”Understanding about the nature and determinants of demand is arguably the most important empirical issue in analysis of professional sporting markets. Team owners and managers, sporting league administrators, and public policy-makers or regulators simply cannot make correct judgements on issues of vital importance to them, without having some knowledge about demand.” (Borland and MacDonald, 2003)
Norwegian premiership football has apparently never experienced more popularity like the popularity we have seen the last couple of years. Never has so much money been involved in the sport and the clubs can be considered as medium sized firms with some having budgets higher than 100 million NOK. The income from ticket sale is an important revenue source, implying that knowledge about the demand for the sport is of vital importance. Even though “demand for sport” studies have been common practice in sporting leagues abroad, there are few contributions on this field in Norway. Johnsen and Solvoll (2007) analyse however in their article the demand for televised football. They examine the TV-ratings and how they are influenced by factors specific to television on the one hand and factors specific to football on the other hand.
This thesis seeks to answer how the demand for Norwegian premiership football is affected by live televising of games on a public broadcaster. The televising of games in Norway is unique in respect to the number of games which are broadcasted live. The result of a 1 billion NOK media contract effective from the 2006 season was that all games in the premiership were broadcasted live either on public television or on subscription TV. Watching football for free can be viewed as a substitute to attend the match at the arena, and one should therefore expect that public broadcasting reduces attendance on those matches.
In my analysis I make use of detailed match specific data from the 2006 and 2007 season to control for potentially other determinants of the attendance. These data capture economic variables, uncertainty variables, quality of viewing variables etc. The method used is a fixed effect regression analysis, implying that both observable and unobservable fixed characteristics of the home teams the respective seasons are accounted for. The analysis has been carried out in the program package PcGive10.
Carrying out an analysis on demand for sport, four key methodological challenges must be addressed. First, like in all empirical work one needs to obtain good data. As there is no complete data set for my purpose, I have used data from different sources in the creation of a suitable data set. Second, there are challenges related to the quality of measurement of variables. This is especially the case on uncertainty variables, which is heavily discussed among sport economists. Third, there are potential problems of omitted variable bias. As there are many observable and unobservable determinants of demand, and the relationships are complex, caution must be expressed when analysing the results. To avoid that unobservable determinants of demand create spurious relationship between live broadcasting and attendance, this analysis include a battery of fixed effects. Fourth, capacity constraints make it difficult to measure demand. This is however not of great concern in this study as the proportion of sold out stadium is relatively small.
I find no evidences that public broadcasting of games reduces attendance significantly. The results show rather a weak positive influence on attendance when matches are broadcasted on the largest public broadcaster TV2. That people attend matches just because they are televised sounds unreasonable. Both the theory and the data build up on the hypothesis that the broadcaster makes no random choice of which games to televise. Their preferences are very much like the preferences of the supporters. The broadcaster is also interested in stadiums which are crowded and has a good atmosphere. That creates better television, implying higher TV ratings and more income from the advertisers. Furthermore, there is reasonable to believe that the broadcaster’s advertise for the game they broadcast, also acts as advertising for the game itself and increases attendance.
The lack of demand for football studies in Norway is somewhat surprising as the popularity apparently has risen to a level where not even the sky seems to be logical limit. In the following I give in chapter (2) some background information about the Norwegian premiership division, Tippeligaen, and its rising popularity. I also briefly present the economics of sport and the media. Their interdependence resulted in 2005 in a historical TV-agreement, which I also shortly present. In chapter (3) I outline the economic theory on the demand for sport. This is based on general demand theory. Then I will discuss the factors which might have an impact on the demand, including the impact of televised games. The discussion is based on the existing literature which I also present. I chapter (4) I go through the data set and how the data are obtained. Chapter (5) presents the model used and the methodological framework. I also comment the descriptive statistics in this section. I examine the results of my econometric analysis in chapter (6) and discuss the final results. A conclusion is given in chapter (7).