Academic journal article International Journal of Sports Marketing & Sponsorship

The Value of Competition: Competitive Balance as a Predictor of Attendance in Spectator Sports

Academic journal article International Journal of Sports Marketing & Sponsorship

The Value of Competition: Competitive Balance as a Predictor of Attendance in Spectator Sports

Article excerpt

Executive summary

The overarching purpose of this research project is to examine the effectiveness of sports league management in providing an entertainment experience that is valued by consumers. A primary goal for sports managers must be to offer a product that consumers will value, which in turn increases the value of sponsorship. This paper investigates whether fans value management efforts to supply an interesting product over time. This paper tests seven independent variables to predict attendance. Of these seven variables, league managers have the ability to manage only two: to balance the competitiveness of the teams in the league and to manage changes in league structure in the form of rate of change, expansion and contraction. Control variables concerning the economic and demographic characteristics of the league's markets were also included.

The sample, non-major professional sports league, offers a unique opportunity to isolate the effects of competitive balance. Other factors, such as star player or players, distance between markets, media attention and school spirit, are not present in these leagues. Based on the results aggregated from five non-major professional sports leagues, competitive imbalance and average income are significant predictors of attendance. Fans do value, over time, a competitive game. Offering a bat night or team calendar giveaway or nickel beer may not be sufficient to draw consumers to games on a regular basis. League managers must also ensure that each team has a reasonable chance to win. Competitive balance may serve as a proxy for the league management's effectiveness.

Macro factors, including population and income, are also important. League managers must look beyond an available facility and a willing owner and consider whether a market has the conditions necessary to support a franchise. Finally, league stability was not a predictor of attendance. Attendance was not affected by the addition or subtraction of teams in a league.

Introduction

During the latter half of the 20th century, spectator sports have grown from a casual pastime to a major part of world culture on which consumers and businesses spend a significant amount of money. Ozanian (2004a, 2004b, 2004c, 2005) estimates the annual revenues of the four major North American sports leagues in the US and Canada--Major League Baseball (MLB), National Basketball Association (NBA), National Football League (NFL) and National Hockey League (NHL)--to be $14.6 billion, and the collective value of the four leagues to be $47.14 billion. Furthermore, Deloitte Touche values the top 20 soccer clubs, all based in Europe, at 3 billion [euro] collectively (Parkes, 2006). They also estimate the value of the English Premier League at $1.35 billion and 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. Sport has become big business. As such, it is important for scholars and managers to understand factors and conditions that can lead to successful sporting events, teams or leagues.

This paper looks at spectator sports from a fundamental marketing perspective, that of managing customer value. As with any business, spectator sports must offer a product or service that has value to the market. Major professional leagues and their members generate revenue by offering a number of business-to-business (13213) 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 value of these products is the number of consumers who view the competition in person and via media, i.e. the success of the business-to-consumer (132C) product. The consumption of the sporting event--i.e. the number of tickets sold and the number of people who watch the game on television or listen to it on the radio--is in part a function of the value that consumers place on the event as an entertainment option relative to alternatives (Deighton, 1992). …

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