1. THE ECONOMIC EFFECT OF RECESSIONS ON MAJOR LEAGUE SPORTS IN THE UNITED STATES Jessie Welton, University of Wisconsin- La Crosse WEA Conference, November 15 th, 2014

2. Outline 1 Introduction 2 Related Research 3 Data and Methodology 4 Conclusion

3. Introduction How do recessions effect major league sports in the United States? Major league sports are a multi-million dollar industry Recessions = reduced spending on entertainment Introduction Related Research Data and Methodology Results

4. Related Research Elasticity of sporting events Getting fans to the game Spending at the game Introduction Related Research Data and Methodology Results

5. Elasticity of Sporting Events  U.S. sports industry is more elastic during recessions. (Cantor and Rosentraub, 2012)  Reducing ticket prices in recessions can raise profit margins if costs to serve customers at margin is close to zero. (Park, Lee, and Miller, 2013) Introduction Related Research Data and Methodology Results

6. Getting Fans to the Game  Creative ways to bring fans to stadium (Mellinger, 2009)  Free tickets for unemployed (New Jersey Nets)  Purchase tickets on layaway (New Orleans Saints) Introduction Related Research Data and Methodology Results

7. Spending at the Game  If fans can’t afford concessions they will stay home (Steinbach, 2009)  Concession bundling/ “dollar menus” (Steinbach, 2009)  Reduction in prices  Example: New York Mets= 15 to 29% decrease in concession prices despite new stadium (Steinbach, 2009) Introduction Related Research Data and Methodology Results

8. Data  Housing Price Index (HPI) years 1991-2011  Federal Housing Finance Agency  Fan Cost Index (FCI)  Team Marketing Report  Average attendance level  Average ticket price Introduction Related Research Data and Methodology Results

9. Methodology  Linear regression to determine relationship between:  Housing Price Index vs. Fan Cost Index  Housing Price Index vs. Average attendance level  Housing Price Index vs. Average ticket price  MLB, NFL, NHL, and NBA  Analyzed differences to account for “big city effect” Introduction Related Research Data and Methodology Results

10. Introduction Related Research Data and Methodology Results  As housing price values increase, attendance levels at NFL and MLB games also increase.  As housing price values increase, the average ticket price at a NHL game will decrease.

11. Results  No significant evidence that HPI affects:  NFL Fan Cost Index or average ticket price  MLB Fan Cost Index or average ticket price  NHL Fan Cost Index or average attendance level  NBA Fan Cost Index, average attendance level, and average ticket price Introduction Related Research Data and Methodology Results

12. Introduction Related Research Data and Methodology Results

13. Conclusion  In the future:  More advanced statistical/econometric procedures  Include more variables  Recessions appear to have an effect on:  NFL/MBA attendance levels  NHL ticket prices Introduction Related Research Data and Methodology Results