Tuesday, March 02, 2010

What Determines Bowl Ticket Sales at the Institution Level? 

Todd McCubbin, the executive director of the University of Missouri Alumni Association, writes a short piece on the number of tickets sold by Mizzou to this year's Texas Bowl. His short essay is located on page 47 of the spring 2010 issue of the Mizzou alumni magazine (I don't have a link to the piece, but here's a general link to the alumni magazine).

"The mystery of the Big 12 bowl selection process still casts a shadow on the 2009 campaign. For the third consecutive year, teams the Tigers defeated were selected ahead of them. Our e-mail and phone lines were busy as many of you voiced concerns about the process.

The media shed light: The bottom line seems to be that, unless a team is conference champion, wins and losses mean little. Instead, bowl organizations make selections based partly on television ratings but mosly on how many fans travel to watch the game in person. It can be tough to swallow that a team's performance on the field can count for so little."

McCubbin goes on to say that about 10,000 Mizzou fans made the trip to Houston, but that was short of the school's 11,000 ticket allotment.

As part of my sabbatical research, I have been working on examining the ticket sales made at the institutional level for the 2008-2009 bowl season. My source for tickets sold is this post at the Wiz of Odds. The results are preliminary and, as such, have not been peer-reviewed yet. So take this for what it's worth.

Here are some results from a preliminary STATA analysis on my data. The numbers are the result of an OLS regression.

Variable Parameter Standard Err t-statistic p-value
Tradition 264.3157 45.48273 5.81 0
Years Since Last Bowl 618.8521 112.5678 5.5 0
Dist from Nearest NFL Stadium 17.07413 2.621021 6.51 0
Distance from Bowl Location -2.229766 1.103187 -2.02 0.048
BCS Dummy 3382.728 2124.074 1.59 0.117
Local Population 0.0006327 0.0003135 2.02 0.048
Private School Dummy -4206.533 1783.724 -2.36 0.022
Intercept 1474.826 1355.562 1.09 0.281

N = 64

F(7, 56) = 0

R-Sq = 0.6700

Root MSE = 4785.7

I defined Tradition as the number of Division/FCS level bowls the program has been to in its history. Local population is the local population of the university's city. I tried controlling for university enrollment and bowl city average temperature during the month of the bowl but neither added anything to the results. I didn't have any information on ticket prices.

The regression explains about two-thirds of the variation in ticket sales. Not too bad. The analysis tells me that teams that have more tradition sell more tickets. For every bowl game the team has been to in the past, about 264 more tickets are sold. Teams that haven't been to a bowl in awhile sell more tickets (this tells me that winning is subject to diminishing marginal utility). For every year it's been since the last bowl appearance, the university sells about 619 more tickets. The farther a university is from an NFL stadium, the more tickets sold (about 17 more tickets for every mile in distance away from the NFL stadium). The farther the university is from the bowl location, the fewer tickets sold (about 2 fewer for every mile in distance). Playing in a BCS game doesn't statistically explain the variability of ticket sales. The bigger the local city's population in which the university sits, the more tickets that are sold. Lastly, private schools on average sell about 4,207 fewer tickets to their games.

So, if bowl executives do pay attention to expected ticket sales and to the extent my analysis captures what they do, they pay attention to tradition, how long it's been since the team last went to a bowl, how far a team is from an NFL stadium, the distance to the bowl, the university city's population, and whether the school is public or private.

So how did Mizzou perform in terms of the number of tickets sold through the athletic ticket office to the Alamo Bowl game the football team played in? According to my calculations, Mizzou should have sold about 8,817 tickets. They actually sold 6,050. Part of the difference can probably be attributed to randomness inherent in the data. But part of it could be that there may be some reason for fan disinterest at Mizzou that I don't capture with my regression. If it's the latter, what could it be?

Cross-posted at Market Power

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Friday, January 08, 2010

Information, Reputation, and the Impact of College Athletics: My story about TCU 

[Note: this was originally posted at EclectEcon, but Phil urged me to cross post it here. I've revised it slightly.]

Way back in the days before people ranked economics departments according publications or citations to publications by their faculty members, departments' reputations seemed to be based more on who knew whom, on who had written important papers, and (perhaps sadly) whether you had even vaguely heard of the school or any of the people who taught there.

When I was finishing my PhD at Iowa State University and beginning to look for a university job, like all good job seekers I went to economics conventions, did my best to meet people and find out who was hiring economists in my field, scoured job listings, and tried to arrange as many job interviews as I could. But in my naivete and ignorance, I had little to go on. And my lack of information and my ignorance let me down several times, with some interestingly poor fits.

One instance that I remember involved Texas Christian University [TCU]. Growing up, I had heard of TCU because of the prowess of their football team, even back then. So when I learned they had a position open, I thought, "Hey, I've heard of them. They might be an okay place." I don't remember thinking that, explicitly, but I certainly behaved as if I did. In fact the only reason I had heard of them was because of their football team, not because of their economics department.

I know, I know. My behaviour likely doesn't seem very smart or very rational. But I bare my soul here for the purposes of illustrating a point.

It turned out they were looking for someone who was willing to teach 4 courses per term ("only" three preparations) and do so for less pay than was offered by other economics departments. I'm sure things have changed since then.

In the end, they weren't interested in me and I wasn't interested in them. But when I saw them playing in the "Impolitic" Bowl this past week, I realized that the reputation created by their football team had at least gotten them in the door with me (so to speak).

National television exposure due to a winning football team is undoubtedly worth something. The question is, how much? And is it worth the costs?


Friday, December 18, 2009

Two Observations on the Mark Mangino Settlement with KU 

The University of Kansas has released the details of the settlement it reached with former football coach Mark Mangino.

In the afternoon, KU athletic director Lew Perkins released the details of the settlement agreement between the athletic department and Mangino that will pay Mangino $3 million as he exits. Mangino had four years remaining on his contract, which would have paid him $9.2 million ($2.3 million per year).

The settlement will be paid through private funds raised by Kansas Athletics; no state taxpayer funds will be used.

Here is the copy of the settlement. Mangino will get the $3 million in a lump sum by Christmas eve.

One thing this tells me is that Mangino and KU, by settling on 36.8% of his contracted salary ($8.16 million in present value assuming a 5% discount rate for both parties), were implicitly saying that the chances were about 63% (3/8.16) that he would have been found to have violated his contract. Had the chances been 50-50, we'd expect Mangino to have gotten closer to $4.08 million.

Mangino and KU agreed that KU would pay Mangino's life and health insurance premiums for a few months, but these premiums will likely be miniscule compared to the $3 million lump sum payment. So it's safe to ignore them.

Of course, I have assumed that there are other things behind the scenes that could have driven the settlement away from the midpoint (differences in legal expenses, differences in underlying preferences for negotiation, different discount rates, etc). Moreover, $3 million is a nice chunk of change... but it's not $8.16 million.

Secondly, where will this $3 million come from? I assume that by "private funds" that KU is going to raise the funds through donors. If so and given that donors have a fixed budget constraint of some sort, what will these "private funds" come at the expense of?

There is an implicit assumption made by some people that donors have a fixed amount to donate to a given college. If so, when an additional dollar is donated to athletics, it must come at the expense of academics. There is some empirical evidence of this (I'm thinking of papers by Stinson and Howard (2004 and 2007). But the same authors also have empirical evidence that they are not subsititutes (2008).

But it also possible that additional donor dollars come from budgets that would otherwise be allocated to other charities or to consumption. It could also come from a fixed donor budget allocated towards athletics. If so, the academic interests at KU have nothing to worry about.

Cross-posted at Market Power.