SPH-M 304 Lecture Notes - Lecture 10: Jerry Mcmorris, Michael I. Monus, Regression Analysis

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magentaseal191

21 May 2018

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Department

Public Health

Course

SPH-M 304

Professor

Sinhung

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The Colorado Rockies are a team that have, over time, have never had strong attendance

from their fans. They have consistently been average in terms of the rest of the MLB but there is

still room for improvement. When asked the question “What are the significant determinants in

the major categories of game attendance of a MLB team?” there are many factors that could

come into play while trying to answer this question, but first I will lead off with some

background on the team. The Colorado Rockies came into the league in 1993 in the two-team

expansion of the Colorado Rockies and the Florida Marlins (now currently Miami Marlins). This

making the Rockies the tied for second newest team behind only the newest two teams being, the

Arizona Diamondbacks and the Tampa Bay Rays. Before the 90s, the city of Denver had wanted

a MLB team for a while because they only had a minor league team but wanted a major league

team to come their way if the league ever expanded. However, in 1991 the city got their break

with the expansion. A group who was led by pharmaceutical mogul Michael Monus and John

Antonucci, were granted the franchise and decided on the name the Rockies because of Denver’s

proximity to the Rocky Mountains. Unfortunately for them, they were forced out of the franchise

in 1992 before the expansion because of a scandal that left their reputation tarnished which led

Jerry McMorris to be able to pick up the franchise instead.

When the franchise started they were placed in the National League, West Division,

which is where they still play today. During the first two seasons of the Rockies seasons, they

shared Mile High Stadium with the Denver Broncos while the Rockies new MLB stadium, Coors

Field, was being built. After its completion in 1995 the Rockies started playing in their new

stadium which they still currently use today. Currently the Rockies have made it to the

postseason 4 times, most recently this year, 2017, and have won the NL pennant one time in

2007. Unfortunately, ever since the early 2000s after the glamor of the new franchise washed off,

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Document Summary

The colorado rockies are a team that have, over time, have never had strong attendance from their fans. They have consistently been average in terms of the rest of the mlb but there is still room for improvement. The colorado rockies came into the league in 1993 in the two-team expansion of the colorado rockies and the florida marlins (now currently miami marlins). This making the rockies the tied for second newest team behind only the newest two teams being, the. Before the 90s, the city of denver had wanted a mlb team for a while because they only had a minor league team but wanted a major league team to come their way if the league ever expanded. However, in 1991 the city got their break with the expansion. A group who was led by pharmaceutical mogul michael monus and john.

Related Questions

The vast majority of consumers have a relatively inflexible leisure budget. If a sports team moves to town, the money one spends taking a family to a game typically is money that is not spent at a local bowling alley, golf course, restaurant or theatre. The net effect on spending in the metropolitan area then is zero or very closes to zero. While sports teams may rearrange the spending and economic activity in an urban area, they are not likely to add much to it. An important exception to this reasoning occurs when sports teams attract new money into an area. If it were true, as the Boston Red Sox claim, that 35 percent of the fans at a typical game in Fenway Park came from out of state, then each game would bring tens of thousands of dollars of new demand to the Boston metropolitan area. Several qualifiers should be noted, however. First, the experience of major league teams in the various sports suggests that the general range of fans from "out of the area" is from 5 to 20 percent (Noll and Zimbalist, 1997a, chs. 2, 15; Crompton, 1995). Of course, this range depends on how one defines "the area." A strict definition of urban limits and, hence, a smaller radius around the stadium or arena, implies a larger percentage from outside the area. A combined metropolitan statistical area that includes several counties implies a smaller proportion of fans from outside the area. Thus, the smaller the radius, the greater the amount of "new spending." Conceptually, the benefit principle of taxation would imply that the delineated area should coincide with the tax jurisdiction that supports the construction and operation of the facility.6 Second, there is considerable evidence that out-of-state fans at most sporting events do not come to town because of the game. Rather, they are in town for business reasons, to see family or for other leisure activities. If they were not at the game, they would spend their money on other entertainment in the same city. Hence, their disbursements in and around the ballpark substitute for another local spending. Further, they may be guests of a local business or family who pays for the tickets and concessions, in which case there also is no new money attracted from outside of the area (Noll and Zimbalist, 1997b). Some stadium proponents have also argued that the local sports team attracts visiting media personnel from other cities. This, of course, is as true for journalists as it is for television or radio reporters and team members themselves. But there is no net contribution here because the inflow is offset by a similar outflow of team members and media personnel when the local team plays away games. Finally, in addition to attracting some new spending from out-of-state fans coming to ball games, professional sports teams also receive distributions of national television contracts and other funds from their central league office. To the extent that these funds remain in the local economy, additional new local demand may be attributed to a sports team. As we shall see in the next section, however, certain substantial leakages retard this effect.

1. Read the above sentences and explain how a substitution effect is relevant for evaluating the economic impact of professional sports franchises.

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Few fields of empirical economic research offer virtual unanimity of findings. Yet, independent work on the economic impact of stadiums and arenas has uniformly found that there is no statistically significant positive correlation between sports facility construction and economic development (Baade and Dye, 1990; Baim, 1992; Rosentraub, 1994; Baade, 1996; Noll and Zimbalist, 1997; Waldon, 1997; Coates and Humphreys, 1999). These results stand in distinct contrast to the promotional studies that are typically done by consulting firms under the hire of teams or local chambers of commerce supporting facility development. Typically, such promotional studies project future impact and almost inevitably adopt unrealistic assumptions regarding local value-added, new spending, and associated multipliers. They often use a regional input-output model that depends on outdated technical coefficients which are treated as invariant to shifts in supply and demand (Center for Economic and Management Research, 1991; Deloitte & Touche, 1994, 1996; KPMG, 1996; Economic Research Associates, 1996; KPMG, 1998; C.H. Johnson Consulting, 1999). The academic work on the economic impact of sports facilities and teams does not rely upon projection. Rather, it compares the local economic performance of areas with and without stadiums, arenas, and teams, controlling for other variables that affect local economic conditions. Among cross-section studies, for example, Baade (1994) found no significant difference in personal income growth from 1958 to 1987 between 36 metropolitan areas that hosted a team in one of the four premier professional sports leagues and 12 otherwise comparable areas that did not. Looking at 46 cities over the 1990-94 periods, Waldon (1997) found that higher high school graduation rates and more spending on police are what encouraged economic growth, while the presence of a major league sports team actually put a drag on the local economy. Both Baade and Waldon controlled for other factors affecting underlying trends in economic growth. Time-series studies confirm the cross-section results. Baade and Sanderson (1997), for example, found no perceptible net increase in economic activity or employment in 10 cities that acquired new sports teams between 1958 and 1993 after factoring out other economic trends affecting each area. They did observe a reordering of leisure expenditures within the cities that acquired new teams, but there was no evidence that the new sports teams brought output or employment growth to the local area. A more recent study, by Coates and Humphreys (1999), finds that new stadiums and sports teams actually reduce per capita income in the host communities. This result is consistent with a higher (negative) multiplier for the displaced leisure expenditures than for the expenditures on a new team or in a new stadium because the latter likely involve substantial leakages from the local economy to the remote residential locations of some players and team owners. The conclusion that sports teams and facilities do not stimulate economic growth is surprising to many people. With live telecasting of games, daily coverage on television news and in the sports sections of newspapers, professional sports play a huge role in U.S. culture. Yet sports teams are small businesses. Yearly average team revenues in 1999 are around $55 million in the NHL, $75 million in the NBA, $85 million in MLB and $100 million in the NFL. For a medium-sized city like St. Louis, the baseball team accounts for less than 0.3 percent of local economic activity; for a large city like New York, a baseball team contributes less than 0.03 percent of economic output. Sports teams typically employ between 70 and 130 people in their front offices. Beyond this, they hire approximately 1000-1500 day-of-game personnel who work in unskilled, low wage, temporary, part-time jobs. An NFL team is assured of playing 10 home games a year (including preseason games). At four hours of work per game, an NFL team provides day-of-game employment for the equivalent of 20 to 30 full-time, year-round jobs. As we shall see, however, it is problematic to attribute even these jobs to the sports team. Of course, the controversy about the economic impact of professional sports teams on their local economy is not just about the teams themselves, but also about how specific local restaurants, hotels, and other businesses might be affected. However, even if one assumes, optimistically, that on average people spend as much outside the sports facility as they do inside, the economic impact of sports teams in proportion to a typical metropolitan economy is diminutive. Apart from their relatively small size, there are three key reasons why professional sports teams do not promote economic development: the substitution effect; extensive leakages; and the likely negative effect on local government budgets. The analysis of these three effects that follows describes the situation when a team or a facility is new to an area. Of course, in many cases, the choice is whether or not to build a facility for a team that is already there. In such a case the incremental consumer surplus, external benefits or new spending will be considerably less. From the city's perspective, however, the opportunity cost of not building a facility with public funds may be perceived to be the loss of the team and all of its attendant benefits.

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1. . The authors discuss the role of leakages in determining the impact of sports teams on the local economy. What are they talking about? Be specific so as to convince me that you read the article carefully

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SPH-M 304 Lecture Notes - Lecture 10: Jerry Mcmorris, Michael I. Monus, Regression Analysis

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