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Sunday, August 29, 2004

Guessing versus reality

In Saturday's FWST, Sean Wood had a brief article about how attendance to Rangers games this year is higher than it has been in the previous two seasons. This season, the Rangers are well above .500 and are only a couple games out of first place, whereas in the past three seasons the team finished an average 30 games out of first place.

I know Sean and he is a good reporter, but this is a filler story - something akin to a report that gravity was once again proven to hold true.

However, this little nugget was buried in the story:
Winning is a big boost to a team's attendance, according to Becky Vallett, executive editor of the Chicago-based Team Marketing Report.

"I'd say probably 75 percent of it is due to on-field performance," Vallett said.

Really?

I didn't believe the number and dug up some data from the 1990s - the only data I had readily available on my computer at home. Regressing attendance on total number of wins I get an R-squared of 0.27 (number of observations = 202 from 1990-1997). In other words, total wins account for 27% of the variation in attendance. Regressing yearly changes in attendance on yearly changes in wins I get an R-squared of 0.46 (N=148), or 46% of total variation in attendance - a bit closer to the 75% claim but not really that close.

Whenever I hear the words "I'd say..." followed by some actual number I get suspicious. There is no doubt that having a winning team will tend to increase attendance, on average, but a lot of other factors go into the demand for professional sports - as sports economists have long known. Here in Arlington, what matters at least as much as how good the team is playing is exactly how friggin' hot it will be that evening. When it is 88 degrees at midnight, you can imagine how hot it is in the stadium at 7:00pm - and ultimately how uncomfortable it can be.

Many might dismiss my criticism as being a bit super-sensitive, but the reality is that the impact of improved winning percentage does not account for 75% of increased attendance, and indeed may only account for half of that predicted by our good friend at the Team Marketing Report (which I respect greatly because of the valuable service they provide - especially when it comes to data).

The fact that winning doesn't explain all of the variation in attendence is the main reason team owners are often reluctant to spend millions of dollars for better players when, in the end, the team may only win a few extra games thereby not justifying the additional expense. This tends to frustrate many fans.

Here in Arlington, the total payroll of the team actually declined after Alex Rodriguez was traded to the Yankees. The Rangers are still paying for a portion of Rodriguez's salary, and the additional players on the team are relatively low-cost and yet the team is playing better. So, Rangers attendance is up this year because the team is closer to contention than in the recent past - I am sure Tom Hicks (owner of the Rangers) is happy to have his intuition confirmed again. The Rangers are evidence that a team owner doesn't have to spend a lot of money to produce a quality baseball team (although money often helps).

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