Citi Field will continue to help attendance for the Mets. Second, prior economic studies did not account for the fact that population size is correlated with having competing franchises in the same city and having multiple pro franchises across all sports. Statistically speaking, this causes errors in estimating attendance models that can produce misleading results.

In the NBA, the San Antonio Spurs and Oklahoma City Thunder have benefited from being the only game in town. But, these results from MLB indicate that having the in-town rivalries between the Cubs & White Sox, Yankees & Mets, Angels & Dodgers help attendance. Fans in these cities must intentionally choose allegiance to one of the teams, which should increase identification and passion for each team.

Ticket and concession prices. The results show that teams with higher attendance have higher ticket and concession prices. We also conducted additional analysis that shows that you can closely predict next year’s prices with this year’s attendance in MLB.  Increased demand for tickets of teams with good stadiums, star players, and winning teams in strong markets means higher prices. Put differently, teams with poor stadiums, no-name players, and losing teams are the ones that are forced to cut ticket prices.

The economy. For all the hand-wringing about the effects of the economy, we find that lower per capita income levels across MLB cities affect attendance, but much less so than the other factors we’ve discussed. In the end, the fan’s objection is not so much to price, but to the value offered by the team in terms of the stadium experience, the players on the team, and the performance on the field.

Dr. Kirk Wakefield is the Executive Director at Baylor University’s Center for Sports Sponsorship & Sales, and serves as editor of The Migala Report published by the Center.

– Click here for David Shoenfield’s ESPN article on “Baseball’s all-time train-wreck seasons.”
– Click here to go Dr. Wakefield’s TeamSportsMarketing.com website to read more research and sports marketing tips.