David J. Berri

Competitive balance and attendance: the case of major league baseball.

Both the popular press and industry insiders have claimed that the growing gap between the “rich” and “poor” teams in major league baseball has led to a greater disparity on the field of play and that the eventual outcome of this gap will be lower attendance. The purpose of this inquiry is twofold. First, an investigation into the level of competitive balance reveals that relative to major league baseball’s historical record and contrary to the contentions of the media, the 1990s was the most competitive decade on the field of play. Second, the previously unexplored link between aggregate attendance and league competitive balance is examined. This investigation suggests that a relationship between these factors does indeed exist, whether one explores the relationship strictly across time or with the use of a panel data set.

Stars at the Gate The Impact of Star Power on NBA Gate Revenues

Investigations into the level of competitive balance within the four major North American professional team sports leagues suggest that the National Basketball Association (NBA) exhibits the lowest level of competitive balance. Given the role competitive balance plays in maintaining consumer demand, the authors examine the role the star attractions of the NBA play in promoting fan interest. The evidence presented suggests the choice of functional form alters the significance of the relationships uncovered. Specifically, the significance of star power is only uncovered in a multiplicative model rather than in the commonly employed linear form. Additional empirical results are reported in the text.

Who is ‘most valuable’? Measuring the player's production of wins in the National Basketball Association

How does one measure the productivity of an individual participating in a team sport? The purpose of this inquiry is to answer this question via an econometric model that links the players statistics in the National Basketball Association (NBA) to team wins. This model will then be employed in the measurement of each players marginal product. Such a measurement is useful in answering the question offered in the title, or a broader list of questions posed by both industry insiders and other interested observers. Copyright

On the road with the National Basketball Association's superstar externality.

Hausman and Leonard offered evidence that Michael Jordan generated US

The impact of the 1981 and 1994-1995 strikes on Major League Baseball attendance: a time-series analysis

53 million in broadcast revenue for teams other than his employer, the Chicago Bulls. In essence, these authors argued for the existence of a superstar externality. The purpose of this article is to extend the work of Hausman and Leonard via an examination of road attendance in this sport. The evidence we report suggests that a superstar externality also exists on the road in the National Basketball Association. Policy suggestions to remedy this issue are offered in the text.

Wage inequality and firm performance: Professional basketball's natural experiment

Protracted labour disputes in professional team sports have become increasingly common in the past 30 years. Although each of the four major professional team sports in the USA have experienced episodes of labour strife, Major League Baseball has the longest and most frequent experience with labour-management conflict. Fans and the media claim with each incident permanent harm is done to baseballs standing as the national pastime. The purpose of this paper is to ascertain whether such claims can be supported by the empirical evidence. Utilizing time-series analysis, aggregate attendance at professional baseball games is examined. The evidence presented suggests that although the most protracted periods of labour discord had short-term impacts on attendance, there is no empirical evidence that these exogenous shocks had any long-term effects.

The Short Supply of Tall People: Competitive Imbalance and the National Basketball Association

The purpose of this inquiry is to utilize a natural experiment from professional basketball to examine how wage inequality impacts the productivity of the firm. The literature suggests that wage inequality may promote firm productivity if higher wages are necessary to limit the damage potential of certain workers. In contrast, other writers have trumpeted the productivity gains from worker cooperation and thus, argued that wage disparity lowers firm output. During the 1990s, the National Basketball Association experienced dramatic increases in the level of wage inequality. The empirical evidence reported here supports a third possibility. Specifically, wage inequality and firm productivity are not related.

Can We Find It at the Concessions? Understanding Price Elasticity in Professional Sports

In recent yearsa wealthof literaturehasbeen offeredexamining theeconomics ofprofes-sionalteamsports.Muchofthisworkfollowsintheneoclassicaltradition,employingthestandard assumptions and focusing primarily on the impact of individual decision mak-ing. The purposeofthiswork istoshowthattheblindersimposedby thenarrow focus ofthe neoclassical tradition on the issue of competitive imbalance may alter the conclu-sions that a broader view suggests.Economists from the time of Adam Smith have trumpeted the virtues of competi-tion. From the perspective of individual firms, though, profits are typically increasedwhen competition is eliminated. However, in professional sports, the elimination ofcompetition effectively removes the primary source of revenue. In the words of WalterNeale, “Pure monopoly is a disaster. [Former heavy-weight champion] Joe Louis wouldhave had no one to fight and therefore no income” (1964, 2).The analysis of Neale extends beyond the obvious case of the boxing champion toany professional sport. As noted by Mohamed El-Hodiri and James Quirk (1971, 1306),

A Re-Examination of Production Functions and Efficiency Estimates for the National Basketball Association

The sports economics literature regularly finds that sports teams price admissions in the inelastic range of demand. Given that marginal revenue is negative in this range, yet marginal cost is always nonnegative, this result suggests an inconsistency in the profit motive of owners. In this article, we attempt to explain inelastic ticket pricing by considering the complementarity between tickets sold and concessions. Depending on marginal revenue and cost parameters, we show that it is entirely possible to find profit-maximizing owners pricing tickets in the inelastic region of demand to sell more concessions.

Competitive Balance and Market Size in Major League Baseball: A Response to Baseball's Blue Ribbon Panel

This paper seeks to re-examine the issue of estimating team efficiency for sports teams via an application of data from the National Basketball Association. This paper argues that the inputs the coaches allocate are the players the team employs. Therefore, this paper employs a measure of playing talent in modeling team production. Unlike previous studies, which only employed one measure of playing talent, we employ measures of guards, small forwards and big men in a study of basketball. This paper also argues that the time-varying stochastic frontier models with the identical temporal pattern assumption such as Lee and Schmidt and Battese and Coelli cannot be used in the analysis of team efficiency in sports. The evidence we present shows by hypothesis test that this argument holds.