Multiple Regression Analysis: Fan Attendance for Major League Baseball

Individuals with the desire and resources to own a Major League Baseball team have much more to investigate than the simple choice of logo and mascot. Baseball is a business that is primarily reliant on labor and the capability of that labor to generate revenues. A team’s success is determined not by wins and losses, but like any business, its success is determined by the revenue it generates and its potential for future revenues. Fan attendance is the major indicator of a team’s capability to generate revenue because it not only determines gate income but it also is a measuring device for the number of television viewers, the amount of team product sales, and the potential valuation for television packages. Although there are many factors that affect fan attendance such as ticket prices, condition of the stadium, and alternate entertainment options, the primary indicators are market size and team payroll. By understanding the relationship between fan attendance, market size, and team payroll, an individual can predict the potential for financial success for his team. This analysis will examine the hypothesis that both the market size in which the team is located and the total team payroll have a significant positive effect in determining fan attendance.