Income and the Locations of AAA Minor League Baseball Teams

By Davis, Michael C. | Atlantic Economic Journal, September 2007 | Go to article overview

Income and the Locations of AAA Minor League Baseball Teams


Davis, Michael C., Atlantic Economic Journal


Minor league baseball in the United States provides a recreational activity for fans. We focus on the possibility that higher income of the local population leads to greater demand for professional baseball, which will lead to the presence of a baseball team in the city.

Other than income, key factors include population, alternative recreational activities, and proximity to other teams. As expected, population is a key determinant of the presence of sports teams (Davis, International Journal of Sport Finance, 2006; Siegfried & Eisenberg, Atlantic Economic Journal, 1980). The impact of income is not clear. Davis (2006) found that higher income leads to a higher level of baseball in the metropolitan area, while Siegfried and Eisenberg (1980) found that increased income does not lead to higher attendance. Davis (2006) attributed the difference to a leisure-consumption tradeoff. Wealthier fans do not have sufficient time to attend a greater number of sporting events (measured by attendance) because they have to spend as much or more time working. However, wealthier fans will demand and can afford a higher quality product (measured by a higher level of a minor league baseball team).

One concern with these findings on income is that income and population are highly correlated. In a sample of all metropolitan and micropolitan areas across the country, the correlation coefficient between population and per capita personal income is 0.38. Since population is such an important determinant and it was only included in Davis' model in log-linear form, the per capita personal income (PCPI) might be picking up an additional unexplained nonlinear portion of the effect of population.

The locations of AAA baseball teams provide an opportunity to study the role of income. The two AAA baseball leagues (the Pacific Coast League and the International League) cover the entire country and most of the teams are located in cities that do not have major league teams. Since AAA is the highest level of minor league baseball, the presence of teams in lower-level minor leagues in the area is unlikely to influence the presence of AAA league teams in the city.

We performed a probit analysis to determine which factors are important for the presence of AAA baseball teams in metropolitan areas. The probit equation is Pr (y = 1 | X) = [PHI](X[beta]), where y is the dependent variable, representing whether there is a team in the area, and X is the vector of independent variables, such as population and income. …

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