Vend It like Beckham: David Beckham's Effect on MLS Ticket Sales*
Lawson, Robert A., Sheehan, Kathleen, Stephenson, E. Frank, International Journal of Sport Finance
In January 2007, Major League Soccer (MLS) announced that international soccer sensation David Beckham would be joining the league playing for the LA Galaxy. This paper examines Beckham's effect on MLS ticket sales for the 2007 season. Depending on specification, our results indicate that Beckham increased ticket sales as a share of stadium capacity by about 55 percentage points. We then use these results to evaluate MLS's Designated Player Rule and to perform a back-of-the-envelope calculation of Beckham's benefit to the LA Galaxy.
Keywords: attendance, soccer, MLS, David Beckham
In January 2007, Major League Soccer (MLS) announced that international soccer sensation David Beckham would be joining the league. Beckham was signed to a large five-year contract with the Los Angeles Galaxy, with both the MLS and LA Galaxy sharing the cost of his contract. Beckham thus became the first player signed under MLS's new Designated Player Rule, which allows teams to sign one player outside of the salary cap with the league paying $400,000 of the player's contract. Although the exact terms of Beckham's contract have not been revealed, ESPN.com (2007) and other media sources have reported a figure of around $250 million for the entire five-year package, including various commercial endorsements. Presumably, MLS and its sponsors hope that the addition of Beckham will increase revenues from ticket, merchandise, advertising, and sponsored product sales.
Examining the NBA, Hausman and Leonard (1997), Berri et al. (2004), and Berri and Schmidt (2006) found that star players create positive externalities. When superstars such as Michael Jordan and Larry Bird play on the road, home teams experience an increase in attendance and revenue even though they do not contribute to the cost of the superstar's contract. Conversely, teams signing superstars do not receive the full marginal revenue product of the superstar. Hence, the MLS Designated Player Rule may be an attempt to better align the costs and benefits of superstars by having the league pay a portion of star players' salaries. The rule is probably also an acknowledgment that a superstar such as Beckham may be necessary to firmly establish a league that has had mixed success in attracting fans since its inaugural season in 1996.
This paper examines Beckham's participation in MLS soccer and how it affected ticket sales for the 2007 season. Beckham's contract start date was July 1, which is about midway through the season. Because of injury, he did not play his first official game for the Galaxy until August 15. Injuries continued to plague him through the remainder of the season, and of the 17 games (out of the 30-game season) for which he was on the roster, Beckham played in just five games (two at home and three on the road). However, fans may have already purchased tickets to the games he had been expected to play. Our analysis captures both the effect of Beckham's being expected to play and the effect of his actually playing on ticket sales. This paper also allows for the possibility of other star players increasing attendance by including United States men's national team players as an explanatory variable.
Data and Empirical Model
An informal look at the data shows that David Beckham did indeed increase ticket sales. Average sales for all MLS games during the 2007 season were 16,758. Average ticket sales for games for which Beckham was on the roster were 29,694, a dramatic increase. For games in which Beckham actually played, ticket sales more than doubled to an average of 37,659. These findings show that Beckham did appear to increase attendance. However, because other influences may affect ticket sales, isolating Beckham's effect on attendance requires multivariate regression analysis.
The regression analysis uses match level data from the 2007 season. There were 13 teams in the league, and each team played 15 home games; thus there are 195 observations. …