Content area
Full Text
ABSTRACT
This paper examines the demand for attendance at National Football League (NFL) games using a rational addiction model to test the hypothesis that professional football displays the properties of a habit-forming good. Rational addiction theory suggests that past and future consumption play a part in determining the current period's consumption for habit-forming goods. Additionally, we postulate the behavioral implications of profit-maximizing ticket pricing behavior by NFL teams. Previous studies have been unable to detect pricing power by NFL teams. Our model of pricing power allows us to identify theoretically- anticipated pricing behavior. A pooled data set is collected using statistics from each NFL team from the 1983 to the 2008 seasons. Current attendance is modeled as a function of team specific variables, including past and future attendance, ticket price, and team performance. The model is estimated using Two-Stage Least Squares (2SLS). We also treat the censored nature of ticket demand as NFL teams frequently experience sell-outs. It is found that past and future attendance, winning percentage, the age of the stadium in which a team plays, and own-price demand elasticity influence attendance. The fact that coefficients for past and future attendance are positive and significant in this analysis lends support to the notion that NFL fans display characteristics of rational addiction in their consumption behavior. Further, we find evidence to support profit-maximizing behavior in ticket sales.
Keywords: sports attendance; rational addiction; NFL demand
INTRODUCTION
In 2002, National Football League (NFL) attendance totaled 16,931,340, with an average attendance per game of 66,138. As illustrated in Figure 1, attendance figures have been on the rise since these statistics were first made available. In the NFL, ticket revenues account for nearly one-third of all revenues, making attendance quite important to the league.1 Football fans spend substantial amounts of time and money when they attend an NFL game. According to the Fan Cost Index calculated by Team Marketing Report, the average fan spends anywhere from near $200 in Atlanta to over $400 in New England when they go to a game. Furthermore, the NFL boasts more fans than any other professional sport in the United States. Over half of all Americans claim to follow the league. Why is it that that the NFL is so popular...