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Competitive Balance and Attendance in Major League Baseball: An Empirical Test of the Uncertainty of Outcome Hypothesis

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  • Brian P. Soebbing

    () (University of Alberta)

Abstract

Competitive balance research partitions into two areas: analyzing sports policy and its effect on competitive balance and the uncertainty of outcome hypothesis. This paper examines the latter section. No formal analysis of the relationship between competitive balance and regular season average attendance in Major League Baseball (MLB) using the actual to idealized standard deviation ratio exits. This paper examines the effect that competitive balance has on MLB attendance between the seasons 1920 and 2006. Additionally, this paper incorporates a games-behind variable to examine if fans are sensitive to team performance. The empirical model in this paper is a fixed-effects OLS model that corrects for heteroscedasticity. The results show a significant inverse relationship between the ratio, games behind, and regular season average attendance. This confirms the uncertainty of outcome hypothesis and shows that fans are sensitive to both league and team performance.

Suggested Citation

  • Brian P. Soebbing, 2008. "Competitive Balance and Attendance in Major League Baseball: An Empirical Test of the Uncertainty of Outcome Hypothesis," International Journal of Sport Finance, Fitness Information Technology, vol. 3(2), pages 119-126, May.
  • Handle: RePEc:jsf:intjsf:v:3:y:2008:i:2:p:119-126
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    Citations

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    Cited by:

    1. Helmut M. Dietl & Markus Lang & Stephan Werner, 2010. "The Effect of Luxury Taxes on Competitive Balance, Club Profits, and Social Welfare in Sports Leagues," International Journal of Sport Finance, Fitness Information Technology, vol. 5(1), pages 41-51, February.
    2. Petr A. Parshakov & Kseniya O. Baydina, 2017. "Brands or Uncertainty? An Empirical Test of the Uncertainty of Outcome Hypothesis in Russian Football," HSE Working papers WP BRP 163/EC/2017, National Research University Higher School of Economics.
    3. Humphreys, Brad & Zhou, Li, 2014. "The Louis-Schmelling Paradox and the League Standing Effect Reconsidered," Working Papers 2014-5, University of Alberta, Department of Economics.
    4. Nola Agha & Thomas Rhoads, 2016. "The League Standing Effect: The Case of a Split Season in Minor League Baseball," Working Papers 2016-13, Towson University, Department of Economics, revised Jul 2016.
    5. Brian Mills & Rodney Fort, 2014. "League-Level Attendance And Outcome Uncertainty In U.S. Pro Sports Leagues," Economic Inquiry, Western Economic Association International, vol. 52(1), pages 205-218, January.
    6. Liam J. A. Lenten, 2016. "Mitigation of Perverse Incentives in Professional Sports Leagues with Reverse-Order Drafts," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 49(1), pages 25-41, August.
    7. Lei Xinrong & Humphreys Brad R., 2013. "Game importance as a dimension of uncertainty of outcome," Journal of Quantitative Analysis in Sports, De Gruyter, vol. 9(1), pages 25-36, March.

    More about this item

    Keywords

    competitive balance; uncertainty of outcome; attendance; Major League Baseball; standard deviation of winning percentage;

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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