Match Outcome Uncertainty and Sports Fan Demand: An Agnostic Review and the Standard Economic Theory of ports Leagues

Abstract

One of Rottenberg’s (1956, The baseball players’ labor market. Journal of Political Economy, 64, 242–258) foundational sports economics hypotheses is that fans prefer their team to win but with more match outcome uncertainty (MOU) rather than less. The testable implication is that increase in home team win chances and match ‘tightness’ should lead to increased fan demand for live attendance. It is safe to say that the verdict by those that voice one, especially recently, is that empirical results offer only occasional and weak support for Rottenberg’s hypothesis. We show that a more agnostic examination of the literature suggests that there is much more evidence failing to reject Rottenberg’s hypothesis than previously acknowledged. We also show that Rottenberg’s hypothesis is only one alternative generated by the standard economics of sports leagues. Rejecting Rottenberg’s hypothesis does not necessarily reject the importance of MOU with a different predicted sign as a demand determinant. This suggests additional testing tasks for the body of work that has moved on to loss aversion based on the prospect theory.