THE DETERMINANTS OF MAJOR LEAGUE BASEBALL ATTENDANCE 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 Scott Thauwald May / 2008 THE DETERMINANTS OF MAJOR LEAGUE BASEBALL ATTENDANCE Scott Thauwald May, 2008 Economics Abstract The purpose of this study is to examine different factors that affect Major League Baseball (MLB) attendance. In doing so, this study uses one dependent variable and twelve independent variables. Data for the study was gathered for five years, starting in 2003 and ending in 2007. A regression analysis was used to analyze the data and statistics. The results found seven variables to be significant. The significant variables include payroll, regular season wins, average ticket price, facility age, substitute teams, income, and arena capacity. Of the seven variables, payroll and regular season wins were found to be the most influential. KEYWORDS: (Attendance, Baseball, Major League Baseball) ON MY HONOR, I HAVE NEITHER GIVEN NOR RECEIVED UNAUTHORIZED AID ON THIS THESIS Signature TABLE OF CONTENTS ABSTRACT. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. III I INTRODUCTION ....................................................................... II LITERATURE REVIEW AND MODEL DEVELOPMENT..................... 6 Sports Attendance..................................................................... 7 Winning Record.................................................................. 7 Ticket Price. .. .. 9 Payroll................... ............................................................ 10 Facility Age... ........................................... ........................... 11 Geographical Location... .. .. .. ... ....... .... .. .. .. .. .. .. .. .. .. .. 13 Substitute Teams.................................................. ...................... 14 Star Players... ................................................... ................... 15 Homeruns. ... 16 Strikes.............................. ... ............... ............ ................... 17 Promotions. 18 Playoff.............................................................................. 19 City Population. .. .. ..... .. .. .. .. .. .. ... .. .. .. .. .. 20 Competitive Balance ... , . .. .. .. .. .. .. .. .. .. .. .. .. .. 21 Income......... ............................................... ............... ...... 22 Interleague Play. 23 Summary............................................................................... 25 III METHODOLOGy....................................................................... 27 Dependent Variable.................................................................. 27 Control Variables..................................................................... 28 Independent Variables............................................................... 28 Summary........ ............ ...... .................................................. ... 31 IV RESULTS............. .................................................................... 32 Model Equations..................................................................... 35 Regression Analysis Results........................................................ 37 V CONCLUSION........................................................................... 46 Possible Limitations and Further Research......................................... 49 SOURCES CONSULTED................................................ .. .. 52 LIST OF TABLES 1.1 2007 MLB Teams..................................................................... 4 2.1 Past Research on Factors Affecting Attendance in Sport Leagues. .. .. .. 24 3.1 Variables Summary................................................................... 31- 4.1 Summary Statistics................................................................... 32 4.2 Correlation Matrix.................................................................... 33 4.3 Regression Analysis Results......................................................... 37 4.4 Regression Analysis Results......................................................... 43 LIST OF FIGURES 1.1 MLB Attendance... ..................................................................... 2 4.1 Model Equation: Control Variables............................................... ... 35 4.2 Model Equation: Base Model..... ................................................. ... 35 4.3 Model Equation: Significant Variables... ........................................ ... 35 4.4 Model Equation: Base Minus Payroll............................................ ... 36 4.5 Model Equation: Significant Base Minus PayrolL.............. ... .............. 36 CHAPTER I INTRODUCTION When the 2007 Major League Baseball (MLB) season came to an end, teams across the country were trying everything they could do to fill as many seats as possible. Whether it's the Rockies, who clinched a playoff spot, or the Twins teams want to end a season by generating money through ticket sales. But determining what brings fans to games is a problem that a lot of teams face. Is it the fact that a team is good, the chance to see a star player, or is it because of a stadium? This thesis examines the different factors that affect attendance at a Major League Baseball game. In doing so, this thesis will gather data from the 2003 season all the way to the 2007 season and will then come to a conclusion on which factors affect MLB attendance. The game of baseball has been known as America's pastime since the late 19th century. Many kids throughout America spend their nights and weekends throwing the ball around thinking they are going to be the next Alex Rodriguez. For many baseball players it is their dream to play Major League Baseball, and that's one of the reasons why the MLB has such a good following. 2 FIGURE 1.1 MLB Attendance 80,000,000 75,000,000 +--------------------/-----c ~ 70,000,000 +-------~. c:: <II 'C c:: ~ 65,000,000 1~--+-----· -------------1- Attendance 1 « ~ ~ 60,000,000 +---------------------' 55,000,000 +----------------------' 50,000,000 \--,-----,----,------,---,----,----,----,-----,---, 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Year The great game of baseball today is more popular than ever with millions of diehard fans watching and supporting their favorite teams. Figure 1.1 shows the total attendance number from 1997 to 2006. MLB attendance has continued to increase over the years, even with a slight dip in 2002 and 2003. In 2006, there were a total of 77,532,108 fans who attended a MLB game, many being families with kids. Baseball will always be a great family affair but over the years Major League Baseball has become more of a business than a game. With payrolls increasing and winning more important than ever, teams need to put people in the stands to generate money. Teams know the more fans, the more money they will make, therefore more money to spend. If teams have the luxury to spend massive amounts of money on players, they will likely be a 3 more competitive team. Because attendance is so important teams are trying to do everything they can to get fans in the seats. But what is it exactly that brings fans to games? In the 2006 season, the New York Yankees averaged 51,000 fans a game whereas the Florida Marlins averaged 13,500. Why did the Yankees average so many more fans than the Marlins when both teams had a shot at making the playoffs? Was the weather a factor considering Florida becomes very hot during the baseball season or was it something else? The purpose of this thesis is to answer many of these questions about MLB attendance and help understand what variables affect getting people to a MLB game. What is the MLB? The MLB stands for Major League Baseball and is one of the four major sports in America. The MLB is the highest level of baseball play in North America and the league consists of thirty teams spread across the country. The MLB is divided into two leagues, the American League and the National League. In each league there are three divisions, East, Central, and West. There are anywhere from four to six teams in each division. Teams for the 2007 season look as follows: 4 TABLE 1.1 2007 MLB Teams Division National League (NL) American League (AL) East Atlanta Braves, Florida Baltimore Orioles, Boston Marlins, New York Mets, Red Sox, New York Philadelphia Phillies, Yankees, Tampa Bay Devil Washington Nationals Rays, Toronto Blue Jays Central Chicago Cubs, Cincinnati Chicago White Sox, Reds, Houston Astros, Cleveland Indians, Detroit Milwaukee Brewers, Tigers, Kansas City Royals, Pittsburgh Pirates, St. Louis Minnesota Twins Cardinals West Arizona Diamondbacks, Los Angeles Angels of Colorado Rockies, Los Anaheim, Oakland Angeles Dodgers, San Athletics, Seattle Mariners, Diego Padres, San Texas Rangers Francisco Giants Each team in the MLB plays 162 games in a season. The MLB season starts on the first Monday of April and runs through late September or early October. When the regular season ends, eight teams enter the post season. After elimination rounds the two remaining teams playa best best-of-seven World Series. The New York Yankees have been the most successful team in MLB history with 26 World Series Titles. The second closest is the St. Louis Cardinals with 10 Titles, followed by the Oakland Athletics with 9. Today, the MLB is led by stars such as Alex Rodriguez, Johan Santana, Derek Jeter, Barry Bonds, and Albert Pujlos. These stars, along with some of the younger