Chad D. McEvoy

Television Broadcast Demand in Markets Without Local Teams

This article uses television ratings from the 2006 and 2007 National Football League (NFL) seasons to estimate viewer demand in large markets without local teams. The factors that are found to be statistically significant and positively related determinants of television ratings are: team quality and age; the closest team in proximity to the market; late-season contests; and having teams such as the Cowboys and Patriots as participants. Concurrent game telecasts and contests involving unevenly matched teams are negatively related to viewership.

Where Did National Hockey League Fans Go During the 2004-2005 Lockout? An Analysis of Economic Competition between Leagues

Identifying and evaluating competitors is a critical aspect of operating a sport organisation. However, North American sports franchises have a limited understanding of competitors in their geographic market – particularly when calculating the degree of competition from other sport teams. Increasing the understanding of local sport competitors, whether in the same or different professional leagues, is critical not only to future franchise operations, but also for potential litigation concerning relevant product markets. This article utilises a natural experiment involving the National Hockey League’s (NHL) 2004-2005 lockout to assess the competitiveness of the NHL with the National Basketball Association (NBA) and four minor hockey leagues. On average, the five potential competitor leagues attained a 2% increase in demand, all else equal, during the lockout period. For the NBA this translates into more than US

The Effects of Roster Turnover on Demand in the National Basketball Association

1 million per team in increased incremental ticket revenue.

An investigation of the relationship between television broadcasting and game attendance

The purpose of this study was to examine the effects of roster turnover on demand in the National Basketball Association (NBA) over a five-year period (2000-2005) and compare these results to previous research on turnover in Major League Baseball (MLB). A censored regression equation was developed to examine the relationship between roster turnover and season attendance, while controlling for other potentially confounding variables in the model. The censored regression model was used to account for the capacity constraints by forecasting the level of demand beyond capacity using information from the uncensored observations. The regression model was found to be significant with a log-likelihood statistic of 110.446. Previous attendance, current winning percentage, previous winning percentage, number of all-star players, and team history were found to be significant predictors of attendance. However, the variables measuring the effects of roster turnover were not found to be significant. There were substantial differences in the effect of roster turnover on attendance in the NBA compared with MLB. In addition, these findings provide evidence for using censored regression when dealing with constrained variables. Sellouts in the NBA appear to have an effect on all of the variables in the demand model. Future research will need to be conducted to help sport managers understand the role of roster turnover in specific professional leagues and to better understand the importance of using a censored regression model.

Treatment of travel expenses by golf course patrons: Sunk or bundled costs and the First and Third Laws of Demand

This study investigated the relationship between whether a major conference NCAA Division I mens college basketball game was televised and game attendance during the 2003–2004 and 2004–2005 seasons. Multiple regression analysis was used to examine this relationship while controlling for 19 other potentially confounding variables. A significant regression model was created (F = 111.586, p < 0.001), explaining 77.6% of the variance in game attendance. The model estimated that mens basketball game attendance increased by 564 spectators when a game was broadcast on television, ceteris paribus, representing a 6.3% increase over the mean game attendance of 8892. These findings support practitioners broadcasting home mens basketball games on television, as television broadcasting was found to be significantly related to a substantial increase in game attendance in the population studied.

Free Ride, Take It Easy: An Empirical Analysis of Adverse Incentives Caused by Revenue Sharing

To attract golf patrons, sport managers must understand consumption patterns of the golfer. Importantly, the treatment of travel costs must be understood. According to the Alchian-Allen (1964) theorem, golfers treat travel costs as bundled costs (third law of economic demand) whereas classical consumer theory indicates that golfers treat travel costs as sunk costs (first law of economic demand). The purpose of this study was to determine if golf patrons treated travel costs as sunk costs or if they treated travel costs as a bundled cost. Data from a survey of course patrons in Ohio support the treatment of travel costs as bundled costs by golf course patrons, especially those classified as tourists. The strong, positive correlation found between distance traveled and the cost of greens fees enables managers to utilize geographic segmentation in choosing to whom to market their course based upon their product’s price compared to area competitors.

Financial Risk Management: The Role of a New Stadium in Minimizing the Variation in Franchise Revenues

A fundamental belief in professional sport leagues is that competitive balance is needed to maximize demand and revenues; therefore, leagues have created policies attempting to attain proper competitive balance. Further, research posits that objectives of professional sport teams’ owners include some combination of winning and profit maximization. Although the pursuit of wins is a zero sum game, revenue generation and potential profit making is not. This article focuses upon the National Football League’s potential unintended consequences of creating the incentive for some teams to free ride on the rest of the league’s talent and brand. It examines whether an owner’s objectives to generate increased revenues and profits are potentially enhanced by operating as a continual low-cost provider while making money from the shared revenues and brand value of the league. The present evidence indicates that, overall, being a low-cost provider is more profitable than increasing player salaries in an attempt to win additional games.

Factors Impacting Ticket Price Paid by Consumers on the Secondary Market for a Major Sporting Event

One of the absolutes in professional sports, and a reason for its success, is the uncertainty of the outcome of individual games, seasons, and championships. This uncertainty impacts a team’s attendance and financial operation. While leagues cultivate uncertainty through various rules such as salary caps, revenue sharing, and the amateur draft, individual franchises have to manage the result of variability in annual revenues. Not only is this due to the parity in a league but also from injuries and changes in player quality that are unexpected. Whether uncertainty or winning or the perfect combination of the two, some aspects that affect revenues can be controlled by team management more so than others. Even though on-the-field success is not easily controlled by team management, the overall quality of the experience can be impacted from, among other things, a quality stadium with comfortable seating and delectable food. This research shows that the variability in annual team revenues decreases (relative to total revenues) once a team moves into a new stadium, all else equal. The increase in predictability lowers financial risk, impacting the cost of financing and other practical operational issues like game-day staffing.

Tomorrow’s Fans Gone Today: Assessing Constraints to Student Attendance at College Football Games

In an era of dynamically priced tickets, sport marketers benefit from a greater understanding of factors impacting the price consumers are willing to pay. Past research has investigated external factors affecting ticket price on the secondary market, but little work has investigated internal factors and no prior research has utilized actual price paid as a dependent variable. The current study found age, income, prior attendance, timing of purchase, and seat location influenced secondary ticket price paid, explaining 44.9% of the variance, while fan identification and alumni status did not impact the amount patrons paid for tickets to a major college men’s basketball tournament. Subscribe to JASM

Variable Ticket Pricing in Major League Baseball

The purpose of this study was to assess constraints to student attendance at college football games. Surveys were distributed on and around six college campuses (2 “Power 5”, 2 “Group of 5”, 2 FCS) during a college football game. Using intercept sampling, students not in attendance at the game were asked to rate the extent to which 33 constraints affected their decision not to attend. Results revealed differences in constraints based on conference tier affiliation, frequency of game attendance, and timing of decision not to attend. Implications for practitioners are discussed. Subscribe to JASM