The Effect of Nba Superstar Players on Game Attendance

THE EFFECT OF NBA SUPERSTAR PLAYERS ON GAME ATTENDANCE A Project Presented to the Faculty of California State Polytechnic University, Pomona In Partial Fulfllment Of the Requirements for the Degree Master of Science In Economics By Xinpeng Wei 2019 SIGNATURE PAGE PROJECT: THE EFFECT OF NBA SUPERSTAR PLAYERS ON GAME ATTENDANCE AUTHOR: Xinpeng Wei DATE SUBMITTED: Spring 2019 Department of Economics Dr. Craig Kerr Thesis Committee Chair Economics Dr. Carsten Lange Economics Dr. Greg W. Hunter Economics ii ACKNOWLEDGMENTS I would thank my professor Dr. Craig Kerr for his inspiring and advisory guidance throughout the process of my paper. What I have accomplished in this paper would not have been possible without his help and comments. iii ABSTRACT With the progress and development of our society, the sports industry has attracted more attention than ever before. When it comes to the National Basketball Association (NBA), the value of superstar athletes has also become more prominent as they are able to generate externalities that increase fans’ passion to attend live games, other revenue sources and potentially creates business opportunities. This paper concentrates on how NBA superstar players impact the level of game attendance at both home and away games. I collect data and investigate the impact on attendance for two particular NBA teams; Los Angeles Lakers and Los Angeles Clippers from the past nine NBA seasons. The reason for picking these two particular teams is because they are the only teams in the league that share the same stadium. They are both based in the city of Los Angeles, which has a relatively higher income population than other cities. This comparison will allow for a better measure in calculating the difference in the types of value that a superstar has to offer because it holds constant any effect that is specifc to that city and stadium. iv Contents Signature Page ii Acknowledgments Page iii Abstract iv 1 Introduction 1 2 Literature Review 3 3 Data and Empirical Model 5 4 Empirical Results 7 5 Conclusion 12 v Bibiliography 14 vi Chapter 1 Introduction The National Basketball Association (NBA) is the men’s professional basketball league in North America, which consists of twenty nine teams in the United States and one team in Canada. It is publicly deemed as the most competitive and favorable professional basketball league around the world. Undoubtedly, “NBA athletes are one of the world’s best paid population by annual salary on average” (Gaines, 2015a). Rosen (1981) defnes superstars as “a small numbers of people who are able to earn enormous amounts of money and dominate their feld of activities in which they engage.” In order to maximize profts, television broadcast ratings and the demand of fans, the NBA’s organizations, broadcast- ing companies, and social media have enhanced the signifcance of the superstar effect more than ever before. Chung and Cox (1994) studied the consumption theory of superstars. According to Chung and Cox (1994) “the consumer’s choice of artistic products would be more demanded and artistic outputs will be concentrated among a few lucky individuals.” Su- perstars have become the object of consumption nowadays as they promote an increase of consumption to their markets and can drive demand in other markets, which is more 1 appealing to sport business. It can be seen that the star may penetrate many aspects of society and provide inspiration to fans of their performance. The superstar effect may also stimulate the local economy through consumption. The stars entertain the public, guide consumption and have the ability to spread a sense of community. In line with Gaines (2015b), LeBron James was not only bringing a championship to the city of Cleveland in his return in 2014, but also other contributions in terms of revenue sources to the city and the franchise. “Bar and restaurants owners near the arena have seen a 30-200% increase in revenue on games nights. In addition, demand for local hotel rooms are increasing too in comparison with the same period before LeBron James returned last year” (Gaines, 2015b). Superstar athletes changed the outlook on the team, especially those starting lineup players of the NBA All-Star Games. Technically, players who have been selected to the NBA All-Star Games starting lineup are considered as superstar athletes, as the voting is done by fans based on their preference. Fans and supporters are likely to decide their votes by taking players’ individual performance and their teams’ records both into consideration. This paper mainly focuses on the two NBA professional basketball franchises; Los Angeles Lakers and Los Angeles Clippers as they are based in one of the most populous cities in the North America. By taking the presence of superstar players into account, I collected their individual game attendance numbers to test if superstar players have a positive effect enhancing match attendance numbers. 2 Chapter 2 Literature Review The defnition of superstars put forward by Rosen in 1981 was followed by Hausman and Leonard (1997), who state that superstar athletes are more infuential and productive positively in terms of raising tickets revenue. Also, the television ratings for NBA games are substantially higher when superstar athletes are involved. The raising of broadcast ratings are dramatic, not only for their own organizations but also for other organizations if they play road games. Not surprisingly, “broadcast contractors end up contributing an estimated 2.6 billion dollars to the NBA per season”(Mcfarlane, 2018). For the relative articles that published recently, Berri, Schmidt and Brook (2004) focus on two-sided relationships; the relationships between match attendance and team performance, and the team’s employment of star athletes in the league. The authors also mention that the team performance, franchise characteristics and players’ popularity are other important factors in determining audience’s preference. Moreover, Jane (2016) investigates the relationship between star effect and match attendance in the NBA based on player’s salary, popularity and performance. He fnds the evidence that superstar athletes are able to generate more attendance externalities 3 through the appearance on both home and road games. In fact, the superstar effect is not only limited to basketball. According to Franck and Nuesch¨ (2012), the controversial theory that a star’s popularity may not be the only factor that is able to directly increase gate revenue and match attendance, while the team performance is considered more important in terms of making people attend games. Franck and Nuesch¨ (2012) fnd evidence from their empirical model that national superstars and local superstars attract audience in different ways, as national superstars are more ver- satile and attractive in both home and road games, where local superstars are popular in home games only. Additionally, superstars attract fans by their sensational performance, whereas local heroes touch audience by popularity and emotion. Likewise, Deutscher and Schneemann (2017) fnd positive attendance effects for newly-signed star athletes, especially if the superstar is on the visitor roster. 4 Chapter 3 Data and Empirical Model Attendanceit = a + Superstar ∗ (a1LastRecordt−1 + a2CurrentRecordt2)+ + a3Homet3 + a4Weekdayst4 + a5Weekendst5 + ui (3.1) Attendanceit = a + a1Superstart1 + a2LastRecordt−1 + a3CurrentRecordt2+ + a4WinStreakt3 + a5Di finPointst4 + a5Homet5 + a6Mondayt6 + a7Wednesdayt7 + a8VisitingStarst8 + ui (3.2) The data used in this paper represents the most comprehensive NBA game attendance numbers and outcomes, and are collected from the database of basketball-reference.com.The data contains each individual regular season game of Los Angeles Lakers and Los Ange- les Clippers from 2009/2010 to 2017/2018 season. The information specifcally indicates the time, day, locations, opponents, points and attendance numbers of each game. Game attendance data are collected from the twentieth game in December of each season for both teams as they have an obvious winning or losing streaks, and current records then. With the exception of 2011-2012 season, attendance data are collected until January of 5 2012 because that season was a NBA lockout season, the regular season games did not start until the Christmas. The data of winning and losing streaks are manually calcu- lated in order to see if teams’ performance and momentum would have any impact on the attendance level. Likewise, difference in points of each game is collected to see audience’s game-attending preference. The data of NBA All-Star Games starting lineup players each year was collected manually from the basketball-reference.com. Players who have been selected to the NBA All-Star Games starting lineup last year are counted as superstars in the current season. Players who are selected to the starting lineup, but are not able to participate due to injuries are still counted. Since the voting is done by fans, it can still show that those injured players are irreplaceable in terms of popularity and infuence. As seen in Equation 3.1, the dependent variable is the level of attendance. Indepen- dent variables are last season’s record, current record and home court advantage as more fans may be likely to show up. Likewise, weekdays and weekends are also independent variables in order to fnd the difference in days, where people are more willing to attend games. When it comes to Equation 3.2, the dependent variable remains as the level of attendance. Independent variables are added with winning streaks, difference in points and visiting teams’ superstars. As star’s performance and popularity may not be the only factors that impact the game attendance level. Teams’ performance and franchises’ characteristics are also supposed to be taken into consideration. It allows a better measure in calculating different types of value. 6 Chapter 4 Empirical Results Estimated coeffcients in the frst row, as seen in Table 4.1, the most important days are applied, which are Mondays and Wednesdays.

Load more