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Friday, April 14, 2006

The Win-Win Proposition

A couple days old, but here's a fine Baseball Prospectus article about something near and dear to the heart of this blog, namely, how team revenues fare in two-team markets. Nate Silver tries to follow the money:
I decided to examine this question more systematically, looking at attendance and related data going back to the mid-80s. The question I was trying to answer was this: suppose that the White Sox produce an extra $1.00 in attendance revenues. What effect, if any, does this have on the attendance revenues of the Cubs? Predictably, this involved a series of regression equations with only slightly fewer ingredients than the Hot and Sour Soup at the Chinese takeout place down the street. In particular, I looked at attendance revenues relative to both recent and long-term on-field performance, ticket prices, stadium changes and renovations, and the attendance revenues of the other team in a two-team market. Revenue figures were adjusted relative to major league average revenues in the given season, in order to account for macroscopic economic fluctuations from year to year.

The figures that I’m going to present look like this:

Jets -> Sharks     $0.25        [$0.04, $0.45]
Sharks -> Jets    -$0.15        [-$0.36, $0.10]
What this notation means is that for every additional dollar in attendance revenues that the Jets bring in, the Sharks can expect an increase in attendance revenues of 25 cents. Conversely, for every additional dollar in attendance revenues that the Sharks bring in, the Jets can expect a decrease of 15 cents. The 95 percent confidence intervals from the regression equations are presented in brackets.
Okay, so all that done, how does it look for the Angels and Dodgers? How's this:
Dodgers -> Angels    $0.42        [$0.23, $0.60]
Angels -> Dodgers    $0.29        [$0.08, $0.50]

Same thing going on; in fact the effect is a bit stronger. Then again, the only people stranger than New Yorkers are Angelinos.
When I was a kid, it used to be San Franciscans and Berkeleyites who got the blunt end of the pen in such comparisons. But I digress.
In any event, general managers are wasting their time if they’re worrying about competing with the second team in their market. Rather, they should be thinking about ways to cooperate, such as joint marketing initiatives or even cross-town partial season ticket plans. All of this, by the way, should be great news for baseball--the game itself is stronger than any one franchise. Baseball needn’t be a zero-sum game; in fact, the opposite is true.
This confirms for me something I've thought for a long time now; given the size of the market, McCourt shouldn't be too worried about the Angels swiping mindshare from his team (although allowing the team to go on an extended crater tour wouldn't be such a hot idea, either). More people just paying attention to baseball means more sales opportunities, period.

that makes sense to me, intuitively.

though it's interesting that the dodgers doing well is better for the angels than the angels' success is for the dodgers.
A bit surprising because there are a lot more Dodger tickets available (approximately 10K per game) than Angels tickets.

Heck, if you go to Ticketmaster right now, you'll probably find better seats to a Dodgers game than an Angels game.
Vishal, I'm sure that most of that factor is because the Angels have been mediocre at best over most of the last 20 years or so.
Matthew -
Keep in mind that Dodger Stadium is 10,000 (give or take a thousand) seats bigger than the Big A.
heh, the dodgers have been mediocre at best for the past 18 years or so

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