Competitive Balance and Attendance in Major League Baseball: An Empirical Test of the Uncertainty of Outcome Hypothesis

Abstract

Competitive balance research partitions into two areas: analyzing sports policy and its effect on competitive balance and the uncertainty of outcome hypothesis. This paper examines the latter section. No formal analysis of the relationship between competitive balance and regular season average attendance in Major League Baseball (MLB) using the actual to idealized standard deviation ratio exits. This paper examines the effect that competitive balance has on MLB attendance between the seasons 1920 and 2006. Additionally, this paper incorporates a games-behind variable to examine if fans are sensitive to team performance. The empirical model in this paper is a fixed-effects OLS model that corrects for heteroscedasticity. The results show a significant inverse relationship between the ratio, games behind, and regular season average attendance. This confirms the uncertainty of outcome hypothesis and shows that fans are sensitive to both league and team performance.