An examination of possible expansion or relocation sites for the NBA is undertaken using a two-equation system requiring two-stage probit least squares to estimate. The location model forecasts the best cities for an NBA team based on the underlying characteristics of current NBA teams. The results suggest that Louisville, San Diego, Baltimore, St. Louis, and Norfolk appear to be the most promising candidates for relocation or expansion.
Daniel Rascher and Heather Rascher
Mark McDonald and Daniel Rascher
A primary objective of sport marketers in the professional sport setting is to develop strategies to increase game attendance. Historically, one of the strategies to accomplish this goal has been the utilization of special promotions. This paper studied the impact of promotions on attendance at professional sport games. Specifically, this research examines (a) the overall effect of promotions on attendance, and (b) the marginal impact on attendance of additional promotional days. Using a data set containing 1,500 observations, we find that a promotion increases single game attendance by about 14%. Additionally, increasing the number of promotions has a negative effect on the marginal impact of each promotion. The loss from this watering down effect, however, is outweighed by the gain from having an extra promotion day.
Joris Drayer and Daniel A. Rascher
Teaching a graduate level sport finance class can be quite complex. With a variety of concepts such as pricing, budgeting, and public funding, to convey in a limited amount of time, new forms of pedagogy are necessary to assist instructors as this technologically-advanced generation enters into academia. Subsequently, technology has been created to apply basic concepts related to finance to the complexity of a professional sports organization. One such program is the Oakland A’s Baseball Business Simulator. Through interviews and “emotional recall” (Ellis, 2004), this evaluative case study seeks to determine the effectiveness of this technology within this environment.
Daniel A. Rascher and Michael M. Goldman
Shelley Valdez is a recent finance team hire at Duke’s Sporting Goods Store. She has 1 week to identify, gather, and analyze relevant information to calculate the financial value of the business, using the income and market approaches. She has also been asked to consider Duke’s liquidation value, and comment on the strategic options these calculations point to, before a board meeting of the owners next week.
Stephen L. Shapiro, Tim DeSchriver and Daniel A. Rascher
Luxury suites have become a key revenue source and an important element of sport facility design for professional sport organizations. There are a variety of factors influencing the pricing of luxury suites; however, the recent recession has impacted the premium seat sales market significantly. The current investigation was the first empirical examination of luxury suite pricing determinants for professional sport facilities. An economic model, utilizing multiple regression analysis, was constructed to examine the relationship between the current price of luxury suites for major North American professional sports facilities and selected demographic, economic, and team/facility/league-specific explanatory variables, in a uncertain economic climate. The final economic models were found to be significant, explaining 57% and 60% of the variability in luxury suite prices, respectively. Significant variables of interest included team performance and league affiliation, which had a positive influence and the number of competing venues, which had a negative influence on luxury suite prices. The current findings further the body of knowledge in the pricing of admissions to sporting events though the development of the first pricing determinants models for luxury suites, which take into consideration the tenuous economic environment.
Daniel A. Rascher, Mark S. Nagel, Matthew T. Brown and Chad D. McEvoy
A fundamental belief in professional sport leagues is that competitive balance is needed to maximize demand and revenues; therefore, leagues have created policies attempting to attain proper competitive balance. Further, research posits that objectives of professional sport teams’ owners include some combination of winning and profit maximization. Although the pursuit of wins is a zero sum game, revenue generation and potential profit making is not. This article focuses upon the National Football League’s potential unintended consequences of creating the incentive for some teams to free ride on the rest of the league’s talent and brand. It examines whether an owner’s objectives to generate increased revenues and profits are potentially enhanced by operating as a continual low-cost provider while making money from the shared revenues and brand value of the league. The present evidence indicates that, overall, being a low-cost provider is more profitable than increasing player salaries in an attempt to win additional games.
Daniel A. Rascher, Chad D. McEvoy, Mark S. Nagel and Matthew T. Brown
Sport teams historically have been reluctant to change ticket prices during the season. Recently, however, numerous sport organizations have implemented variable ticket pricing in an effort to maximize revenues. In Major League Baseball variable pricing results in ticket price increases or decreases depending on factors such as quality of the opponent, day of the week, month of the year, and for special events such as opening day, Memorial Day, and Independence Day. Using censored regression and elasticity analysis, this article demonstrates that variable pricing would have yielded approximately $590,000 per year in additional ticket revenue for each major league team in 1996, ceteris paribus. Accounting for capacity constraints, this amounts to only about a 2.8% increase above what occurs when prices are not varied. For the 1996 season, the largest revenue gain would have been the Cleveland Indians, who would have generated an extra $1.4 million in revenue. The largest percentage revenue gain would have been the San Francisco Giants. The Giants would have seen an estimated 6.7% increase in revenue had they used optimal variable pricing.