POLICY CHANGES IN MAJOR LEAGUE BASEBALL: IMPROVED AGENT BEHAVIOR AND ANCILLARY PRODUCTIVITY OUTCOMES

Offense in Major League Baseball (MLB) has decreased substantially since 2006, often attributed to increased testing and punitive action for use of performance enhancing drugs. However, there has been concurrent policy change affecting behavior of other league agents that may have also affected game play. I therefore examine the effect of these agents, MLB umpires, on offensive production in baseball. Estimates reveal that a substantial portion of the offensive reduction from 2008 through 2014 can be attributed to changes in the size of the strike zone. Implications are further discussed in the context of firm production relevant outcomes as they relate to the labor force and supervisor performance expectations. (JEL J44, Z22, Z28, L25)     

Structural Change in MLB Competitive Balance: The Depression, Team Location, and Integration

No detectable break points in within-season competitive balance (1901–99) occur after 1937 in the National League or after 1962 in the American League, despite expansion, free agency, and the growth of local TV revenue disparity since then. Instead, a continual improvement in competitive balance has occurred since those years. Associated with break points prior to these years, (1) the AL emerged from the depression much more unbalanced than the NL, (2) team movement and league expansion alter balance in well-known ways, and (3) discriminatory preferences were stronger in larger-revenue markets than in smaller-revenue markets in both leagues.     

PERCEIVED GAME UNCERTAINTY,SUSPENSE AND THE DEMAND FOR SPORT

This study tries bridging between different behavioral economic explanations for the lack of support of the uncertainty of outcome hypothesis in spectator sports. We test a measure of perceived game uncertainty that is comparable to objective measures frequently tested in the literature. Econometric results suggest that fans do not perceive closeness of a game differently than how economists have tended to measure it. However, fans' perceptions of suspensefulness are distinct from their perceptions of game uncertainty. Moreover, the finding that fans' preferences for game uncertainty are dominated by loss aversion also emerges—independently of fanship status—in our stated‐preference setting. (JEL L83, D12, Z2)     

OUTCOME UNCERTAINTY,FAN TRAVEL,AND AGGREGATE ATTENDANCE

The uncertainty of outcome hypothesis (UOH) informs economists' understanding of consumer decisions to attend sporting events and team revenue generation. We develop a model of fan behavior based on standard expected utility methods which incorporates fan heterogeneity in terms of decisions to travel to away games and strong preferences for wins. The model reflects aggregate attendance outcomes across local and visiting fans, generates predictions consistent with the UOH, and gives rise to concave league-wide revenue functions. Empirical analysis of game outcomes and attendance at regular season National Basketball association games from 1979 to 2013 supports key predictions of the model. (JEL L83, D12, Z20)     

UNSCRIPTED DRAMA: SOCCER AUDIENCE RESPONSE TO SUSPENSE,SURPRISE, AND SHOCK

By modeling minute-by-minute television audience figures from English Premier League soccer matches, with close to 50,000 minute-observations, we show that demand is partly driven by suspense and surprise. We also identify an additional relevant factor of appeal to audiences, namely shock, which refers to the difference between pre-match and current game outcome probabilities. Suspense, surprise, and shock remain significant in the presence of a traditional measure of outcome uncertainty. (JEL C23, D12, L82, L83, Z20)     

REFERENCE‐DEPENDENT PREFERENCES,LOSS AVERSION,AND LIVE GAME ATTENDANCE

We develop a consumer choice model of live attendance at a sporting event with reference‐dependent preferences. The predictions of the model motivate the “uncertainty of outcome hypothesis” (UOH) as well as fans' desire to see upsets and to simply see the home team win games, depending on the importance of the reference‐dependent preferences and loss aversion. A critical review of previous empirical tests of the UOH reveals significant support for models with reference‐dependent preferences, but less support for the UOH. New empirical evidence from Major League Baseball supports the loss aversion version of the model. (JEL L83, D12)     

WINNING GAMES VERSUS WINNING CHAMPIONSHIPS: THE ECONOMICS OF FAN INTEREST AND TEAM PERFORMANCE

Championship prospects, as distinct from game-winning prospects, may contribute to a fan's interest in a particular sports team. If so, then both season length and the structure of championship playoffs help determine the equilibrium allocation of playing skills across the teams of a league. Evidence from a regression analysis of team attendance in baseball indicates that ticket demand depends in part on perceived flag-winning prospects. Several patterns in the winning percentages of league leaders in the major U.S. team sports are consistent with the perspective that championship considerations influence the allocation of playing skills.     

CONSUMPTION BENEFITS OF NATIONAL HOCKEY LEAGUE GAME TRIPS ESTIMATED FROM REVEALED AND STATED PREFERENCE DEMAND DATA

This paper examines the demand for hockey game trips among metropolitan and nonmetropolitan residents of Alberta, Canada. Using data on both revealed and stated preference game‐trip behavior from a telephone survey conducted throughout Alberta, we estimate the effect of ticket prices, team quality, arena amenities, and capacity on the latent demand for National Hockey League hockey games. We find that lower ticket prices, higher team quality, and additional capacity encourage attendance. In the status quo scenario, consumer surplus per game is $50 for those who had attended hockey games and about 50% less for those who had not attended games. Exploiting the stated preference data, we develop a number of other consumer surplus estimates. We also include travel costs in the estimation of the demand function and estimate the full value of the game trip considering both ticket prices and travel costs. Sold‐out arenas in Calgary and Edmonton generate annual consumption benefits of $40 and $35 million when only ticket prices are used to calculate consumer surplus (i.e., excluding travel costs). Considering the full‐price consumer surplus for the Calgary Flames of $103 per game trip, the annual consumption benefits may be as high as $82 million. (JEL R22, L83, D61)     

Free agency,owner incentives,and the national football league players association

In an effort to raise salaries in professional football, the National Football League Players Association (NFLPA) has demanded that NFL owners set aside 55 percent of gross revenues to fund a union wage scale. An alternative means of raising salaries, as evidenced by the relatively higher earnings in major league baseball and professional basketball, is through a free agent system wherein players are free to sell themselves in the open market. This paper examines the NFLPA’s claim that free agency will not work in the NFL because owners lack the financial incentive to win that would induce them to bid on free agents.     

HISTORY DEPENDENCE AND THE FORMATION OF SOCIAL PREFERENCES: AN EXPERIMENTAL STUDY

We study the minimal contributing set (MCS) game, a three‐person sequential step‐level public goods game. The behavior of critical third players changes with experience in this game even though they face no strategic or payoff uncertainty. We explore why these changes occur by manipulating subjects' experience in the first half of the experiment. The treatments give subjects very different initial experiences, but all treatments move subjects' choices toward experienced subjects' play in the control sessions. Long‐run play is indistinguishable across treatments. Our results are more consistent with the “discovered preferences” hypothesis ( Plott 1996 ) than either the “constructed preference” or “reference point” hypotheses. (JEL H41, C72, C92)     

ON THE OPTIMAL REALIGNMENT OF A CONTEST: THE CASE OF COLLEGE FOOTBALL

This article examines the relationship between demand and scheduling in college football. We first derive two different metrics for team quality, and then use those metrics to see how they impact attendance. We find that there is a positive interaction between the quality of the teams. Then various simulations are run to see how attendance would change under different scheduling scenarios. If teams are put into conferences based on the team quality measures, the average per game attendance only rises 1–2%. This is true if 1‐year or 10‐year quality measures are used. However, our simulation suggests that this effect would be more than offset, mainly because schools with larger capacity would play fewer home games and so aggregate attendance would fall. We discuss whether this effect would be mitigated by capacity adjustments in the longer term. (JEL L83, Z20, C78)     

DETERMINANTS OF REVENUE IN SPORTS LEAGUES: AN EMPIRICAL ASSESSMENT

This study investigates determinants of revenue in North America's four major professional sports leagues. Revenue is positively associated with on‐field success in baseball (MLB), basketball (NBA), and hockey (NHL), but not in football (NFL). The returns to success are not diminishing as commonly assumed, which casts doubt on the uncertainty of outcome hypothesis, and differences across leagues are consistent with revenue sharing arrangements. Estimates indicate a strong negative but diminishing relationship between stadium age and revenue. Teams in larger markets generate more revenue than smaller markets, but the returns to success do not differ according to market size. (JEL Z21)     

IF YOU DON'T LIKE THE OUTCOME,CHANGE THE CONTEST

This article analyzes contests when contestants derive heterogeneous benefits from winning and investments are seen as costs to the contest designer. An example of this is sports leagues maximizing league profits. For sports leagues, optimal contests depend upon the heterogeneity of market sizes and the impact of team investment on winning. Sports leagues have mechanisms to change the structure of contests, implying they have some control of the expected payoff of teams, the value of the athletes, and the balance of the league. Data from Major League Baseball and the National Basketball Association are used to empirically estimate the model. (JEL C72, L10, L83)     

Associations of Childhood Religious Attendance,Family Structure,and Nonmarital Fertility Across Cohorts

This article considers associations among childhood family structure, childhood religious service attendance, and the probability of having a nonmarital first birth before age 30 for non‐Hispanic White women born 1944 to 1964 using data from the 1988 and 1995 waves of the National Survey of Family Growth (N = 5,995). We found that attending religious services weekly during childhood and growing up in a 2‐biological‐parent family were associated with lower odds of having had a nonmarital first birth. These associations were quite stable across cohorts, although religious attendance was less associated with nonmarital fertility for the youngest cohort. We estimate that changes in these childhood experiences account for 22% of the increase in nonmarital first births across these cohorts.     

American v. National Football League: Using public relations to “win” a war against a monopoly

No professional sports group ever achieved acceptance as widespread within a single decade's span as the American Football League (AFL). This study chronicles how the AFL used public relations strategies and tactics to garner public acceptance, which in turn helped convince the older National Football League (NFL) to merge with the upstart league. This study will further the understanding of how trade associations use public relations as an image-building device, as well as address a deficiency in the study of sports public relations.     

Against all odds? Exploring the role of game outcome uncertainty in season ticket holders’ stadium attendance demand

In this study we investigate the important but rather ambiguous role of game outcome uncertainty (GOU) in consumers’ demand for professional sports. Specifically, using a unique and strongly balanced panel data set containing information on individual physical attendance from 13,892 season ticket holders (STHs) of a German professional football club, we find evidence for a positive effect of GOU on two differing spectator decisions – both the decision to physically attend a game in the stadium and the decision on what time to enter the stadium, an aspect which has so far been neglected in the literature. Moreover, GOU seems to play an especially important role in the decision-making of one particular group: STHs with comparatively high coordination costs.     

Predicting outcomes: Sports and stocks

Many gamblers and most fans, players, and coaches offer causal explanations for long runs of good or bad performance in sports and financial analysts are quick to offer explanations for the daily performance of the stock market. The records of professional basketball and baseball teams and the Dow Jones daily closing average for a ten year period were evaluated for trends (streaks). The records of teams were also evaluated to assess whether the record against opponents, the home court or home field advantage, and—for baseball teams—the record of the winning and losing pitcher (excluding the current game) predicted the outcome of individual games. Recent performance is, at best, a very weak predictor of current performance and the three best predictors for baseball (pitching, home field, and record against opponent) together accounted for only 1.7% of the variance in the outcomes of individual games. We overestimate our ability to predict. This overconfidence is likely to play a role in maintaining gambling behaviors.     

PERSUADED UNDER PRESSURE: EVIDENCE FROM THE NATIONAL FOOTBALL LEAGUE

We exploit a natural experiment within each National Football League game, finding the first evidence in professional sports that referees succumb to the pressures of satisfying team personnel in the vicinity of possible violations. Using generalized additive models for binomial outcomes, we show that these sideline‐based differences in penalty rates, which are observed on common but influential penalties including pass interference and holding, peak near the centralized location of players and coaches on the sideline. With sizable interests in referee decisions, coaches and players often try to manipulate referee behavior with verbal and nonverbal communications; such actions appear to be persuasive. (JEL ZO, H3)     

EXTERNALITIES, PROPERTY RIGHTS AND THE ALLOCATION OF RESOURCES IN MAJOR LEAGUE BASEBALL

Most economists who have analyzed professional baseball have concluded that two distinctive features of its labor market—the reserve clause and player draft—influence the distribution of wealth between players and owners but do not affect the allocation of playing talent among teams. Such conclusions, which are strongly at variance with laymen's views of such matters, are derived from theoretical considerations rather than empirical examinations. Our paper examines data from the two decades of major league history and concludes that, on the basis of that data, the empirical generalizations of previous economists do not appear to be justified.     

SIMULTANEOUS DECISION‐MAKING IN COMPETITIVE AND COOPERATIVE ENVIRONMENTS

We experimentally investigate simultaneous decision‐making in two contrasting environments: one that encourages competition (lottery contest) and one that encourages cooperation (public good game). We find that simultaneous participation in the public good game affects behavior in the contest, decreasing sub‐optimal overbidding. Contributions to the public good are not affected by participation in the contest. The direction of behavioral spillover is explained by differences in strategic uncertainty and path‐dependence across games. Our design allows us to compare preferences for cooperation and competition. We find that in early periods, there is a negative correlation between decisions in competitive and in cooperative environments. (JEL C72, C91)