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The value of competition: competitive balanceas a predictor of attendance in spectator sportsKeywordsconsumer valuenon-major professional sportscompetitive balanceattendanceMichael A. LevinAssistant Professor, Otterbein CollegeDepartment of Business, Accounting and EconomicsWesterville, OH 43081-2006, USATel: +1 614 843 1299Email: mlevin@otterbein.eduRobert E. McDonaldAssociate Professor, United Supermarkets. Professor of Marketing,Rawls College of Business, MS 42101, Texas Tech UniversityEmail: mcdonald@ba.ttu.eduAcknowledgementsDennis B. Arnett, David J. Berri, E. Malchman, Simon ChadwickPeer reviewedAbstractThis paper investigates the role of competitive balanceamong teams in a league in predicting attendance atspectator sporting events. It also controls for thedemographic and economic characteristics of theleague’s markets, and changes in the number of teamsin the league. The research relies on a sample thatincludes 707 non-major professional team seasonalwin-loss records (12,956 games) from five sports,aggregated into 75 seasons to develop a modelconsistent with extant literature. The authors find thatcompetitive balance and average income in theleague’s markets are significant predictors of leaguewideattendance.RESEARCH PAPERExecutive summaryThe overarching purpose of this research project is toexamine the effectiveness of sports leaguemanagement in providing an entertainment experiencethat is valued by consumers. A primary goal for sportsmanagers must be to offer a product that consumerswill value, which in turn increases the value ofsponsorship. This paper investigates whether fansvalue management efforts to supply an interestingproduct over time. This paper tests seven independentvariables to predict attendance. Of these sevenvariables, league managers have the ability to manageonly two: to balance the competitiveness of the teamsin the league and to manage changes in leaguestructure in the form of rate of change, expansion and● OCTOBER 2009 ● International Journal of Sports Marketing & Sponsorship7
The value of competitionRESEARCH PAPERcontraction. Control variables concerning the economicand demographic characteristics of the league’smarkets were also included.The sample, non-major professional sports league,offers a unique opportunity to isolate the effects ofcompetitive balance. Other factors, such as star playeror players, distance between markets, media attentionand school spirit, are not present in these leagues.Based on the results aggregated from five non-majorprofessional sports leagues, competitive imbalanceand average income are significant predictors ofattendance. Fans do value, over time, a competitivegame. Offering a bat night or team calendar giveawayor nickel beer may not be sufficient to drawconsumers to games on a regular basis. Leaguemanagers must also ensure that each team has areasonable chance to win. Competitive balance mayserve as a proxy for the league management’seffectiveness.Macro factors, including population and income, arealso important. League managers must look beyondan available facility and a willing owner and considerwhether a market has the conditions necessary tosupport a franchise. Finally, league stability was not apredictor of attendance. Attendance was not affectedby the addition or subtraction of teams in a league.IntroductionDuring the latter half of the 20th century, spectatorsports have grown from a casual pastime to a majorpart of world culture on which consumers andbusinesses spend a significant amount of money.Ozanian (2004a, 2004b, 2004c, 2005) estimatesthe annual revenues of the four major North Americansports leagues in the US and Canada – Major LeagueBaseball (MLB), National Basketball Association(NBA), National Football League (NFL) and NationalHockey League (NHL) – to be $14.6 billion, and thecollective value of the four leagues to be $47.14billion. Furthermore, Deloitte Touche values the top 20soccer clubs, all based in Europe, at €3 billioncollectively (Parkes, 2006). They also estimate thevalue of the English Premier League at $1.35 billionand Italian Serie A at $1.73 billion (Karrar, 2006).Additionally, the Australian Football League (2005)reported league-total revenues of $415.9 million(Australian dollars) following the 2005 season. Sporthas become big business. As such, it is important forscholars and managers to understand factors andconditions that can lead to successful sporting events,teams or leagues.This paper looks at spectator sports from afundamental marketing perspective, that of managingcustomer value. As with any business, spectator sportsmust offer a product or service that has value to themarket. Major professional leagues and their membersgenerate revenue by offering a number of business-tobusiness(B2B) products to corporate markets,including rights to television and radio broadcasts,event and facility sponsorship, and product licensing(O’Reilly & Nadeau, 2006). Fundamental to the valueof these products is the number of consumers whoview the competition in person and via media, i.e. thesuccess of the business-to-consumer (B2C) product.The consumption of the sporting event – i.e. thenumber of tickets sold and the number of people whowatch the game on television or listen to it on theradio – is in part a function of the value thatconsumers place on the event as an entertainmentoption relative to alternatives (Deighton, 1992). Abusiness that offers value to customers moreeffectively than its competitors can achieve greaterfinancial rewards (Hunt, 2000; Hunt & Morgan,1995, 1996, 1997).The number of people who consume the game ormatch will increase as the expected value of thecompetition increases. This has implications for thevalue of the B2B products, as their value to corporatecustomers is a function of the number of people whowatch the game. For example, it follows that if morepeople attend a game, then the value of sponsorshiprights will increase because sponsors will reach alarger audience. Therefore, it is critically important forsports promoters to understand how to provide8 International Journal of Sports Marketing & Sponsorship ● OCTOBER 2009 ●
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