Sports are a great business that creates great revenue for organizations that are in the major leagues. In this particular industry, revenue is generated through the sales of tickets to the game spectators and loyal team fans. Baseball, hockey, basketball, football and other sporting teams playing in their corresponding teams gain a substantial percentage of their revenues from the sale of attendance tickets. Many studies have been conducted to establish the factors that determine game attendance in different leagues. One of the most important findings is that, despite increase in ticket prices over the years, the attendance demand has not decreased.
Krauttman and Berri explain that, between 1991 and 2002, the cost of attending a baseball match to a family of four increased at more than twice the inflation rate in recreational services from an average of $80 to where it’s over $140, but stadiums still get full of spectators (183-184). This means that the pricing of game tickets does not significantly affect the demand for attendance. Krauttman and Berri further explain that fans pay lower prices will actually maximize the team’s profits (184). These factors and the research history cited by Krauttman and Berri mean that the demand for attendance in sports is inelastic since the demand is not or barely affected by the price of tickets. This paper explores the extensive literature available on the league game attendance to construct a good explanation of the major factors that determine the demand for attendance. The demand of attendance of sports events is influenced and determined by different factors including team success, promotions, ticket pricing, the provision of new facilities, consumers’ income levels and team publicity...
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...port Finance, 3.1 (2008): 1-31.
Gitter, Seth R. and Thomas A. Rhoads. "Determinants of Minor League Baseball Attendance." Journal of Sports Economics, 11.6 (2010): 614-628.
Krauttmann, Anthony C. and David J. Berri. "Can We Find It at the Concessions? Understanding Price Elasticity in Professional Sports." Journal of Sports Economics, 8.2 (2007): 183-191.
Lemke, Robert J., Matthew Leonard and Kelebogile Tlhokwane. "Estimating Attendance at major League Baseball Games for the 2007 Season." Journal of Sports Economics, 11.3 (2010): 316-348.
Parris, Denise, Joris Drayer and Stephen Shapiro. "Developing a pricing Strategy for the Los Angeles Dodgers." Sport Marketing Quarterly, 21.4 (2012): 256-264.
Siegfried, John and Andrew Zimbalist. "The Economics of Sports Facilities and Their Communities." Journal of Economic Perspectives, 14.3 (2000): 95-114.
The Toronto Blue Jays baseball team was founded in the 1970s and experienced support from the fans during the 1970s and 1980s. In 1992 and 1993, the Jays won back-to-back World Series, yet in 1994, the team faced setbacks. The team had a losing streak, there was a major league baseball strike, and no World Series was played. At the same time, gambling came to Toronto, and the team had to compete for the fan's time. Also, players' salaries skyrocketed at a time when the Canadian dollar fell in value. How could the Toronto Blue Jays adjust ticket prices to improve financial performance and increase fan attendance?
Overall, compelling points exist supporting or not supporting a salary cap in baseball. Teams have the benefit of a salary cap existing, and out of that, a balance in free agency forms and a sense of championship parity develops too. On the other side of the spectrum, teams can use the Moneyball method of recruiting and signing players, along with tax implications and revenue sharing to balance out payrolls. The main factor in deciding if a salary cap is appropriate is the factor of fairness among the teams. Therefore, based off the support the research provides, the implementation of a salary cap is necessary.
As in typical labor markets, employees are valued by the marginal revenue of production they add to their firm, or in the case of professional sports, their team. Determining player’s MRP becomes an easier process than in the labor markets of other industries due to the availability of statistics of player’s and their contribution to their team’s success. The difficulty of this process lies in the determination of how revenues for a team are produced. As previously mentioned Paul DePodesta, an analyst from the Oakland Athletics was on the foreground of this type of analysis in the MLB. His discovery of the correlation of winning percentage and team revenues was just the starting point. His methodology of his model building was briefly touched on before, but it started with running regression analysis on a series of different typical baseball statistics, and continued with his finding of On Base Percentage and Slugging Percentage being the stats that correlated closest with winning percentage, and the implementation of the AVM systems models outputting player’s expected run values. MLB’s regression analysis on player’s MRP to a team is some of the most sophisticated in professional sports, with other leagues and teams starting to catch on and attempting to create their own models of MRP for their respective leagues.
Baade, R. A., Baumann, R., & Matheson, V. A. (2008). Selling the game: Estimating the economic impact of professional sports through taxable sales. Southern Economic Journal, , 794-810.
First and foremost, nowadays attendance rates amongst professional baseball games can be in the thousands. When that many people are grouped together, the
Some of the most prolific franchises in sports, like the Oakland Raiders and Baltimore Colts of the National Football League, have moved to other cities breaking off their loyalty to the hometown fans. More important than the actual moves are the more frequent threatened moves. When teams “play the field” and explore the option of playing in other cities they are able to lure interested cities into giving them just about any royalty they want. New stadiums are only the beginning. The willingness to threaten departure has secured for teams a variety of land deals, lower taxes, more revenues from parking and concessions, control of stadium operations, guaranteed ticket sales, renovation of stadiums with luxury seating, control over neighborhoods and transportation systems, and that’s only the beginning of the list.
Financial aspects and profitability of college athletic programs is one of the most important arguments involved in this controversy. A group of people expresses that college athletic programs are over emphasized. The point they show on the first hand, is that athletic programs are too expensive for community colleges and small universities. Besides, statistics prove that financial aspects of college athletic programs are extremely questionable. It is true that maintenance, and facility costs for athletic programs are significantly high in comparison to academic programs. Therefore, Denhart, Villwock, and Vedder argue that athletic programs drag money away from important academics programs and degrade their quality. According to them, median expenditures per athlete in Football Bowl Subdivision were $65,800 in 2006. And it has shown a 15.6 percent median expenditure increase fro...
Noll, Roger, and Zimbalist, Andrew. Sports, Jobs, and Taxes: The Economic Impact of Sports Teams and Stadiums. Brooking institutions press, Summer 1997. Vol. 15 No. 3.
Johnson, Dennis A., and John Acquaviva. "Point/counterpoint: Paying College Athletes."The Sport Journal 15.1 (2012). Questia School. Web. 3 Feb. 2014.
Baseball used to be a simple game, associated with the smell of hot dogs, the sweet dew of the night air as fans rose for the seventh inning stretch, and the beautiful spectacle of the field with its freshly cut grass and newly chalked base lines. Now it seems like each game is won by at least five runs, the stadiums are half empty, and the pride of a baseball radio announcer, once an honorable career, has dwindled along with the game. Additionally, since 1976 players’ salaries have increased 168% a year, numbers too high to be blamed on inflation (Breton 4). These current conditions reflect the growing corruption of baseball.
...movie, videogames, college and amateur sports, and eating out. As the price of attending a basketball game continues to rise teams need to offer motivations to fans, for example family and season ticket packages, to make game attendance more interesting for entertainment seekers.
Johnson, Dennis A., and John Acquaviva. "Point/counterpoint: Paying College Athletes." The Sport Journal 15.1 (2012). Questia School. Web. 3 Dec. 2013.
In Major League Baseball, stadiums can affect the game dramatically by the size and by the way the dirt is laid out and how the weather is as well. The baseball teams and players can be affected by this in their major life physically and mentally. Major League Baseball is a prominent organization in our daily life. The game is very important for most people. The game is a lifestyle to people as well. Baseball has changed over the years. For instance, Pete Palmer states, “The way baseball is playing right now is completely different from the past” (Palmer, summary, 2014). A very helping part of baseball are baseball stadiums. For example, ballparks of america says, “... ballparks are amazing, they help us play” (ballparks of america, summary,
Schooled: The Price of College Sports. Dirs. Ross Finkel, Trevor Martin and Jonathan Paley. 2013. Online.
From 2001 2002 there was a 23% increase in the construction of sports stadiums and arenas with costs of those facilities upwards of $7.8 billion. The growing global sport industry requires that sport facility and event management keep current of new and proven management techniques. Sport Facility Management: Organizing Events and Mitigating Risks by Ammon, Jr., Southall, and Blair, provides readers with a basic introduction to elements of facility management for the full range of sporting and entertainment events. There is a high demand for individuals who are educated and trained in facility management, event organization, and risk management and since the September 11 attacks there has been a great emphasis placed on facility and risk management. Each chapter provides theoretical foundations and practical applications for each critical phase of facility management. The authors provided photographs, case studies, and industry examples to assist the reader in gaining an overall basic, picture of the sporting event and entertainment industry today. The book provides in-depth discussions about positive advances that have made the entire experience easier and more comfortable for fans; and about the negative economic and cultural consequences for sport events after September 11 2001.