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The Economics of Stadium Sharing

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Ian Brennan

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Dylan Leasure

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January 29th, 2012

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I. Introduction Undoubtedly, game attendance is a closely scrutinized aspect of any National Basketball Association (NBA) team. It provides some insight into both the relative strength of fan bases as well as a portion of the revenue earned by teams and venues. Obviously, a strong and satisfied fan base is desirable for NBA teams; for instance it is a teams fans that buy tickets, purchase merchandise, and drive T.V. ratings. While attendance at an NBA game does not completely reflect the number of tickets sold, it still serves as an important indicator of that figure. Furthermore, high attendance figures at these games typically accompany greater sales among concessions and merchandise which also factor into both a teams and a venues revenue. Erecting a professional sports stadium is an enormously expensive and involved endeavor, and for this reason there are many teams that utilize the same venue as at least one other professional team. Among the five major sports in the United States, which are football, baseball, basketball, hockey, and soccer, this practice is most common between the NBA (NBA Properties, Inc., 2010) and the National Hockey League (NHL) (NHL 2012, 2012). Indeed, out of the 30 teams forming the NBA (NBA Properties, Inc., 2010), there are currently ten that share a home arena with a team from the NHL (NHL 2012, 2012). It is entirely conceivable that the sharing of a home arena with an NHL team can have an effect on the attendance at NBA basketball games. There are two ways in which an effect on attendance caused by stadium sharing might manifest. On one hand the use of a single arena for two professional teams could have a positive effect on attendance; the attendees exposure to the

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marketing for both teams instead of just the one could result in higher attendance during both of their games. There is also the possibility that stadium sharing could have a negative effect, due to a degraded aesthetic quality or profit loss when seats arent filled at an NHL game but are needed in an NBA game. In order to examine this issue further, we will draw upon economic analysis. We are interested in using economic analysis to clearly establish whether or not this arena sharing between NBA and NHL teams has any measurable effect, positive or negative, on attendance at NBA games. Should any attendance differential exist between those that share with the NHL and the rest of the teams in the league, we are also interested in quantifying it. Our analysis will be conducted by comparing attendance for the ten teams that share arenas with attendance for the 20 other teams that do not. Attendance will be measured using data obtained from ESPNs online database for the 2008-2009 through 2010-2011 seasons (2012 ESPN Internet Ventures, 2012), and we will be analyzing attendance as a percentage of capacity rather than raw attendance figures. That is, attendance will be quantified as the recorded number of people at a game divided by the total seating capacity of each NBA arena. As venues vary in seating capacity, measuring attendance in this manner lends a better means of comparison than figures for absolute attendance. Additionally, in order to examine attendance in this way, we will account for the different variables that drive it such as a teams lagged winning percentage and average ticket prices. Since the results will show if there is any effect on the attendance whatsoever when a stadium is shared as well as what that effect is, they can provide insight into

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some of the benefits or drawbacks associated with building multipurpose sports venues. Knowing this can tell us whether or not shared stadiums should be attractive to developers and cities looking to build a new arena. Information about this is going to become more pertinent in the very near future; the sports facility construction cycle will begin again around the year 2020 (Siegfried, Zimbalist, 2000, p.1). This is due to the thirty year average of the useful economic life of stadiums (Siegfried, Zimbalist, 2000, p.1).

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II. Economic Model Attendance at NBA basketball games can be modeled using simple supply and demand analysis with attendance determinants making up the demand equation (Garcia and Rodriguez, 2002). Additionally, NBA franchises are treated as monopolies due to the fact that each one provides a unique product (Leeds and von Allmen, 2010). In this instance the demand for seats in an NBA arena is primarily predicated on consumer income, population, prices of related goods, and consumer preferences, which is consistent with economic theory (Leeds and von Allmen, 2010). Furthermore, since ticket prices are predetermined for a season, consumer expectations regarding prices do not factor into demand (Leadley and Zygmont, 2005)Obviously, fans of a particular sports team gain a certain benefit from watching a live performance of that team. Standard economic theory states that these consumers will demand seats at an NBA game up until the point at which the marginal benefits they receive are equal to the price of ticket for that game (Leeds and von Allmen, 2010). Moreover, as noted above, NBA franchises hold market power due to offering a unique product, so they

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are assumed to behave as monopolies. Notably, the marginal cost for each ticket provided by the franchise is equal to zero up until when stadium capacity is reached, and then marginal cost is treated as infinite, instead (Leeds and von Allmen, 2010). This is important because it means the monopolist NBA franchise will set its ticket price such that the quantity of tickets sold occurs where the firms marginal revenue becomes equal to its marginal cost of zero (Leeds and von Allmen, 2010). Alternatively, if stadium capacity is reached before this occurs, then the venue will be sold out. Since it is assumed that NBA teams are profit-maximizing firms, they will care more about charging a price that causes marginal revenue and marginal cost to be equal rather than hosting a sellout crowd. Thus, between the behavior of the fans and the franchises, equilibrium is established in the market for tickets for an NBA game. Figure 1 depicts this equilibrium in the market for tickets for an NBA game. On the vertical axis is the price of a ticket in dollars, while the quantity of tickets is represented on the horizontal axis. The demand for tickets represents the marginal benefit to fans and slopes downward due to the fact that as the price of ticket increases, the quantity of tickets demanded by fans falls (Leeds and von Allmen, 2010). Additionally, the line labeled MC for marginal cost represents the quantity at which marginal cost becomes infinite due to the fact that arena capacity has been reached. This particular graph

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shows an example of the case in which a sellout will not occur because marginal revenue and marginal cost become equal before venue capacity is reached. Changes related to the different determinants of demand will cause the demand curve to shift. In other words if say fans preferences change in favor of attending more NBA basketball games, then the demand for tickets for an NBA game will increase which will induce an outward shift in the demand curve from D1 to D2. Consequently, the marginal revenue curve also shifts from MR1 to MR2 because the home team will be able to charge a higher price and thus, receive more revenue. As a result equilibrium moves from the point (P1,Q1) to (P2,Q2). This is illustrated in Figure 2. For this analysis any attendance related effect caused by arena sharing between NBA and NHL franchises is treated as an aspect of consumer preferences, which, as is shown above, is one of the determinants of demand. Assuming that this venue sharing does indeed have an effect on the attendance at NBA games, there are two ways in which this effect might appear, and so they must both be considered. On one hand it could result in an attendance premium at NBA games. That is, the sharing of arenas by two major sports could cause

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attendance figures to be higher for those NBA teams that share a venue than it is for those that do not. This positive effect on attendance would manifest in the form of an outward shift of the demand curve. For instance an NBA arena that also houses an NHL team exposes NHL fans to marketing for NBA games. Most marketing related to the NBA is aimed at promoting the entire league as opposed to any one specific franchise (Leeds and von Allmen, 2010). However, in this case the lack of marketing for a specific team does not matter because there is the potential that fans of a completely different sport (hockey) are being affected. Further, anything related to the NBA franchise housed in a given arena can also be treated as marketing because fans coming and going from NHL games are exposed to them. This extra dose of marketing reminds these fans that they can also attend NBA games at the very same venue and results in a rightward shift of the demand curve which can be seen in Figure 3. There is also the possibility that there could be a negative effect on attendance due to stadium sharing. Stadium sharing could draw a lot of attention to the team with the highest win percentage. Winning percentage has a significant effect on attendance; of course any consumer of professional sports is more likely to attend the game of a winning team. (Coates and Humphreys, 2007) In a stadium sharing scenario, winning percentage could display a negative effect on a teams attendance. With a shared stadium substitution could play a role in the attendance of the individual sports teams. If one team has a higher win percentage we could see it pull attendance from the sports

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team it shares a stadium with. This could lead to very negative effects. If one team is able to sell out and the other is struggling to cover costs due to lack of attendance we will start to see some serious problems with stadium sharings economic feasibility. These negative effects could cause a leftward shift in the demand curve for NBA tickets shown in Figure 4. Focusing on the percent change the winning percentage of both teams has on attendance is important to finding whether or not stadium sharing has an effect on attendance.

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III. Literature Review Coates and Humphreys (2007) aspired to link ticket prices with concessions and attendance at professional sporting events. They did this by developing a monopoly price determination model based on fan cost index, which encapsulates all complementary good pricing at professional sporting events, ticket demand function, and the capacity constraint of the stadium (Coates and Humphreys, 2007). The main goal was to maximize revenue while taking the capacity constraint problem into consideration. The results of the data show monopolistic leagues that oddly price at an inelastic point. The ticket price variable was found to be significant in the NBA and MLB (Coates and Humphreys, 2007). The ticket price elasticity was also found to be small, meaning it was inelastic (Coates and Humphreys, 2007). It was also found that concession prices are placed at a more elastic point, having found the fan cost index statistically significant and its elasticity is greater than that of the ticket price variable. From this Coates and Humphreys (2007) found that concession pricing is

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based on concessions profit maximization, and that attendance is not affected by this pricing, except for in the NBA. The study also finds that in the NFL, because the capacity constraints were binding due to the high number of games that were at capacity or just below it, the tools that worked in estimating for the MLB and NBA would not work for the NFL (Coates and Humphreys, 2007). In our analysis of the effects of stadium sharing on attendance, this information is especially pertinent. Finding that an inelastic ticket price is the most common in the NBA gives us a more detailed view on attendance and how price affects it. Coates and Humphreys (2007) finding that the FCI is significant in the NBAs attendance but not in the MLB and NFL, is both very interesting and also obviously related to examining attendance at NBA games. By getting a more detailed idea about attendance, the inputs that need to be included in its accurate estimation and how those inputs are related to changes in attendance as a percentage of capacity, the model will give a better indication of the true effects of arena sharing on attendance. Morse, Shapiro, McEvoy, and Rascher (2008) explored the possibility that roster turnover may have an effect on demand in the NBA. They wanted to see if player movement and loyalty really affected attendance. The model used was a demand model, but it was found that a censored model worked best in order to add some extra weight to sell-outs. Due to the fact that an OLS model assumes that there are no constraints on the variables, the authors found that sell-outs do not carry as much weight as they should because demand usually exceeds capacity (Morse, Shapiro, McEvoy, and Rascher, 2008). They devised the censored model to correct for this and show that sell-outs meant demand in excess of capacity.

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They estimated multiple regression models all having attendance as the dependent variable. The main focus was on the variables that had to do with roster turnover. Roster turnover was explained with player turnover, the players who played 60% or more of the seasons games and did not return on the following years roster, and salary turnover, the proportion of the teams payroll that does not return the next season (Morse, Shapiro, McEvoy, and Rascher, 2008). They included variables such as previous attendance, current and previous season winning percentages, All-star players, per-capita income, local major sports competition, and a few other explanatory variables that were previously found to have statistical significance when estimating attendance. They used previous seasons uncensored variables and seasons that werent sold out to forecast demand above capacity in the censored regression. This helps to show the real demand changes due to certain roster changes and gives them true weight. The results found that in the uncensored regression the significant independent variables were previous attendance, current team win percentage, previous team win percentage, and all-star players on the roster, neither player or salary turnover was deemed statistically significant by this model (Morse, Shapiro, McEvoy, and Rascher, 2008). When the censored regression was run they still found that player and salary turnover were not statistically significant but, population and local sport competition were found to have statistical significance (Morse, Shapiro, McEvoy, and Rascher, 2008). Interestingly, per-capita income had no statistical significance, and neither did ticket price (Morse, Shapiro, McEvoy, and Rascher, 2008). While it was found that roster turnover had no significant effect on attendance, the findings of this study

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conflict with the perspectives of many previous studies with regard to significant variables that affect attendance. This study is very interesting with respect to the study we are conducting now because of its findings on local sports competition. Through running their regressions they found that local sports competition was the only variable that had a noticeably negative and significant effect on attendance (Morse, Shapiro, McEvoy, and Rascher, 2008). This is important to this study because we are trying to find the statistical significance stadium sharing has on attendance. Stadium sharing is obviously local sports competition; we could find that the negative effect is much greater when two local professional sports teams play in such proximity. Leadley and Zygmont (2005) examine the possibility of a honeymoon effect on attendance at NBA basketball games from 1971-2000. In this particular case, the honeymoon effect can be described as a new NBA arena experiencing high attendance levels during the first several seasons following its completion but then encountering a decline in attendance as it begins to age (Leadley and Zygmont, 2005). The model they use to examine whether or not a honeymoon effect was present during the 1971-2000 seasons relies upon several standard assumptions. Leadley and Zygmont (2005) assume that demand for seats at NBA games is a linear function of ticket price, the marginal cost of a ticket is zero, and that demand is also determined by team and city characteristics. Also of note is the fact that population and income variables, which are known determinants of demand, were excluded due to collinearity with the dummy variables estimated for each of the teams (Leadley and Zygmont, 2005).

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Two models were estimated, one for attendance demand and one for ticket price. Several lag variables such as a teams previous year winning percentage were included because ticket prices are determined prior to the beginning of the season (Leadley and Zygmont, 2005). They estimated fixed-effects models using panel data and employed a maximum-likelihood Tobit procedure in order to censor for arena capacity (Leadley and Zygmont, 2005). This was done because roughly 15% of their observations were of teams selling out for the entire season, and 12% of their observations were for teams that averaged a 95% attendance rate (Leadley and Zygmont, 2005). Failing to account for these facts would have caused bias among the estimators, but the authors note that dummy variables can be used as a censoring mechanism as well and with similar results (Leadley and Zygmont, 2005). After estimating their model, Leadley and Zygmont (2005) found that there was a honeymoon effect for NBA arenas during the 1971-2000 seasons which they estimate to be between 15 and 20%. They note that this nonlinear effect begins to substantially decrease after the first four years following the completion of an arena and effectively disappears after ten years (Leadley and Zygmont, 2005). While Leadley and Zygmonts (2005) results do not directly pertain to our hypothesis, they highlight some of the methods that must be used in order to estimate a correct model. For instance the censoring of arena capacity will be conducted using the dummy variable method, rather than the Tobit procedure, and our model for attendance is similar to theirs. Furthermore, Leadley and Zygmont (2005) note that there was a boom in the construction of new NBA arenas during the 1990s. As our dataset is comprised of data for the 2008-2009, 2009-2010, and

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2010-2011 NBA seasons, we ignore the honeymoon effect in our analysis. There should be enough of a time difference between our dataset and theirs for the implications of this effect to be significantly reduced, that is, if the honeymoon effect is still even present. IV. Data and Methodology Using data from ESPN for the 2008-2009 through the 2010-2011 NBA regular seasons and release 1.9.7 of the Gretl software package, regression analysis will be used to examine the effects of stadium sharing between NBA and NHL teams on attendance at NBA games (2012 ESPN Internet Ventures, 2012). More specifically, since this analysis will be conducted using panel data, an ordinary least squares regression model has been specified below in its matrix notation: APCT =X" + #it An ordinary least squares model has been specified in this case because we assume that the heterogeneity inherent to each NBA team does vary over time. The dependent variable APCT represents the average overall home attendance as a percentage of arena capacity was collected from ESPN (2012). There were a couple of years for which no percentages were available, so values were manually calculated by dividing the average home attendance figure for each team by the capacity of its arena (2012 ESPN Internet Ventures, 2012). The matrix X contains the continuous variables excess, and price, as well as the dummy variable teams for each team, times, a dummy variable to explain which year the data is from, and shared, explaining whether or not the stadium is shared by multiple professional teams.

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Additionally, the standard OLS well-behaved error term is represented in the model by the term !it. A dummy variable is used to represent whether or not an arena is shared by the NBA team and an NHL team. It is denoted as shared and takes a value of one if the home arena of a team is shared and a value of zero if it is not. The data for whether or not an arena is shared was compiled by cross referencing the NBA handbook (NBA Properties, Inc., 2010) and the NHLs official website (NHL 2012, 2012). Of note is that there are 11 NBA teams that share but only 10 arenas that are shared with the NHL. This is because the Clippers, Lakers, and the Kings (NHL) all share the Staples Center. However, this is not an issue because the Staples Center is listed as having different capacities for the Clippers and Lakers which allows them to be treated as different, despite sharing an arena (NBA Properties, Inc., 2010). Some of the variables typically associated with demand such as income, population, and unemployment have not been included. Leadley and Zygmont note that the inclusion of these variables and the team dummy variables can lead to multicollinearity issues (2005). As ticket price is an important factor to examine when analyzing attendance, the average general admission ticket price has been included for each team in each year and is denoted by the variable priceit. Obviously, these are subject to inflation over time, so the values have been deflated to 2008 dollars using the average annual consumer price index (Bureau of Labor Statistics, 2012). Pricing information was obtained from Forbes.com (2011) and Team Marketing Report (2012). Another important factor related to attendance at NBA games is a teams winning percentage. Since fans expectations for a teams performance is in part determined by that

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teams performance in the previous season, we lagged win percentage by one year. This is represented by the variable winpctit-1 where the subscript t-1 represents the one year lag applied to this variable. Team winning percentages were taken from ESPN (2012 ESPN Internet Ventures, 2012). In some years the average attendance as a percentage of capacity for several teams was in excess of one hundred percent. For this reason the final variable included in our model is a dummy denoted as excessit that serves as an indicator of when a teams average attendance as a percentage of capacity is above one hundred percent. Leadley and Zygmont explain that some method of accounting for values greater than one hundred percent should be included because failing to do so results in biased estimation (2005). The inclusion of a dummy variable is done in lieu of using the Tobit procedure since Leadley and Zygmont note that this method serves as an adequate alternative (2005). Summary statistics are included in Table 1. There are 90 observations 30 teams with 3 years of collected data each. The data summary is fairly ordinary, we see that Attendance as percent of capacity has a fairly high mean at 90%. This tells us that most of our teams are on average filling 90% of their seats during the regular season. As discussed before, we see that the maximum for our APCT variable is above 100% to account for those teams that have sell-out games. Win percentage is an interesting variable to investigate as well, using all the teams in the NBA we find that on average 50% of the games are won, this might seem odd but every game played always has a loser therefore, it would show that our data were incorrect if the average was

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anything but 50%. The shared variable average is intriguing because it tells us that around 36% of the stadiums in the NBA are shared. Figure 5 depicts a histogram of the average attendance as a percentage of capacity for the 30 teams in the NBA. It was created using release 2.13.0 of the R statistical package. We see in figure one that our data is skewed leftward. This means that more teams operate at a higher attendance as a percentage of capacity. The data does not seem to have a normal distribution; we see an odd dip between 85 and 95 percent, a spike between 95 and 100 and then a massive drop for over 100 percent. The drop after 100 is easily explained by the fact that most teams do not have a sell out season. The gap between the lower attendance percentages and high ones is difficult to explain at this point but is an interesting pattern in the data, and may be of significance later in the study. V. Estimation and Results After testing the ordinary least squares model we specified in the previous section, we found that our overall model is significant at traditional levels of significance. Full results of the regression analysis can be found below in Table 2 and Table 3. Since we used an ordinary least squares model, an F test was used to check model significance. As Table 3 shows, the p-value associated with this test implies statistical significance at all traditional levels. The results of this test suggest that the model has a certain degree of explanatory power because at least one of the coefficients associated with an explanatory variable has been found to be significant. Additionally, the R2 value of 0.918426 indicates that 91.8426 percent of the variation

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in the average attendance as a percentage of capacity can be explained by our ordinary least squares regression model. The winning percentage of a team in the previous year was found to be statistically significant at the .1 significance level but not the .05 or .01 levels of significance. This is reflected in the relatively low p-value of 0.0866. Holding all other factors constant, a one percentage point increase in the winning percentage of a team in the previous year is associated with a 12.2309 percentage point increase in the average attendance as a percentage of capacity in the current year. This is consistent with the results obtained by Leadley and Zygmont (2005). Additionally, the average price of a ticket was found to be insignificant at all traditional levels of significance with a p-value of 0.4391. The fact that ticket price is not significant at all traditional significance levels is unexpected as theory indicates that there is a negative relationship between price and quantity (attendance) (Leeds and von Allmen, 2010). Indeed, we still regard price as an important aspect of our model due to the stance of the prevailing literature; ceteris paribus, a one dollar increase to the average price of a ticket is associated with a -0.0542901 percentage point decrease to the average attendance as a percentage of capacity. Of the two attendance related dummy variables included in our model, both the excess variable and the shared variable were found to be significant at all traditionally used levels. That is, the shared variable was found to be significant with a p-value of 0.0043. Given our hypothesis that stadium sharing between NBA and NHL teams could have an effect on attendance as a percentage of capacity at NBA games,

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this result is not surprising. A stadium that is shared between NBA and NHL teams has on average a 2.62184 percentage point higher attendance as a percentage of capacity than an arena that is not shared, ceteris paribus. As mentioned in the previous section, the excess variable has been included as a censor for teams that had average attendance levels of 95% of greater in order to prevent biased coefficients (Leadley and Zygmont, 2005). The excess variable is significant, meaning that for an arena whose average attendance as a percentage of capacity was above 95%, the average attendance as a percentage of capacity was 5.44279 percentage points higher than it was for an arena whose average was less than 95%, holding all other factors constant. Time dummies were included in order to account for unobserved heterogeneity, but these were found to be insignificant when using an F test. The beta values estimated by the regression model had p-values of 0.3056 and 0.8656 for the years t-1 and t-2, respectively. Most of the team dummies were found to be significant at all traditional levels. Only the dummies for the Sacramento Kings and for the Minnesota Timberwolves were found to not be significant at traditional levels. Furthermore, the variable for the Milwaukee Bucks was found to be significant at the .1 level but not the .05 or .01 levels of significance. These results are not surprising because previous studies have found that team dummies capture many of the factors associated with demand for tickets for NBA games. For instance Leadley and Zygmont found that these dummies capture much of the variation associated with demand determinants such as income and population levels (2005).

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We also specified a model utilizing the logs of average attendance as a percentage of capacity, ticket price, and the previous seasons winning percentage as an alternative means for examining whether or not arena sharing has an effect on average attendance as a percentage of capacity. Full results of this log-log model specification can be found below in Table 4, while results from the F test can be found in Table 5. The results of this model suggest that it is worse fit than our original model with regard to the individual significance of several of the explanatory variables. That is, the extremely small p-value associated with the overall F test signifies model significance at all traditional levels, but several important explanatory variables are now insignificant. The team dummy variables are largely unchanged other than with regard to the coefficient values. Mystifyingly, the logprice variable is now insignificant at the .1, .05, and .01 levels, and the logwinpctatt-1 is also now insignificant. The shared variable is still significant in this specification and has a pvalue of 0.0179 in this instance. Moreover, the time dummies are still not significant according to the results of the regression model. Figure 2 can be found below, and it depicts the predicted attendance for shared and non-shared arenas. This provides a visual display of the attendance premium associated with arena sharing between NBA and NHL teams. While the predicted values for shared arenas have a range that begins at a lower attendance level than those of the non-shared venues, these values are also most heavily concentrated above 95% of capacity. In comparison the fitted values for the nonshared arenas are more evenly spread out between about 75% and 100% of arena

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capacity. Also, there are more shared arenas with attendance levels above 100% of capacity than there are non-shared arenas with attendance levels above this amount. VI. Conclusion In conducting this analysis, our intent was to determine whether or not the sharing of a home venue by NBA and NHL teams has any effect, whether positive or negative, on the attendance as a percentage of capacity at NBA games. We used an OLS regression model with time and unit dummies in order to test our hypothesis that arena sharing does have some sort of an effect on attendance. According to the results of our regression analysis, there was an attendance premium associated with arena sharing between NBA and NHL teams for the 2008-2009 through 2010-2011 seasons. That is this sharing of a home arena was associated with a positive effect on attendance as a percentage of capacity at NBA games during this time frame, ceteris paribus. This attendance premium was likely due to the fact that venue sharing between teams belonging to these two leagues exposed fans attending an NHL game to marketing for both the NBA as a whole and for the specific NBA team housed by that arena. Additionally, for these seasons we found positive linear relationships between the lagged winning percentage of a team and the average price of a general admission ticket. The first of these results is consistent with the findings of Leadley and Zygmont (2005), while the second falls in line with the prevailing literature (Leads and von Allmen, 2010). For future research studies, we would like to examine data for other NBA seasons in order to determine whether or not our findings about the effect of stadium

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sharing on attendance hold for those other seasons. Furthermore, we would also like to examine whether this attendance premium associated with arena sharing is also present for attendance at NHL games. Table 1: Summary Statistics

Variable

Mean

Minimum

Maximum

Number of Observations

APCT winpctt-1 price shared excess

90.33444444 0.500030894 50.59777778 0.366666667 0.1

69.1 0.146341463 22.89 0 0

104.7 0.804878049 113.4 1 1

90 90 90 90 90

Figure 5: Histogram of APCT

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Figure 6: Predicted Attendance for Shared and Non-Shared Arenas

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Table 2: Coefficients for an Ordinary Least Squares Model with Robust Standard Errors Dependent Variable: Average Attendance as a Percentage of Arena Capacity 2008-2010 n = 90 Variable Intercept shared excess winpctatt-1 Coefficient 76.5244 2.62184 5.44279 12.2309 Standard Error 3.20878 0.879058 1.23552 7.00895 P-value 1.11e-030 0.0043 4.93e-05 0.0866

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price dt-1 dt-2 Bucks Bulls Cavaliers Celtics Clippers Grizzlies Hawks Heat Hornets Jazz Kings Lakers Magic Mavericks Nets Nuggets NYKnicks Pacers Pistons Raptors Rockets SeventySixers Spurs Suns Thunder

-0.0542901 1.26187 -0.388141 -0.150552 16.7563 15.8848 14.4876 7.71639 -4.28814 5.45483 14.0920 8.78995 16.1138 -1.33499 16.9733 15.3948 14.7240 -5.68568 5.92670 19.4771 -3.07141 5.83664 7.60864 11.0796 -8.49474 15.7361 16.1895 19.7767

0.0696547 1.22033 1.11619 0.885113 1.84534 1.77816 2.49797 1.53132 0.734502 0.682280 2.18021 0.884439 1.13645 2.40625 4.29947 1.49127 1.97332 1.04780 1.74614 3.31703 0.647665 0.916594 1.40434 1.29102 0.546460 1.53461 2.36670 1.44146

0.4391 0.3056 0.7289 0.8656 1.57e-012 2.70e-012 3.38e-07 5.39e-06 2.93e-07 8.89e-011 2.84e-08 6.96e-014 5.15e-020 0.5813 0.0002 1.76e-014 6.61e-010 1.33e-06 0.0013 2.59e-07 1.54e-05 4.07e-08 1.37e-06 9.92e-012 8.83e-022 2.25e-014 6.88e-09 2.13e-019

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Timberwolves Trailblazers Warriors

-0.700140 15.8164 14.6722

1.67783 1.66144 0.579165

0.6781 3.16e-013 5.27e-032

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Table 3: F Test for an Ordinary Least Squares Model with Robust Standard Errors F Statistic P-Value R2 Adjusted R2 18.21276 1.05e-19 0.918426 0.867998

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Table 4: Coefficients for a Log-Log Model with Robust Standard Errors Dependent Variable: Log(Average Attendance as a Percentage of Capacity) 2008-2010 n = 90 Variable Intercept Coefficient 4.58034 Standard Error 0.156478 P-value 3.20e-035

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shared excess l_winpctatt-1 logprice dt-1 dt-2 Bucks Bulls Cavaliers Celtics Clippers

0.0320740 0.0598856 0.0374958 -0.0483329 0.0164793 -9.63640e-05 0.0343316 0.200067 0.210047 0.195024 0.0963752

0.0131408 0.0145711 0.0346991 0.0426786 0.0153121 0.0107499 0.0181658 0.0241263 0.0225913 0.0285762 0.0220949

0.0179 0.0001 0.2846 0.2623 0.2865 0.9929 0.0640 2.92e-011 7.09e-013 7.31e-09 5.71e-05

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References 2012 ESPN Internet Ventures. (2012). NBA Attendance Report-2011. Retrieved from http://espn.go.com/nba/attendance/_/year/2011 Bureau of Labor Statistics. (2012). Cpi inflation calculator. Retrieved from http://www.bls.gov/data/inflation_calculator.htm Coates, D., & Humphreys, B. (2007). Ticket Prices, Concessions, and Attendance at Professional Sporting Events. International Journal of Sport Finance. 2(3), 161-170.

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Forbes.com. (2011, Jan 26). Nba team valuations. Retrieved from http://www.forbes.com/lists/2010/32/basketball-valuations-11_NewYork- Knicks_328815.html Garcia, J., & Rodriguez, P. (2002). The determinants of football match attendance revisited: empirical evidence from the spanish football league. Journal of Sports Economics, 3(18), 18-38. Leadley, J. C., & Zygmont, Z. X. (2005). When is the honeymoon over? National basketball$association attendance 1971-2000. Journal of Sports Economics, 6(203), 203-221. Leeds, M., & von Allmen, P. (2010). The economics of sports. (4th ed.). Boston, MA: Pearson Education, Inc. Morse, A. L., Shapiro, S. L., McEvoy, C. D., & Rascher, D. A. (2008). The effects of roster turnover on demand in the national basketball association. Sports Finance, 3(1), 8-18.

International Journal of

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