Zenon Zygmont and John Leadley, “When Is the Honeymoon Over? Major League Baseball Attendance 1970-2000,” Working Paper, Western Oregon University.
Professors Zygmont and Leadley (Western Oregon University) analyze the impact of a new stadium on attendance in Major League Baseball (MLB). Their analysis is based upon a profit-maximizing model of franchise behavior. They assume that costs are fixed in the short run (current season), so each team prices their tickets to maximize variable gate revenues. In turn, this strategy will maximize team profits.
Their data are from 1970-2000, a period over which 20 new stadiums were constructed in MLB. Using binary variables to measure the incremental annual attendance in a new stadium, they estimate that the “new stadium honeymoon” effect generates attendance gains for the first nine seasons. With respect to a new team (expansion or relocated franchise), there is a large positive attendance effect the first year, but by the third year there are negative effects. A new team has a much shorter honeymoon than a new stadium! Their results also indicate that stadiums built exclusively for baseball (mostly in the 1990s) have larger honeymoon impacts on attendance than those of multi-purpose stadiums (built mostly in the 1970s).
The authors conclude that the increased revenue (due to both increased attendance and higher ticket prices) will cover a substantial portion of a stadium’s construction costs. They estimate that the typical “baseball only” facility, which costs approximately $250 million, will generate additional revenues of about $200 million for the average team. This does not include additional revenues from concessions, parking, and/or naming rights. On the other hand, the empirical results imply that a MLB team cannot solve their economic problems by simply relocating to a new unoccupied market.
The paper is extremely timely given the continuing debate over public (taxpayer) subsidies for the construction of new stadiums. These subsidies are typical in all of the major team sports—not just MLB. The paper is accessible to intelligent non-economists although the statistical estimation techniques are advanced.
Reviewed by: Lawrence Hadley
University of Dayton
Dayton, OH 45469-2251
Copyright © 2003 Larry Hadley. All rights