Competitive Balance and Attendance in Major League Baseball: An Empirical Test of the Uncertainty of Outcome Hypothesis
Gregory Gay
OverviewWritten by Brian
SoebbingDiscussion
Competitive BalanceAISDRUOHCreate a model which
determines if fans are sensitive to competitive imbalance and team performance
Competitive BalanceThe degree of balance among teams
Standard Deviation of Winning Percentage (SDWP)Examines the dispersion of win percent within an entire
league for a seasonLimited due to the number of games in a season
AISDRActual to Idealized Standard Deviation Ratio
Created to counter the SDWP limitation
AISDR for a league is .500/√GG # of games in a season
The closer the ratio is to 1 the better the competitive balance
UOHUncertainty of Outcome
HypothesisThe more even team
abilities are, the less certain the game’s outcome
Therefore a greater attendance is expected
The number of games behind the leader is one of the best measurements of demand
Attendance is greater for the home team in close games
As a result the probability of a home team winning is positive and significant
The Empirical Model
I = teams t = seasons u=explanatory termÔ = a fixed effect parameter for each team
Summary Statistics
Regression Results
ResultsModel covers only 67% of the variation
Variables such as market population, market income, and ticket prices
These variables are difficult to accurately calculateAISDR is negative and significant
Confirms UOHFans are sensitive to league-wide performance
Games behind a playoff berth variable is negative and significantFans are sensitive to individual team performance
Conclusion
Using results can help MLB policy makers create an optimal match between competitive balance and team performanceMaximizes attendance
My ThoughtsQuestions?