Is the Price Right? An Analysis of the National Football League Ticket Market Relative to the Great Recession

 

Ben Singer, MBA Candidate, Yale School of Management

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Abstract: The Great Recession in the United States not only incurred widespread economic turmoil, but also was one of the few times during the last decade when National Football League (NFL) attendance figures fell below almost complete attendance. However, NFL ticket prices never decreased on average during this time. This paper takes advantage of this natural experiment to analyze the macroeconomic, team performance, and other factors that influence the market for NFL tickets before, during, and after the Great Recession. Data for 30 teams from the years 2004-2014 are used in a regression model that accounts both for team-based fixed effects and autocorrelation in the errors. The results show that the unemployment rate in a team’s metropolitan area is a strong predictor of that team’s attendance; that the mean annual wage in a team’s metropolitan area and the opening of a new stadium are strongly predictive of the price of non-premium tickets; and that the relative ticket price increase associated with a new stadium is greater for non-premium tickets than for premium tickets. Additionally, there is no evidence that team performance affects either component of ticket demand, after controlling for team fixed effects. These findings lend insight into how the Great Recession impacted demand for NFL tickets and which factors can be used to predict the market for NFL tickets in the future. Furthermore, this paper lays the foundation for future work that investigates to what degree NFL teams’ ticket pricing strategies were economically rational during this time period.

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