NOVELTY EFFECTS OF NEW FACILITIES ON ATTENDANCE AT PROFESSIONAL SPORTING EVENTS UMBC Economics Department Working Paper 03-101 Dennis Coates * UMBC Department of Economics Brad R. Humphreys † UMBC Department of Economics September, 2003 Abstract We investigate the possibility that new facilities affect attendance - the “novelty effect” - in professional baseball, basketball, and football from 1969-2001 by estimating the parameters of a reduced form attendance model. Our results indicate a strong, persistent novelty effect in baseball and basketball and little or no novelty effect in football. Our estimates of size and duration of the novelty effect imply that, in a new facility, at a minimum, a baseball team would sell an additional 2,561,702 tickets over the first eight seasons, a basketball team 446,936 over the first nine seasons, and a football team 163,436 over the first five seasons. This increase in attendance also suggests a corresponding increase in revenues that could be tapped to help defray the large public subsidies that state and local governments frequently provide to new stadium and arena construction projects. JEL Codes: L83, R39, D12 I. Introduction Both conventional wisdom and casual empiricism suggest that new sports facilities boost attendance at sporting events. Economists, when analyzing the economic impact of professional sports teams and facilities on local economies, also typically assume that these effects are concentrated in the years immediately following the opening. Some evidence of a relatively large “novelty effect” on attendance exists. Quirk and Fort (1997) report an average increase in attendance of about 62% during the first five years a baseball team plays in a new stadium. But based on attendance at several new baseball stadiums, where attendance is down significantly, the era of large novelty effects on attendance may be ending. Whether this decline can be attributed to macroeconomic events outside the control of sports teams or to the glut of new stadiums opened in the last decade is an open question. In order to address these issues, several fundamental questions must be answered * Contact information: UMBC Department of Economics, 1000 Hilltop Circle, Baltimore, MD 21250, USA. Phone: 410-455-2160. Fax: 410-455-1054. e-mail: coates@umbc.edu † Corresponding author. Contact information: UMBC Department of Economics, 1000 Hilltop Circle, Baltimore, MD 21250, USA. Phone: 410-455-2160. Fax: 410-455-1054. e-mail: humphrey@umbc.edu. 1