FACTORS THAT DRIVE ATTENDANCE in MAJOR LEAGUE SOCCER a THESIS Presented To
Total Page：16
File Type：pdf, Size：1020Kb
FACTORS THAT DRIVE ATTENDANCE IN MAJOR LEAGUE SOCCER A THESIS Presented to The Faculty of the Department of Economics and Business The Colorado College In Partial Fulfillment of the Requirements for the DeGree Bachelor of Arts By Matthew Fechter May 2013 FACTORS THAT DRIVE ATTENDANCE IN MAJOR LEAGUE SOCCER Matthew Fechter May 2013 Economics Abstract Major LeaGue Soccer is a GrowinG leaGue within the United States. AlthouGh soccer is not an American sport, it is GrowinG increasinGly more popular. UsinG a simple OLS regression this thesis provides insight into factors that drive attendance in Major LeaGue Soccer. The purpose of this thesis is to determine the factors that increase attendance to help the struGGlinG franchises Grow their fan base. KEYWORDS: (Major LeaGue Soccer, Attendance) TABLE OF CONTENTS ABSTRACT iii ACKNOWLEDGEMENTS iv 1 INTRODUCTION 1 2 LITERATURE REVIEW 5 2.1 Sport Specific Stadiums................................................................................. 5 2.2 Fan Loyalty.................................................................................................... 7 2.3 Superstar Effect.............................................................................................. 9 2.4 Winning Percentage....................................................................................... 11 2.5 Conclusion..................................................................................................... 12 3 THEORY 14 3.1 Introduction………………………………………………………………… 14 3.2 Theoretical Determinants of MLS Attendance……………………………. 16 3.2.1 Stadium Age………………………………………………………… 16 3.2.2 Stadium Size………………………………………………………… 16 3.2.3 City Population……………………………………………………… 17 3.2.4 Median Household Income…………………………………………. 18 3.2.5 Win PercentaGe……………………………………………………... 19 3.2.6 Total Goals………………………………………………………….. 19 3.2.7 Goals For……………………………………………………………. 20 3.2.8 Goals Against……………………………………………………….. 20 3.2.9 MLS Cup Champion………………………………………………... 20 3.2.10 Year………………………………………………………………... 21 4 DATA AND METHODOLOGY 22 4.1 Introduction and Data……………………………………………………… 22 4.2 Ordinary Least Squares ReGression……………………………………….. 24 5 RESULTS AND CONCLUSION 25 5.1 Introduction…………………...……………………………………………. 25 5.2 Results……………………………………………………………………… 27 6 WORKS CONSULTED 30 LIST OF FIGURES 3.1 Factors EffectinG Attendance…………….………………………………………………….. 15 3.2 Median Household Income…………………………………………………………………… 18 LIST OF TABLES 4.1 Descriptive Statistics. …………………..…………………………................ 23 5.1 Pearsons Correlation Test ……………………….………………………….. 26 5.2 ReGression…………………………………………………………………… 27 ON MY HONOR, I HAVE NEITHER GIVEN NOR RECEIVED UNAUTHORIZED AID ON THIS THESIS Matthew Fechter Signature CHAPTER I INTRODUCTION Soccer is widely considered the world’s sport. In America, soccer has traditionally been dwarfed by more instantly gratifying sports such as football, basketball, and baseball; all of which share a rich American history. Soccer’s growth has been stunted as it was adopted from Europe. Therefore many Americans do not fully understand the Game nor resonate with the sport as they do with other “American” sports. However, as more Americans Grow up playinG and developinG a love for the beautiful Game, it has gradually risen in popularity. This past year Major LeaGue Soccer (MLS), has out-grown basketball in averaGe per Game attendance. MLS averaGed 18,807 fans per Game in 2012, settinG a record for the leaGue, and surpassinG the National Basketball Association’s (NBA) average of 17,274 fans per Game. This upward trend is crucial to the growth of soccer in America, as all professional sports rely on fan support for survival. History of Soccer in the United States The first leGitimate soccer leaGue in America was the American Soccer LeaGue (ASL). It was founded in 1921 and consisted of seven teams from the East coast. In 1958 the ASL was Granted permission from the United States Soccer 1 Federation (USSF) to create a new league, the International Soccer League (ISL). The ISL was formed so that ASL teams could compete aGainst top European and South American club teams in cities across America. A new leaGue, the North American Soccer LeaGue (NASL), was formed in 1967, creatinG competition for the ASL. In 1984 the ASL ceased operations in what would have been its 50th year as a league, and the United Soccer LeaGue (USL) was created. Unfortunately, a year later the USL alonG with the NASL ceased operations as well. It wasn’t until 11 years later, in 1996, that America formed its current first division outdoor professional league, Major League Soccer (MLS). The league consisted of ten teams spread across the nation. Currently, the MLS has expanded to 19 teams and is continuing to grow with rumors of a 20th team, the New York Cosmos, to be added in the near future. The MLS Major League Soccer is a ”single entity” leaGue, meaninG that the leaGue owns every team and in turn every player in the leaGue. Each team has an “owner” who is essentially the largest shareholder in the club. The owners operate their clubs, but decisions about player contracts, advertisinG, and their stadiums all must be approved by the league. The reasoning behind the “single entity” league was so teams in the lower half of the leaGue that weren’t GeneratinG larGe amounts of revenue could continue to compete in the league and grow over time. The MLS consists of 19 teams that compete in two conferences, the East and the West. Each team plays a 34-Game reGular season schedule; 17 home Games, and 17 away Games. Teams in the Western conference play 24 in-conference Games and 2 10 out-of-conference Games. While teams in the Eastern conference play 25 in- conference Games and 9 out-of-conference Games. In-conference teams will play each other at least three times durinG the reGular season while playinG out-of- conference teams occurs only once during the regular season. The MLS just recently implemented this type of season to increase in-conference rivalries. However, it hinders cross-conference rivalries. This past 2012 season, the New York Red Bulls were not able to play a rival, the Los AnGeles Galaxy, at home. Consequently, a Game that would have surely sold out the Red Bull stadium did not occur. However the hope is to eventually produce fierce in conference rivalries that sell out stadiums. With that, the MLS still continues to generate revenue and increase fan support each year. The MLS set new attendance records during its 17th season. One of the premier clubs in the league, the Seattle Sounders, has continued to raise the bar for fan attendance since it entered the league as an expansion team in 2007. In the 2012 season the Sounders averaGed 43,104 fans per Game. To put that in perspective, if the Sounders was a Major LeaGue Baseball team it would average the third most fans per Game behind the New York Yankees and the Philadelphia Phillies. Unfortunately, the large fan base that the Sounders enjoy is extremely rare in the MLS. The club with the next highest fan base is the Los AnGeles Galaxy, which averages 23,136 per game, rouGhly 20,000 fans less than Seattle. 3 Motivation Since I can remember, I have been playinG soccer. I just recently ended my colleGe career, with no set plans of playinG professionally. The Game of soccer has tauGht me countless lessons that have helped me Grow throuGhout my life. I’d like to give back to the sport and help increase its popularity in America. This is my first step. Even though 2012 showed record-breakinG attendance numbers, rouGhly half the clubs in the leaGue showed a drop in attendance from the previous year. Furthermore clubs with statistics that normally suGGest a rise in fan support had a drop in attendance. So what drives attendance in the MLS? Is it the superstar effect, team record, aGe of stadium, ticket price, marketinG strateGy, etc? It is important to identify the factors that increase and decrease attendance to provide the MLS with critical information to Grow the leaGue. The purpose of this thesis is to determine the factors that are essential to increasing the attendance rate in the MLS to help the struggling franchises grow their fan base. 4 CHAPTER II LITERATURE REVIEW The goal of any business is to constantly produce a positive revenue stream to make money and prosper. In the professional sports world, fan support provides that constant stream of revenue. The more fans in the seats, the more money the franchise will make. Many studies have been conducted on attendance factors in professional sports. The purpose of this literature review is to identify central factors that drive attendance in all sports, and more specifically soccer. Sport Specific Stadiums Over the past few years, many clubs within Major LeaGue Soccer have built their own soccer specific stadiums. The MLS believes that to continue to expand the league and increase attendance, soccer specific stadiums must be built. Will new, innovative stadiums increase attendance? A theory called the honeymoon effect suGGests that the openinG of a new stadium will create an initial surGe in attendance, but that over time attendance will decline, eventually returning to its initial state. Studies on this effect have been conducted in various sports other then soccer. The authors of some of the most 5 recent studies include Clapp and Hakes (2005) on Major LeaGue Baseball (MLB), Leadley and ZyGmont (2005) on the National Basketball Association (NBA), and Leadley and ZyGmont (2006) on the National Hockey League (NHL). In each study it became obvious