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Demand for Ice Hockey, the Factors Explaining Attendance of Ice Hockey Games in Finland

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Demand for Ice Hockey, the Factors Explaining Attendance of Ice Hockey Games in Finland Demand for ice hockey, the factors explaining attendance of ice hockey games in Finland The study focuses on season 2007 – 2008 ice hockey league games in Finland. The aim is to explain factors affecting attendance. During the season there were 392 games played excluding playoff games. The total attendance number was 1964626. Both population of the home team and the visitor have a statistically significant effect on attendance as well as distance between home town and visitor’s town. Local games have a bigger attendance than other games. The demand is not elastic with respect to the ticket price. Success of both the home team and the visitor has an effect: home team’s success with a positive and visitor’s with a negative coefficient. The number of plays already played has a negative effect. Weekday effect is important: the attendance is bigger during Saturdays. Also the day temperature has an effect: the colder, the bigger attendance. That effect is small but still statistically significant. The unemployment rate has no effect, and the success factor of the last three games does not seem to explain as well as the success factor of all games played. Keywords: Ice hockey, Attendance, Finland, Temperature Demand for ice hockey, the factors explaining attendance of ice hockey games in Finland 1. Introduction This paper uses regular season 2007 – 2008 Finnish ice hockey attendance figures to examine the explaining determinants. Simple economic theory suggests that the demand for attendance should depend on the ticket price of the game and travel costs, the incomes of spectators, the prices of substitute goods and market size (Simmons 2006). Usually market size is measured by local population. There is a wide literature on attendance of sports events but not any with Finnish ice hockey data. A recent sport attendance survey1 – both active consumption (participation in sport competitions or being a member in sport or gymnastic club) and passive consumption (attendance) reveals that the most popular sports by attendance were ice hockey (25.5%), football (16.9%), athletics (10.6%), skiing (6.5%) and Finnish rule baseball (5%). In this survey 44 % responded that they had not attended any sports event between February 2005 and January 2006. A key contribution of this paper is to show that both market size (town population) of the home and the visitor teams have an impact on attendance. Previous success measured as points per game from the beginning of the season is better to explain attendance than points per game from three last games (the form guide), and temperature also matters although the games are not played outdoors. There are 14 teams playing at the highest level in the Finnish ice hockey league. The regular season 2007 – 2008 was a four-fold series – i.e. 52 games per team – with teams located in Helsinki (HIFK and Jokerit) played extra four mutual games, two at home stadium and two at visitor’s stadium. In addition to that, the remaining 12 teams played extra four games in the subdivisions of three teams. The subdivisions were 1) Blues (home city: Espoo), Pelicans (Lahti), SaiPa (Lappeenranta), 2) HPK (Hämeenlinna), Ilves (Tampere), Tappara (Tampere), 3) JYP (Jyväskylä), KalPa (Kuopio), Kärpät (Oulu) and 4) Lukko (Rauma), TPS (Turku), Ässät (Pori). Altogether each team played 28 home games and 28 games as visitor (Jääkiekkokirja 2008 - 2009, 55). The first regular season games were played in September 2007 and the last in March 2008. After that some teams continued their games in play-offs and the champion (Kärpät) were known in mid April. Jokerit from Helsinki got the biggest average attendance (8591 per game) while the lowest figure was for HPK (3281 per game). Jokerit has the biggest stadium (Hartwall Areena) in terms of capacity. The number of 1 Liikuntatutkimus 2005-2006, Sport Survey: Adult Population seats was 13506 while in Hämeenlinna (HPK) the number of seats was only 3214 but with 1786 standing places – so altogether 5000 places. Table 1 summarizes some statistics for the average attendance of each team during the regular season 2007 – 2008. (Table 1 about here) Naturally bigger cities like Helsinki, Espoo, Tampere or Turku have a bigger attendance potential but this does not explain enough the variation in attendance. It is also true based on the coefficient of variation that attendance variation is much higher for Jokerit and KalPa than for Kärpät, JYP, HPK or Pelicans. Altogether in regular season the number of games was 14 x 28 = 392 and the total attendance was 1964626 i.e. 5012 per game. Other cultural events, like theater gathered a bigger admission in 2007: about 2.7 Million but with a bigger number of total presentations (about 13000) which equals 207 per presentation. The Finnish national opera sold 162555 tickets to 198 presentations (about 820 per presentation). In the highest football league, Veikkausliiga games the admission number was 541612 with 182 games (2976 per game). Hence, in terms of cultural events attendance in live performances ice hockey was the most important. However, going to the movies was even more important since the total admission number was about 6.5 Million in Finland (population 5.3 M) but there were not live performances (Statistical Year Book 2008 Finland and www.veikkausliiga.fi ). According to statistical surveys made by national sports associations (SLU, Suomen Liikunta ja Urheilu, published in Statistical Year Book 2008, Finland) exercising ice hockey is not usual as football, hence one might assume that attendance in football games should be higher than ice hockey. However, the aim of this study is not comparing different sports but to explain ice hockey games attendance. The results indicate that both population of the home team and the visitor have a statistically significant effect on attendance as well as distance between home town and visitor’s town. Local games have a bigger attendance than other games. The demand is not elastic with respect to the ticket price. Success of both the home team and the visitor has an effect: home team’s success with a positive and visitor’s with a negative coefficient. The number of plays already played has a negative effect. Weekday effect is important: the attendance is bigger during Saturdays. Also the day temperature has an effect: the colder, the bigger attendance. That effect is small but still statistically significant. The unemployment rate has no effect, and the success factor of the last three games does not seem to explain as well as the success factor of all games played. 2. Literature There is a wide literature on attendance of cultural events. An important and influential study explaining movie attendance by Eliashberg and Shugan (1997) showed that attendance and the number of screens are highly correlated. A bigger number of screens is associated with movie attendance. Critics’ reviews published in media, like newspapers or magazines have been shown to have an impact on movie attendance. Also spontaneous dispersal, like “word-of-mouth” is important factor to explain movie attendance (Elberse and Eliashberg 2003). The literature explaining attendance in sport events, especially in the USA, is also wide starting with Demmert (1973) and Noll (1974). Conventional economic theory assumes that demand base measured as the incomes of the relevant market population and market size (population) should have an impact on attendance. Teams from bigger cities should have bigger attendance if the venue capacity allows it. Many teams are local monopolies with almost zero marginal costs of attendance. Hence maximizing profits equals maximizing revenues, and the outcome should be to set ticket prices high enough to ensure unitary price elasticity. Most studies still reveal that sporting events are priced in the inelastic range (Krautmann & Berri 2007). Coates and Harrison (2005) studied baseball (MLB) attendance with a panel data throughout the years 1969 – 1996. The team’s home town population as well as winning percentage is positively significant variables to explain attendance, while the ticket price is negatively associated. Different, alternative ticket prices, like “gate” measured as the ratio of total box-office income to total attendance or “seat” measured as weighted average of different category seat prices. Regardless of which price measure is used attendance is price inelastic. Incomes in home town do not seem to be statistically significant. Also Coates and Humphreys (2007) have similar results. Elsewhere Depken (2000) shows that attendance at MLB baseball is positively significant with the incomes of the home town and team’s payroll. Kahane and Shmanske (1997) report similar results and show also that changes in teams’ structure (scorecard) has a negative effect on attendance. Relatively big scorecard changes between seasons diminish attendance. Distance between home town and visitor’s town has a significantly negative effect on attendance in MLB baseball (Knowles, Sherony and Haupert 1992). The further away visitor comes, the fewer spectators the game attracts. During weekends, there are more spectators than during weekdays. With MLB baseball McDonald and Rascher (2000) show that sales promotion has a positive but diminishing effect on attendance. Sales promotion results in larger attendance but excessive promotion are probably too expensive in terms of profitability. The competitive balance of the league is important for attendance (Schmidt and Berri 2001). If some teams “always” win and some “always” lose the games, spectators’ motivation to attend falls. Occasionally there have been strikes or lock-outs in baseball, which has not had any significant and long-term effect on attendance (Schmidt and Berri 2002). During the season 1994 – 1995 even a six-month strike did not have any long-term effects on attendance. Fans returned after the pause. This result is valid in baseball but also in football (NFL) and ice hockey (NHL) as shown by Schmidt and Berri (2004).
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