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Wednesday, August 04, 2010

Novelty effect in Minneapolis

The Minnesota Twins are playing in a new stadium this year - Target Field. I haven't been but it looks like a nice park. I attended a game in the Metrodome a few years back and anything would be an improvement over that stadium.

In sports economics there has been a well documented "Novelty Effect" or "Honeymoon Effect" when a team moves into a new stadium. There is a period of time after the stadium opens during which attendance increases because people want to see a game in the new stadium, not because the team is good or better than it was in the past. The Twins are battling for their division but it is an interesting hypothesis that teams might perform worse after moving to a new stadium because the team owner anticipates the Novelty Effect and thus cuts payroll/quality.

There are two questions that pertain to the novelty effect that are important for the team owner. First, how big is the initial novelty effect. Second, how long will the novelty effect last. As for the Twins, their novelty effect is huge (see attendance chart below) - attendance is up by 35% from last year and the attendance to most other American League teams is down - way down in the case of Cleveland (which, if one remembers, ran a six year consecutive sell-out streak a few years back).

The Twins ownership is therefore enjoying a windfall in terms of gate, concessions, and merchandise sales. The team might enjoy a boost in future local media revenues if the team's popularity (as reflected in attendance) stays strong. This is great for the Twins ownership in the short run. How long the novelty effect sticks around is the next question for the team's ownership. Previous studies estimated a novelty effect that lasted almost a decade - using data from the 1980s and 1990s. More recently, the novelty effect has been considerably shorter - perhaps as short as three years. Many recently opened stadiums - Pittsburgh and New York (Mets) - already have empty seats, so the novelty effect might be getting much shorter (or is somehow impacted by the macroeconomy).

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Comments:
Hi...Your post really got me thinking man..... an intelligent piece, I must say. Mordazas para cable

 
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