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The value of competitionteam has an equal number of wins and losses,i.e. a .500 record (Berri et al, 2004; Schmidt & Berri,2003). If competitiveness does indeed indicate theperceived value of sports league products, we wouldexpect a decrease in league attendance as competitiveimbalance grows.Competition among businesses is a common,perhaps even fundamental, subject of businessstrategy research (e.g. Hunt, 2000). In the spectatorsports industry, however, leagues offer to the market akind of competition as their product (Neale, 1964).This notion of competition distinguishes spectatorsports from other forms of entertainment such astheatre, movies or American professional wrestling(Deighton, 1992; Holt, 1995). The competitionconsidered here pits opponents in a contest thatcustomers pay to witness. Each competitor does itsbest to outperform the other in order to win the game.Opponents can be two individuals, such as boxers, alarge number of individuals, such as golfers, orteams, such as in football. While competitors mustcooperate in order to produce the event, customersare not likely to value the sport if they perceive thatthe outcome of the match is predetermined. Beyondagreement of the rules and presentation of thecontest, teams cannot cooperate on the outcome ofthe competition. This would eliminate the essentialelement of doubt about the outcome and dramaticallyreduce the suspense of the competition and therebyits value to the spectator (Deighton, 1992). This inturn would be likely to decrease the demand for theproduct.Since the coordination of sporting events is quitedifficult, teams often form leagues, in part to developa schedule of competitions that typically culminate ina championship. Thorne et al (2001, p. 76) describea league as a group involved in a “contractualrelationship among several clubs or teams of onesingle sport, with the primary purpose of organisingcompetition”. The league plans for all members toparticipate in an equal number of events, establishesthe schedule of events for the upcoming season anddevelops a format to determine the league’s champion.In this manner, the individual team owners cooperatein creating a schedule of production and delivery fortheir collective and co-produced market offerings.Besides setting the schedule, a league creates andenforces a set of rules to ensure fair competition, andmarkets the sport for all team owners through suchvehicles as media contracts, sponsorships andlicensing. In essence, a league is an alliance ofindependently owned organisations working togetherto produce and market a series of competitions stagedfor the entertainment of the alliance members’customers – their fans (Lambe et al, 2002).Outcome uncertainty leads to a more excitingseason and, consequently, a higher perceivedentertainment value (Whitney, 1988). By limiting eachteam’s player resources, a league can strive tomaintain a competitive balance among its members,thereby providing higher perceived value to its fans.One method is the redistribution of player resources byusing such tools as salary caps, luxury taxes anddrafts (O’Reilly & Nadeau, 2006; Sloane, 1997).These tools tend to distribute the pool of player talentthroughout the league. This helps to increase thehomogeneity of talent among the various teams in theleague, which in turn reduces the opportunity forsome teams to have player-based advantage on thefield. The result is that the teams tend to be moreevenly matched, producing more competitive, andtherefore more valuable, contests.Fans are more likely to attend a game when theoutcome is in doubt than when the outcome isperceived as a foregone conclusion (Deighton, 1992;Whitney, 1988). Leagues with a dominant team orleagues with fans that perceive the outcome to be aforegone conclusion suffer in two ways. First, fewerfans will attend the games and teams will sufferfinancially. Second, the value of teams’ broadcast,sponsorship and licensing rights will be lower becauseof the lower reach. Although each team within aleague wants to win the championship, it is in thebest interests of all teams in the league to ensure acompetitive product that fans will find attractive. Aleague with more competitive balance will achieveRESEARCH PAPER● OCTOBER 2009 ● International Journal of Sports Marketing & Sponsorship11
The value of competitionRESEARCH PAPERsuperior financial rewards through higher attendanceand higher revenue from the sale of broadcast,sponsorship and licensing rights (Hunt, 2000).Factors affecting fan demandSports marketing literature has traditionally studiedfactors that affect fan demand from the consumerperspective. Laverie and Arnett (2000) and Arnett andLaverie (2000) use consumer behaviour theories toexamine attendance as a function of fan identity. Finket al (2002) research the role of fan and team gendersto explain attendance. Robinson and DeSchriver(2003) look at the demographic differences betweenthe fans of two teams competing in the NationalProfessional Soccer League. DeSchriver (1999) andWells et al (2000) research consumer factors thatinfluence fan attendance for one season and twosingle seasons respectively of American football,among schools that compete in the National CollegiateAthletic Association (NCAA) Division II. Noll (1974)and Baade and Tiehen (1990) include race as apredictor variable. Meir (2000) examines fan reactionto the league management’s marketing strategies.Based on a survey of team general managers andusing principal component analysis, Hansen andGauthier (1989) identify 10 factors that affect eithergame or season attendance. Kim et al (2007) andZhang et al (2003) follow a similar approach, askingresidents about factors that determine their attendanceat sporting events.Although these studies focus on importantcharacteristics of consumers of sporting events thatmay affect attendance, with the exception of Hansenand Gauthier, and Meir, there has been little researchon the factors that a team’s management, or itsleague’s management, could control in order to affectattendance. O’Reilly and Nadeau (2006) investigateleague expansion as a predictor of team revenue, butno study has been identified that includes changes inleague membership as a predictor variable ofattendance. Because much of the sports marketingliterature has focused on the consumer, thisperspective has shaped theoretical discussions. Thispaper looks at how the league can strategicallyimprove the entertainment value of its competitionsto consumers in order to increase attendance andrevenues.Outcome doubtPast research has demonstrated that uncertainty aboutthe outcome of a game is a component of predictiveattendance models. Borland and Lye (1992) and Peeland Thomas (1988, 1992, 1996) look at attendanceat a particular match as a function of outcomeuncertainty. Borland (1987) reviews the long-termeffect on attendance of a dominant team. Baimbridge(1997) and Hynds and Smith (1994) examine therole of doubt in an international athletics tournament.Noll (1974) and Baade and Tiehen (1990) attempt toinclude doubt by using several indicators, includingthe concentration of championships and the end-ofseasongap between the division winner and otherteams in that division. In each of these studies, doubtor match uncertainty is statistically significant inexplaining attendance. Zhang et al (2003) develop afactor to measure fans’ perceived attractiveness of amatch. Whitney (1988) shifted the research focusfrom match attendance to league attendance byinvestigating league championship uncertainty. Heargues that a league with a dominating team, or aleague with a non-competitive team, would experiencea decline in league attendance. Following this work,we use the league as the unit of analysis because it ismost appropriate to the study of the aggregate,strategic impact of competitive balance.AttendanceAttendance is treated in various ways in the literature.Wells et al (2000), Peel and Thomas (1996), Baadeand Tiehen (1990), Greenstein and Marcum (1981)and Noll (1974) use total league attendance whileothers employ match attendance (Baimbridge, 1997;Borland and Lye, 1992; Dobson et al, 2001; Knowleset al, 1992; Paul, 2003; Peel & Thomas, 1992;Jones & Ferguson, 1988; Welki & Zlatoper, 1994).Hansen and Gauthier (1989) use both game and12 International Journal of Sports Marketing & Sponsorship ● OCTOBER 2009 ●
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