Author: Evan Fleischer / Source: Big Think
- There is a correlation between winning and revenue in Major League Baseball, the NBA, and the NHL — but not in the NFL.
- A wealthy team doesn’t automatically make for a successful team.
- Your favorite sports team might not be experiencing a ‘real’ championship drought.
Do sports teams with evergreen sales have longer championship slumps than teams who depend on winning to sell the brand? From a purely business standpoint, why invest when demand for your product is seemingly so inelastic?
There are a few ways to go about answering this. The first is to say that — as an academic named John Charles Bradbury noted in a paper published in 2016 — there is a positive correlation between winning and revenue in Major League Baseball, the NBA, and the NHL — but not in the NFL. There’s also differing degrees of positive correlation between winning and revenue, with baseball being the highest. Though it’s worth noting: “Market size and winning both affect revenue, but they do so independently.”
Conversely, Bradbury found little to indicate teams caught in a ‘loss trap’ or ‘trap game‘— the notion that a team will deliberately lose to get a financial bump.
This seems to suggest a few immediate things:
- Winning ‘sells the brand’ regardless of whether or not you get a championship.
- A team that isn’t winning doesn’t necessarily have to worry about winning to sustain its finances, especially if it’s in a strong market.
What’s more, Bradbury, notes:
Previous estimates of the impact of stadium quality on fan attendance have found a novelty or “honeymoon” effect from new stadiums that boosts revenue for between five and ten years, because fans are attracted to updated amenities and a new experience.
It’s an observation which — with the exception of the NFL once again (where the initial bump in revenue begins to turn into a negative drain fairly quickly) — Bradbury more or less confirms.
It’s also worth taking into account the average length of a title drought. In the NBA — if we’re to count 29 of 30 teams — the average length of a title drought is 32.7 years. (One team — the team that won — will always be a ‘zero’ in this.) The average length of a title drought in MLB — if, again, we’re to count 29 of 30 teams — is 24.34 years. The average overall length of a title drought in the NFL if we’re to count all 32 teams is 61.5 years.
That means…
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