The Rise (and Fall) of the Arena Football League
Foley, Mark C., Smith, Fred H., Atlantic Economic Journal
Economists have had a long-standing interest in the factors that determine the demand for tickets at professional sporting events. Understandably, much of the existing literature focuses on the highest levels of professional sports--the National Basketball Association (NBA), National Hockey League (NHL), National Football League (NFL), and Major League Baseball (MLB). There are, however, a significant number of "minor leagues" operating on the U.S. professional sporting landscape; the determinants of the demand for tickets to these events remains relatively unexplored. In this paper we focus on a particularly interesting minor league, the Arena Football League (AFL), and we study the determinants of demand for tickets to AFL games for the years 1987 to 2008.
The founders of the AFL created the league in 1987 in an attempt to capitalize on America's passion for NFL football. Playing American football in the NFL's off-season, the players in the AFL offered fans a fast-paced and unique brand of football. The AFL plays its games indoors, on a fifty-yard field with narrow goal posts flanked by nets, using eight-man teams and a strong emphasis on scoring and the passing game. In its first year of competition, the league had only four teams. The teams completed a short six-game season and managed to draw over 11,000 fans per game on average (www.arenafan.com/history). The AFL eventually expanded, adding to both the length of its season and to the number of teams. Yet, despite outward signs of the league's apparent success, league leaders made a surprise announcement in December of 2008 that the AFL would suspend operations (Manoloff 2008). The AFL resumed operations in 2010, and it continues to operate today. While the AFL has reemerged from its one-year hiatus, attendance is down. League wide attendance averaged just over 12,000 fans per game in 2008, but that figure had fallen to under 8,000 per game in 2012. Moreover, the league has experienced significant franchise instability over the past three seasons. Seven of the teams that competed in either the 2010 or 2011 seasons have already folded. It remains to be seen whether or not the second incarnation of the AFL will survive to become a stable league.
Studying the AFL is of interest to economists for two reasons. First, AFL franchises are not subject to the rules that govern the operation of teams in the major professional sports leagues: quite simply, these teams can, and do, fail. Team owners are also able to move their teams with relative ease. Sports economists have investigated the presence of a honeymoon effect, the effect that moving into a new stadium or arena has on attendance (Clapp and Hakes 2005). Because of the franchise relocation, rebranding, and expansion that commonly occurred throughout the AFL's history, the league is an ideal setting in which to test the presence of a new franchise honeymoon effect. This differs from the traditional honeymoon effect.
Secondly, economists have started to expand their analysis of demand side factors that influence ticket sales. Historically, team quality, ticket price, and the competitive balance of a league have been identified as the most important factors determining a team's attendance. Recent studies have looked at the significance of game day promotions (Girls and Sommers 2006), proximity to the nearest competitor (Winfree et al. 2004), and the availability of alcohol inside the stadium (Chupp et al. 2007) in determining game day attendance. Our study adds to this literature by examining how the presence of a major league franchise affects the attendance at a minor league sport's games. Overlap between the major league sports exists, but with the exception of the NHL and the NBA, the sports do not compete with one another directly. (1) AFL teams compete directly with MLB, thus our study provides a clear opportunity to examine if consumers can support a minor league team operating in direct competition with a major league competitor. …