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Fan Response to League Playoff Structure and Consecutive Season Competitive Balance in Professional Sports

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Fan Response to League Playoff Structure and Consecutive Season Competitive Balance in Professional Sports University of Massachusetts Amherst ScholarWorks@UMass Amherst Doctoral Dissertations Dissertations and Theses Spring August 2014 FAN RESPONSE TO LEAGUE PLAYOFF STRUCTURE AND CONSECUTIVE SEASON COMPETITIVE BALANCE IN PROFESSIONAL SPORTS Ryan L. Spalding University of Massachusetts Amherst Follow this and additional works at: https://scholarworks.umass.edu/dissertations_2 Part of the Sports Management Commons Recommended Citation Spalding, Ryan L., "FAN RESPONSE TO LEAGUE PLAYOFF STRUCTURE AND CONSECUTIVE SEASON COMPETITIVE BALANCE IN PROFESSIONAL SPORTS" (2014). Doctoral Dissertations. 142. https://doi.org/10.7275/t77k-ks88 https://scholarworks.umass.edu/dissertations_2/142 This Open Access Dissertation is brought to you for free and open access by the Dissertations and Theses at ScholarWorks@UMass Amherst. It has been accepted for inclusion in Doctoral Dissertations by an authorized administrator of ScholarWorks@UMass Amherst. For more information, please contact [email protected]. FAN RESPONSE TO LEAGUE PLAYOFF STRUCTURE AND CONSECUTIVE SEASON COMPETITIVE BALANCE IN PROFESSIONAL SPORTS A Dissertation Presented By RYAN L. SPALDING Submitted to the Graduate School of the University of Massachusetts Amherst in the partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY May 2014 Isenberg School of Management © Copyright by Ryan L. Spalding 2014 All Rights Reserved FAN RESPONSE TO LEAGUE PLAYOFF STRUCTURE AND CONSECUTIVE SEASON COMPETITIVE BALANCE IN PROFESSIONAL SPORTS A Dissertation Presented By RYAN LENARD SPALDING Approved as to style and content by: ______________________________________ Neil Longley, Chair ______________________________________ Stephen McKelvey, Member ______________________________________ Nelson Lacey, Member ______________________________________ Christian Rojas, Outside Member ______________________________________ George R. Milne, Program Director Isenberg School of Management, PhD Program ACKNOWLEDGEMENTS First and foremost, I would like to thank my advisor Dr. Neil Longley for guiding me through the Ph.D. program at UMass and always being there for help and advice as I often struggled to finish my dissertation. While I was a master’s student, Neil was the one that identified me as having strong research potential and encouraged me to apply to the Ph.D. program. Four years later, I can truly say that I am extremely grateful to have embarked on this journey, and am excited as I look forward to a new career in academia. I originally came to UMass from the aerospace industry seeking a career that ignited my passion and made me happy, and I have now found my calling in academia. Thanks Neil for pushing me toward and along this path. I would also like to thank my other committee members for their important contributions to my dissertation. First, Professor Steve McKelvey offered great ideas and suggestions based on his extensive knowledge of the sports industry. Second, Dr. Christian Rojas provided invaluable assistance when it came to refining my model and assuring that my findings were methodologically convincing. Lastly, Dr. Nelson Lacey provided a great combination of both sport and econometric knowledge that aided the development of my dissertation. To my entire committee, thanks for all of your detailed feedback as I progressed through the writing of my dissertation and thanks for the timeliness of your responses. In addition to my four great committee members, I want to thank all of the professors in the sport management program at UMass for their help and encouragement throughout the Ph.D. program. In particular, I owe a debt of gratitude to Professor Lisa iv Masteralexis, Dr. Janet Fink, and Dr. Mark McDonald for their unwavering support even when things looked bleak. Last but certainly not least, I need to thank all of my loving friends and family. In particular, Dr. Mujde Yuksel was the best friend and support system I could ever ask for during my four years in the Ph.D. program. My sister Martha (and her adorable son Spencer) also deserves a lot of credit in helping me stay motivated and finish my dissertation on time due to her desire to fly from Sweden to attend my graduation ceremony. And finally, special thanks go to my girlfriend Yi for always believing in me, always being an avid listener and comforter when problems arose, and generally just being a wonderful person. v ABSTRACT FAN RESPONSE TO LEAGUE PLAYOFF STRUCTURE AND CONSECUTIVE SEASON COMPETITIVE BALANCE IN PROFESSIONAL SPORTS MAY 2014 RYAN SPALDING, B.S. PURDUE UNIVERSITY M.S. STANFORD UNIVERSITY M.B.A./M.S. UNIVERSITY OF MASSACHUSETTS Ph.D. UNIVERSITY OF MASSACHUSETTS Directed by: Professor Neil Longley Competitive balance (the level of equality of playing talent across teams) is presumed to be a necessary element for league success due to the unique inter-dependent economic nature of professional sports which requires teams to have financially healthy rivals in order to field games (Rottenberg 1956). Underlying this notion is the uncertainty of outcome hypothesis, which suggests that a fan’s interest in professional sports is dependent on various levels of uncertainty of outcome: individual game uncertainty (who will win the game), individual season uncertainty (who will win the championship), and consecutive season uncertainty (does the same team win the championship every year) (Cairns 1987). Although there is an expanding body of literature that empirically tests the uncertainty of outcome hypothesis, most of it focuses on attendance responses to within-game or within-season measures of competitive balance. In addition, nearly all previous studies focus on regular season outcomes only and completely ignore the playoffs (Longley and Lacey 2012). Filling in a notable gap in the literature, this dissertation thus uses a new metric of competitive balance that relies on inter-seasonal measures of qualification for and advancement in the playoffs. vi In addition to measuring fan response to this new measure of competitive balance that incorporates both playoff outcomes and consecutive season effects in a novel way, this dissertation also investigates the effects of league playoff rules on competitive balance. No previous study has analyzed how the number of teams that qualify for the playoffs affects fan interest in a league through competitive balance concerns. On the one hand, increasing the number of teams that qualify for the playoffs should increase fan interest by increasing the overall pool of teams that are competitive for a playoff spot. On the other hand, increasing the number of teams that qualify for the playoffs shifts the importance from the regular season to the playoffs, reducing fan interest in the regular season. This dissertation empirically investigates the issue of fan response (as measured by league-wide regular season attendance figures) to varying levels of inter-seasonal competitive balance as measured by the churn of playoff qualifying/advancing teams and as affected by league playoff structures that dictate the number of teams making the playoffs. The results show that small changes in league playoff structure can significantly affect attendance. It is predicted that if Major League Baseball were to further increase the number of teams that make the playoffs from 10 to 12, the average attendance per game would increase by over 4,300 (about 14% of the current average). In the National Hockey League, a reduction in the number of teams that make the playoffs from 16 to 14 is expected to increase the average attendance per game by over 700 (about 4% of the current average). These results highlight the importance of including playoff considerations when investigating the uncertainty of outcome hypothesis as well as the value of competitive balance to sport league success. vii TABLE OF CONTENTS Page ACKNOWLEDGEMENTS………………………………...………………………….....iv ABSTRACT…………………………...………………………………………………....vi LIST OF TABLES…………………………..………………………………………….....x CHAPTER 1. INTRODUCTION…………………………..................................................…..……...1 2. THEORETICAL FOUNDATIONS OF COMPETITIVE BALANCE…….....….……6 2.1 Theoretical Modeling of Professional Sports Leagues…..………………………11 2.2 Analysis of Competitive Balance (ACB) Research……….……………………..20 2.2.1 Seasonal Competitive Balance Measures………………………………..21 2.2.2 Consecutive Season Competitive Balance Measures………………...….37 2.2.3 Match Competitive Balance Measures…………………………………..43 2.3 Uncertainty of Outcome Hypothesis (UOH) Research...………………………...44 2.3.1 Tests Using Match Competitive Balance.………………………………..46 2.3.2 Tests Using Seasonal Competitive Balance ………………………...…...55 2.3.3 Tests Using Consecutive Season Competitive Balance ……………..…..60 2.3.4 Tests Using Multiple Forms of Competitive Balance …………………...61 2.4 Summary of Literature and Future Directions…………………………………...68 3. CONCEPTUAL FOUNDATION AND HYPOTHESES DEVELOPMENT…….......73 3.1 Playoff Structure UOH Hypothesis……………….………………..……………75 3.2 Consecutive Season UOH Hypothesis……….….……………………………….83 4. DATA AND ANALYSIS METHODOLOGY……..….…………………..…………91 viii 4.1 H1 Model Specification...……………..………………..…………………..........92 4.2 H1 Research Variables…..……………………..……………………..………….98 4.2.1 Independent Variables ……………………………………..……………98 4.2.2 Dependent Variable.…...…………………………………………..…….99 4.2.3 Control Variables……………………………………..………………...101 4.3 H2 Model Specification……………………….………………………..………106 4.4 H2 Research Variables……………………………………………………….....111 5. RESULTS AND DISCUSSION....………...……………………..…………………114
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