What is it about?
The presence of asymmetry in the relation between attendances and competitive balance in the Australian Football League is tested, over the period 1945-2010. The results from the well-specified structural time-series model validate the uncertainty of outcome hypothesis, and the null of no asymmetry is rejected easily in the 'random' components of the series, although it is not rejected in the 'level' components. The latter finding substantiates the reversibility (without net loss of demand) of league revenue-sharing and labor market policies that influence demand in professional sports leagues.
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Why is it important?
While the uncertainty of outcome hypothesis has been tested frequently in the past using time-series data, this is the first attempt (to one's best knowledge) to test for the presence of asymmetry in that relationship. The answer has important implications for sports administrators who have to consider whether to alter the level of competitive balance via policy, and for the effect this can have on the level of consumer demand for their 'product'.
Perspectives
Despite a lot of evidence suggesting that a more competitively unbalanced sports league is associated with lower attendances, I wanted to determine whether the relationship was asymmetric, for the following reason. If administrators had caused the competitive imbalance via policy decisions, could they then reverse those policy changes and restore attendances (all other things equal) to their previous levels, or would there be a net decrease (or, even increase)?
Dr Liam J A Lenten
University of Adelaide
Read the Original
This page is a summary of: A Formal Test for Asymmetry in the Uncertainty of Outcome Hypothesis, Journal of Sports Economics, April 2017, SAGE Publications,
DOI: 10.1177/1527002514567921.
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