1. Economic and team performance data have different effects on different elements of ticket demand Unemployment is a strong predictor of attendance but not price Mean annual wage is a strong predictor of non-premium ticket price but not attendance When controlling for fixed-team effects, team performance variables did not affect attendance, but had (small) effects on ticket price Opening a new stadium predicted increases in attendance and ticket prices The relative ticket price increase associated with a new stadium is greater for non premium tickets than for premium tickets In general, macroeconomic effects on ticket demand were stronger than team performance effects Next steps and implications: This study lays the foundation for future work that investigates to what degree NFL teams’ ticket pricing strategies were economically rational during this time. Conclusions Is the price right? An analysis of the National Football League ticket market relative to the Great Recession Benjamin Singer 1 Graduate Student, Yale School of Management Results (continued) Introduction Results Data and Methods The Great Recession (December 2007 through June 2009) in the United States not only incurred widespread economic turmoil, but also was one of the few times during the last decade when National Football League (NFL) average attendance figures fell below almost full attendance. However, NFL ticket prices never decreased on average during this time. This study takes advantage of this natural experiment to analyze the macroeconomic, team performance, and other factors that influenced NFL ticket markets before, during, and after the recession. Primary Research Questions 1.How do local economic factors (unemployment, median wage) impact the demand for NFL tickets (ticket price and attendance) relative to team performance variables (wins, championships)? 2.To what degree do these various economic and team-related factors have different effects on different elements of ticket demand (e.g., premium tickets vs. non-premium tickets)? NFL Ticket Market Data Primary market data on average non-premium and average premium ticket prices for 30 NFL teams (Jacksonville and Buffalo excluded), courtesy of Team Marketing Report Average annual home game attendance data for the 30 teams, courtesy of ESPN Data span 11 years from 2004 – 2014, for 330 team-year observations Local Macroeconomic Data Annual average unemployment rate and median wage for each local major metropolitan area corresponding with an NFL franchise, courtesy of the Bureau of Labor Statistics from 2004 - 2014 Team Performance Data Prior year team wins, whether the team won the Super Bowl the prior year Data on Other Factors Affecting NFL Ticket Demand Winning percentage of local professional sports substitutes (MLB, NBA, NHL teams), opening of a new stadium, beer and parking prices Study Design and Analysis All models use linear regression with team-based fixed effects and a Prais- Winsten specification for panel-corrected errors. The fixed effects specification accounts for the possibility of large disparities in baseline values of dependent variables (e.g., attendance, ticket prices) for different teams. The Prais-Winsten estimation controls for serial correlation between the errors in autoregressive models. Additionally, I include independent dummy variables for each year (except for 2004, which is used as the baseline year) to account for annual NFL-wide fluctuations in variables. Price data – no information on secondary ticket market, which is potentially more robust, dynamic, and nuanced in terms of its ability to capture the impact of macroeconomic conditions on consumer decisions No reliable estimate for the relative proportion of premium vs. non-premium tickets Over the 300 team-year observations from 2005 – 2014, various models show (see Tables 1 and 2 for more details for attendance and non-premium ticket price models): Annual attendance decreases 1.34% for every one percent increase in local unemployment New stadia opening are associated with a $20.30 increase in non-premium ticket prices and a $43.08 increase in premium ticket prices Winning rates of local MLB, NBA, and NHL teams do not appear to have significant associations with attendance or ticket prices Prior year wins and championships (winning the Super Bowl) do not have significant associations with attendance or premium ticket price Every prior year win is associated with a $0.17 increase in non-premium ticket price Winning the Super Bowl is associated with a $2.35 increase in non-premium ticket price Robustness checks (example: Figure 1) indicate that a linear model seems reasonable for the attendance and ticket price models Table 1. Prais-Winsten fixed effects regression results for attendance (percent) Limitations Table 2. Prais-Winsten fixed effects regression results for non-premium ticket price (dollars) Figure 1. Scatter plots of residuals (y-axis) vs. predicted values (x-axis) for attendance 1 Work conducted as partial qualification for master’s degree in Quantitative Methods in the Social Sciences at Columbia University. Dr. Benjamin Goodrich advised my work on this project.