Demand for professional and semi-professional sports leagues – on the relevance of substitution within and between sports

Abstract

Attending a sports event live in the stadium or arena is always a choice between several alternatives. For instance, ongoing discussions among sport officials over the last years confirm that leagues and clubs are perceived to be competitors with regard to the demand for their products. The assumed threat of competition and fan substitution between sports leagues is directly linked to revenue losses, which, at its worst, is decisive on the financial survival of clubs and leagues. Consequently, insights about substitution effects within the sports industry appear highly valuable for several stakeholders when setting any competitive strategies. For these reasons, this dissertation addresses the relevance of substitution within and between sports. Since previous studies either neglected the European setting or remain inconclusive due to methodological issues, it remains unclear whether (semi-) professional sports clubs (in Europe) indeed face substitution in attendance. Furthermore, by employing novel substitution measures, this dissertation attempts in subsequent steps to explain to what extend attendance demand is affected. Three studies are conducted within the scope of this dissertation. Game-level attendance data of German sports leagues are utilized in the three studies in order to examine substitution effects in professional and semi-professional leagues. While Study 1 focuses on substitution across different divisions of the same sport, Study 2 examines substitution across different sports. Finally, Study 3 intends to make a contribution to the literature on substitution within the same game, that is, attending a game live at the venue or watching it on broadcast. The findings of this dissertation show that sports leagues and clubs indeed face substitution in attendance demand. These effects are found with regard to an idiosyncratic setting (i.e., Germany) where professional football overshadows the demand of lower football divisions and other top-tier leagues. Results suggest that local competition causes sizeable substitution effects adversely affecting attendance. Compared to local substitution, nonlocal substitution (i.e., concurrently played games broadcasted live) appears to impact attendance by even greater effect sizes. Finally, substitution takes place not only between clubs and leagues but also within the same game, that is, broadcasting a game live on TV or online stream.