Determinants of NFL Ticket Prices

Andrea AlvarezGina Rodriguez

Individual Contributions Page:

Andrea Alvarez: 50%Gina Rodriguez: 50%

TOTAL: 100%

1. Introduction Does average annual percentage of wins affect NFL season ticket pricing? Does being a SuperBowl Champion affect season ticket prices? Does being a consistent AFC or NFC division Champion affect season ticket

prices? Are tickets more expensive in the NFC or the AFC? Does household income affect ticket pricing?

2. Data

Dependent Variable:

The dependent variable is the average season ticket price for each team between the years of 2012-2014 and is named TPrice in the regression. Its unit of measure is U.S. dollars.

Independent Variable:

Average winning percentage between the years 2011-2013 (APW) measured as a decimal.

Median Household income for the years 2011-2014 (MHI) measured in US Dollars.

AFC or NFC (Conf) measured as 1 = AFC and 0 = NFC. Number of Conference Championships (WConf) measured in integers. SuperBowl Champion (SuperBowl) between the years 2011-2013 measured as 1

= yes and 0 = no.

Data Sources:

http://espn.go.com/nfl/standings

http://quickfacts.census.gov/qfd/states

http://www.fancostexperience.com

http://seatgeek.com/nfl-tickets/

3. Regression Estimation Results and Final Model Evaluation

Source | SS df MS Number of obs = 32-------------+------------------------------ F( 5, 26) = 9.83 Model | 56563.797 5 11312.7594 Prob > F = 0.0000 Residual | 29917.8263 26 1150.68563 R-squared = 0.6541-------------+------------------------------ Adj R-squared = 0.5875 Total | 86481.6233 31 2789.72978 Root MSE = 33.922

------------------------------------------------------------------------------ Tprice | Coef. Std. Err. t P>|t| [95% Conf. Interval]-------------+---------------------------------------------------------------- APW | 241.3388 68.73639 3.51 0.002 100.0492 382.6285 MHI | .002451 .0009807 2.50 0.019 .0004352 .0044667 Conf | -36.45062 12.39974 -2.94 0.007 -61.93866 -10.96259 Wconf | -2.721103 10.24442 -0.27 0.793 -23.7788 18.3366 SuperBowl | -26.67645 23.48798 -1.14 0.266 -74.95668 21.60379 _cons | -89.57484 56.40553 -1.59 0.124 -205.5181 26.36838------------------------------------------------------------------------------

F-statistico The F-stat provided was 9.83, which is significant at the .05 level because

this value is much greater than 2.59.

R Squared & Adjusted R Squaredo The model as a whole showed an R-squared of 0.6541 which means the

variables used explain about 65.41% of the variation in season ticket prices for NFL teams. However, the adjusted R^2 was lower than R^2 because the regression model was penalized for using two variables that were insignificant, Wconf and SuperBowl.

T-statistics measured at the critical value 1.96 & -1.96 (5% significance level)

o The t-stat for average annual percentage of wins in a season (APW) was 3.51. The t-stat for APW is > 1.96 and is therefore significant to the model at the 5% level.

o The median household income (MHI) had a t-stat of 2.50, which is significant at the 5% level because 2.50 > 1.96.

o The conference (Conf), either AFC or NFC, the NFL team participates in had a t-stat of -2.94, which is significant at the 5% level because -2.94 > -1.96.

o The t-stats for Wconf and Superbowl were -0.27 and -1.14, respectively, and were insignificant at the 5% level because both values are less than the critical value -1.96.

Interpretation of model coefficients:o Holding all other x’s constant, a one unit change in APW will result in a

$241.34 rise in Tprice. o Holding all other x’s constant, a one unit change in MHI will result in a $0.002

rise in Tprice. o Holding all other x’s constant, a one unit change in Conf will result in a

$36.45 fall in Tprice.

Questions Answered

o Does average annual percentage of wins (APW) affect NFL season ticket pricing?

Yes, a high APW is positively correlated with an increase in season ticket prices.

o Does being a SuperBowl Champion affect season ticket prices? No, the regression revealed that being a SuperBowl Champion is

insignificant in regards to season ticket pricing. o Does being a consistent AFC or NFC division champion affect season ticket

prices? No, the regression revealed that being a consistent AFC or NFC division

champion is insignificant in regards to season ticket pricing. o Are tickets more expensive in the NFC or the AFC?

We found the mean of Tprice to be higher if the NFL team participates in the NFC Division rather than the AFC Division. (See results below, NFC=0; AFC=1)

. summarize Tprice if Conf==0

Variable | Obs Mean Std. Dev. Min Max-------------+-------------------------------------------------------- Tprice | 16 159.0104 50.99176 79.79 278.3033

. summarize Tprice if Conf==1

Variable | Obs Mean Std. Dev. Min Max-------------+-------------------------------------------------------- Tprice | 16 121.8392 49.27854 64.51667 230.83

o Does household income affect ticket pricing? Yes, a higher household income yields a higher average season ticket

price.

3. Summary:o We wanted to consider factors that may affect ticket prices for future season

ticket pricing for all 32 NFL teams. Five variables will be further analyzed and tested to determine which of those variables have the most significant effect on season ticket pricing. Collectively, data was collected from the years 2011 to 2014. Regression analysis was used to analyze the data.

o The model examined the effect of all the variables that were obtained in this research project on NFL season ticket prices. The model contained five independent variables. Among those variables, three were significant at the 5% level. The significant variables were average annual percentage of wins in a season, median household income, and whether the NFL team was in the AFC or NFC conference. Alternatively, the two other variables used in the regression, number of wins in a conference and Super Bowl wins, were not significant at the 5% level which is surprising because one would think that this would hold true in affecting future season ticket prices.