Detroit Red Wings attendance woes
Last semester, I took Sports Economics and for our final project, we had to come up with our own topic and then present our results. While my results don’t really prove anything since I don’t have the knowledge to perform higher levels of statistical analysis on the data, I did want to share my results and apparently the report was good enough for an A on the assignment. It’s a fairly long report so you will have to click on the read more link to see it in its entirety. The actual results aren’t until the second half of my report.
What factor has the strongest relationship with the Detroit Red Wings attendance: ticket prices, Michigan economy, the success of the Detroit Tigers, the success of the Detroit Pistons, or the NHL lockout?
People living in the metro Detroit area can find articles about economic problems in the state of Michigan and Detroit sports on a daily basis. However, it hasn’t been until recently that these economic problems have found their way into the sports section.
In the spring of this year, the Detroit Red Wings failed to sell out a single game in the playoffs despite making it all the way to the Western Conference finals. Despite starting this season against the defending Stanley Cup champions (and the team that beat the Wings in the playoffs), the team failed to sellout the arena and has only averaged 17,461 fans in the first eight home games this season in an arena seating 20,066 fans (ESPN attendance figures). The Wings have only sold enough tickets to fill 87% of the arena. This average attendance figure places them 13th in the league, which is just above the league average.
So why are both the local and national media making such a big deal about the Wings’ attendance if it’s above the NHL average? In 1996, the Red Wings marketing department came up with the term “Hockeytown, USA” and the hockey crazy city clung to the term. Since Detroit became known as Hockeytown, the team has won three Stanley Cup titles with the most recent victory coming in 2002. According to James Mirtle, a reporter at Globe and Mail, the Red Wings have been the most dominant team in the NHL in terms of hockey attendance over the last 17 seasons as they have averaged around 20,000 fans every game during that timespan. Mirtle created the graph below featuring the league average attendance and the top 10 teams in terms of attendance since the 1989-1990 season. As a result of the team’s dominance in terms of attendance in the past, a drop in attendance especially when it ends a 396 game sellout streak draws the attention of the mass media and deservingly so. Not only has the team failed to sellout their first eight home games of this season, but the waiting list for season tickets has evaporated.
NHL Average for Top 10 Attendance Teams [Graph made by James Mirtle]
Newspapers from USA Today to the Detroit News to the Columbus Dispatch have covered the attendance issues and the possible reasons for why the team is struggling to sell tickets. Possible reasons include the NHL lockout resulting in a lost 2004-2005 season, the 28 year old Joe Louis Arena, the retirement of fan favorite and captain Steve Yzerman, an NHL schedule that highlights intradivisional play, the recent success of the Detroit Tigers, and high-ticket prices in a poor Michigan economy.
Drew Sharp, a columnist for the Detroit Free Press, wrote the following after the Wings’ season opener this year:
“Michigan’s poor economy has certainly curtailed discretionary spending, but tighter family finances didn’t keep people from filling Comerica Park in record numbers this summer. The Lions’ 3-1 start isn’t an applicable reason because they’ve always sold out Ford Field even when their seasons ended come the start of the October. The average cost of a Pistons’ individual game ticket this season is eight dollars more than a single game Wings’ ticket.”
In the same column, a quote from the current team captain and Swedish veteran defenseman Nicklas Lidstrom believes that for a long time, the Wings were the only successful team in town. After the Tigers’ magical run in 2006, which ended in the World Series, Lidstrom believes the baseball team may have stolen some fans from the hockey team, both of which are owned by Mike Ilitch. Lidstrom may have a point as the Tigers sold 3 million tickets in the 2007 season, which was a 500,000-ticket increase from the 2006 season while the Wings noticed a decrease in ticket sales.
For my project, I want to address this very issue and examine a Detroit sports fan’s willingness to pay over the last ten years and see if the poor Michigan economy has impacted this willingness to pay. I also want to examine other possible reasons for why the team’s attendance is falling including the success of the Detroit Tigers and Pistons as well as ticket prices and the effects of the NHL lockout.
A fan’s willingness to pay can be shown through the demand function for the product. The more fans are willing to pay, the greater the demand will be for the team or product. According to the textbook Sports Economics by Rodney Fort, “demand is simply the relationship between prices and quantities demanded” (20). In this project, the willingness of a Detroit sports fan to pay for each of the four major sports teams will be determined by looking at the correlations between the Red Wings’ attendance and other variables (Wings’ ticket prices, Pistons’ ticket prices, Tigers’ ticket prices, Pistons’ winning percent, Tigers’ winning percent, and Michigan’s percentage change in per capita income).
Demand can be shifted by five primary factors including the price of other substitutes, preferences, fan income, and fan expectations about the future (20). It would seem that if Michigan is in a recession, sports fans would have to budget their money and decide if they can afford to attend an athletic contest. Let’s say one person closely follows the Detroit Tigers and the Detroit Red Wings. If he has only $500 to spend on sports entertainment in the year, he may decide to split the money between the teams or just attend games of the team that provides the cheapest alternative. I would hypothesize that the team with the cheapest average sports ticket in Detroit between 2003 and 2006 would have the highest attendance capacity.
Maintained Hypothesis: The Detroit Red Wings’ attendance has no correlation with Michigan’s economy.
Alternative Hypothesis: The Detroit Red Wings’ attendance has a positive correlation with Michigan’s economy.
Secondary Hypothesis: The Detroit Red Wings’ attendance has a positive correlation with a factor other than Michigan’s economy.
The purpose of this project is to compare the correlational relationships between the Detroit Red Wings’ attendance and a variety of possible factors explaining the drop in attendance. The attendance figures were obtained from three different sources, Rodney Fort’s Sports Business Data Pages, Andrew’s Dallas Stars Page, and ESPN. The attendance data contains the reported attendance average for each season and does not include the playoffs.
Three different sets of average ticket prices were collected for the Detroit Red Wings, Tigers, and Pistons. All three data sets came from Team Marketing Report’s Fan Cost Index. The Tigers’ average ticket price from this past summer and the last two Pistons’ seasons have missing data.
The Wings’ revenue over the last ten seasons is the estimated revenue by Forbes and the data set was found on Andrew’s Dallas Stars Page. Data was unavailable for the 1996-1997 season.
Winning percentages for the Wings, Tigers, and Pistons all came from Rodney Fort’s Sports Business Data Pages and then the respective team’s websites for the current season’s record and the 2007 season record for the Tigers.
Data regarding Michigan’s per capita income as well as the percentage change in per capita income for Michigan and the US came from the Michigan government’s website.
There were two different techniques used on the data for this project. Excel calculated the averages for each category. The averages were measured for 1996-2001, 2001-2007, and 1996-2007. A correlation between the various categories was calculated. The correlations were measured for 1996-2001, 2001-2007, and 1996-2007. Both the correlations and averages were broken up like that to see if there were any noticeable differences following the 9/11 attacks in 2001.
By taking the average of each category for each year, I got the information I needed to create a general comparison between the different seasons for the various factors. The project did not need more specific data regarding individual games in each season so these averages were reflective of the data I needed for this project. The correlational tests were done to determine the strength of the relationship between two variables. I will be unable to draw causality from these correlations, but a correlation closer to one or negative one will indicate a strong relationship (positive or negative respectively). A weaker correlation will be closer to zero.
Results and Discussion
A common explanation for the Red Wings’ attendance woes this season has been that the Detroit Tigers’ recent success has resulted in more Detroit sports fans spending their expendable income on baseball instead of hockey. In 2006, the Tigers went above 0.500 for the first time in a decade on the team’s run of destiny into the World Series. However, the past two seasons were not enough to bring the average winning percent to 0.500 as you can see in Table A.
Since the Tigers’ and Red Wings’ seasons are opposite times of the year, it is also valuable to examine the impact of the Detroit Pistons’ recent success and over 180 consecutive sellouts. Both teams play 82 regular season games roughly over the same time. The Pistons have a 0.518 average win percentage since 1996. The squad won the NBA Championship in 2004 and has reached the Eastern Conference Finals five times over the last ten seasons. In fact in 2005-2006, both the Red Wings and Pistons finished first in their respective leagues for the regular season.
I did not include data for the Wings’ win percentage over the last ten years in Table B because of the consistent success the Wings have held throughout the time span I am examining for this project. While the Red Wings’ winning percent has not remained constant, the team’s winning percent has not dipped below 0.567 (1998-9 season) since the 1996-7 season. The team has qualified for the playoffs in each of the last 16 seasons with success in the postseason including three Stanley Cup titles, four trips to the Western Conference Finals, and seven trips to the Western Conference Semifinals. In the years leading up to the NHL lockout, team owner Mike Ilitch was banking a payroll well over $60 million. After the team had to cut its $78 million payroll to $39 million following the lockout to fit under the salary cap, the team managed to finish first in the league with a 0.756 win percentage (the team’s best in the last decade). This season, the Wings have jumped to a 13-2-1 start in the team’s first 16 games earning 84.38% of the possible points. It’s hard to argue that the level of success by the team has hurt the team’s attendance. Unless you want to argue that all the winning has spoiled Detroit hockey fans and they will now only flood the gates when the team makes the Stanley Cup Finals. As such, my focus in this project will not be on the relationship between the Wings’ winning percentage and their attendance.
For a similar yet quite opposite reason, I will not examine the relationship between the Lions’ winning percentage and attendance because that team has played consistently poor since 1996-7 with an overall 0.358 win percentage.
Four of the six correlations show negative relationships between the variables. A negative correlation indicates that high scores in one variable are associated with low scores in the other variable. These data results in Table B would suggest that from 1996-2001, the Pistons’ lower winning percentage had a fairly strong negative correlation with the Red Wings’ attendance figures suggesting that the Wings’ attendance rose as the Pistons’ winning percent fell. However, the overall correlation for the Pistons’ winning percentage from 1996-2007 is only –0.2682, which is a pretty weak correlation and thus there is an overall poor relationship between Wings’ attendance and the Pistons’ winning percent. Likewise, the Tigers’ overall correlation of 0.5411 is a moderately positive relationship of the team’s winning percentage to the Wings’ attendance. This moderate relationship would suggest that as the Tigers’ winning percent increases so does the Wings’ attendance.
Another excuse for the Red Wings’ attendance problems is that their ticket prices are too high in today’s poor economy. When fans have the option to attend a sporting event for teams that are close in terms of success, the fan may choose the best bang for their buck. The Wings’ overall ticket price average is 26.8% greater than the Pistons’ average and 65.1% greater than the Tigers’ average. While the Tigers have a considerably larger stadium with almost twice as many seats, the Pistons only have a couple thousand seats more than the Wings’ Joe Louis Arena and thus the disparity in ticket prices is somewhat surprising.
As you can see in Table D above, the Pistons’ overall average ticket price has the strongest correlation (0.6548) to the Red Wings’ attendance. This correlation would suggest that as the Pistons’ ticket prices increase so does the Red Wings’ attendance. The correlation of Wings’ attendance to the Wings’ ticket prices and Tigers’ ticket prices is too weak to draw any conclusions aside from the fact that the variables have a weak negative relationship.
The Michigan economy is currently in a recession and has been struggling since the September 11th terrorist attacks in 2001. From 1996 to 2001, Michigan’s per capita income percentage change was 4.70%. After 9/11, the average per year increase was a mere 2.27%. While Michigan’s per capita income is a solid representation of the state of Michigan’s economy, this number increases over time making it seem as the economy isn’t too bad because the per capita income continues to rise. It’s only when one compares that figure to the national average do we see how Michigan falls behind. The national average increase of per capita income is 4.31% since 1996 as shown in Table E. Michigan’s PCI increased, on average, at the rate of 3.37% since 1996, almost a full percentage point behind the national average. By correlating the percent change of per capita income, I will be able to more easily examine the relationship between the Michigan economy and Wings’ attendance.
The correlation of the per capita income to Red Wings’ attendance is a moderately strong negative relationship as shown in Table F. This correlation is unlike what I hypothesized as the high percentage increases in the Michigan per capita income came when the attendance was lower (in the mid 1990s) and the lower percentage increases came more recently when the attendance has been higher. This correlation is not necessarily indicative that the economy has not harmed the team’s attendance since the attendance has increased over time as the team has added seats increasing the capacity of Joe Louis Arena. The correlation results may have been different had the attendance remained constant over the same time span.
Some argue that the lockout, which canceled the entire 2004-2005 season, diminished the interests of fans. Not only was no NHL hockey played for an entire year, but the league also made key changes to the game upon its return (no red line, creation of the shootout, etc.) and a new scheduling format that highlighted intradivisional play.
As you can see in Chart B above, the Red Wings’ value has never been higher. While the team did see a decrease in value following their most recent Stanley Cup victory in 2002, the value is now at $293 million. Only two NHL teams are worth more than the Wings according to Forbes, the Toronto Maple Leafs and New York Rangers. Thus, it would be hard to say that the lockout had a negative impact on the organization overall as the team’s value has never been greater. However, it will be interesting to see what the value of the team will be next year at this time after the team experienced attendance problems for an entire season.
Influx of European Stars
Some reporters have gone so far as to suggest that the fact that the team’s current big stars are European (instead of Canadian) has reduced fans’ interest and consequent willingness to pay. Personally, I think that’s a weak argument. Yes, the loss of fan favorites, who do happen to be Canadian, in Steve Yzerman to retirement and Brendan Shanahan to the New York Rangers may have diminished some fans’ interests. However, the number of North American players to European players (including Russians) hasn’t really changed that drastically since the 1996-7 season as shown in Chart C. In 2001, the Wings had 15 North American players and 11 European players. This year, the team has 12 Europeans and 11 North Americans composing the squad. While the number of European players overall has increased since 1996-7, the current roster does not appear to be statistically significant from that of the Stanley Cup winning season in 2001-2 when the Wings sold out every home game in the regular season and postseason to allow blame to fall on the European stars.
After analyzing the data and the corresponding correlations between the Red Wings’ attendance and other possible factors that could explain it, my results cause me to reject the maintained hypothesis and the alternative hypothesis. The maintained hypothesis stated that the attendance had no correlation with Michigan’s economy. I found that it actually had a moderately strong negative correlation of –0.6594 and thus I cannot support that hypothesis. The alternative hypothesis stated that the attendance had a positive correlation with the local economy, which the –0.6594 correlation causes me to reject that hypothesis. Therefore, my results support the secondary hypothesis, which stated that the attendance has a positive correlation with a factor other than Michigan’s economy. Red Wings’ attendance had the strongest positive correlation with the price of the Detroit Pistons’ tickets, which would suggest that the higher the Pistons’ ticket prices, the higher the Wings’ attendance. Thus, I rejected my maintained and alternative hypotheses in favor of my secondary hypothesis.
Further statistical analysis would be beneficial in determining exactly what kind of role the economy plays in the Wings’ attendance problems. More advanced statistical knowledge could actually make a conclusion from the –0.6594 correlation. Unfortunately, my level of statistical knowledge prevents me from taking a closer look above a simple correlation between datasets. Additionally, these simple correlations can show a positive relationship between two variables and even suggest a causal relationship, but my results cannot prove that Pistons’ ticket prices directly cause changes in the Wings’ attendance. As my discussion showed, there are a variety of factors that can influence the attendance over a season or even a decade so more detailed statistical analysis would be needed to determine which variable plays the greatest role.
After conducting this research project, I have greater respect for those who use statistical analysis to try to sort out issues like this because the research of just trying to find the appropriate data was time consuming much less actually conducting the statistical tests and then analyzing the data results. After hearing Professor Fort discuss how the media can be way off in their reasoning for why things happen in the sporting world economically speaking, I can’t say that I was too surprised to find that the strongest positive correlation was not the Michigan economy or the Tigers’ winning percent, or even the Wings’ ticket prices, but was in fact the price of the Pistons’ tickets. I have never read in any newspaper that the Pistons’ high-ticket prices may result in higher Wings’ attendance or a lower cost of the Pistons’ tickets may result in lower attendance at the Joe. The biggest lesson I learned was that simple correlations cannot give you the results you want to prove something and that further tests need to be done, which is frustrating when you want to have concrete results for a project and actually be able to say definitively that yes, the Michigan economy does not impact the Wings’ attendance or that it, in fact, does change the Wings’ attendance.
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