Uncertainty of Outcome Versus Reputation: Empirical Evidence for the First German Football DivisionZEW Discussion Paper No. 99-46 // 1999
During the next few years, the German football industry will changedramatically. New distribution channels and initial public offerings willlead to large inflows of capital and hence funds for investment. However, this inflow of capital will not be equally distributed to all members of theindustry. Some observers fear, that the increasing inequality will reduce the thrill of uncertainty of match outcome and therefore the demand for football. Regarding this background information this paper analyses the determinants of match attendances in the German first football division.What kind of role plays outcome uncertainty to attract spectators? How does the reputation of a team contribute to explain the attendance figures? Despite the fact that different measures of uncertainty are examined, theresults of the study suggest that the role outcome uncertainty plays is overestimated by the literature. Therefore, we conclude that a rising inequality will not have a negative impact on the attendance figures. What counts is the reputation and goodwill, a club was able to build up during past seasons. This kind of supporter loyalty is long lasting and depreciates only slowly. The geographical distribution of supporter clubs does also influenceattendance and can be regarded as a key variable. Regarding the distance between the two cities involved in a game the fan behaves like a rational agent: The longer the distance the higher the travelling cost. Therefore, less fans follow their team to out-of-town games when the distance gets larger. Furthermore, the weather conditions influence the attendance: The higher the temperature the higher the demand for tickets. We conclude that a football fan is a rational agent in the microeconomic sense.
Czarnitzki, Dirk and Georg Stadtmann (1999), Uncertainty of Outcome Versus Reputation: Empirical Evidence for the First German Football Division, ZEW Discussion Paper No. 99-46, Mannheim.