On the Road With Minor League Baseball Externalities

Abstract

Investigation of minor league demand is scant relative to major leagues, particularly at the game level. This presents not only a contextual gap in the research, but also a conceptual one related to demand externalities. Minor League Baseball differs from major professional leagues in that gate revenue sharing is not a fixture in league policy, and talent investment decisions are made by the parent club. Nonetheless, it may be the case that a host club benefits from characteristics of its opponent. Econometric examination of over 31,000 minor league games across multiple leagues and seasons finds proximity to an opponent’s major league parent team increases attendance. Although the authors find evidence of increased demand for a top prospect from the home club, the presence of visiting top prospects is not associated with changes in attendance, prompting the question as to whether effective marketing efforts in this regard would increase home club revenues.