Monday, January 21, 2008

Recessions and Baseball

I've recently thrown out a comment or two about how recessions don't really hurt baseball all that much. When I did so, I was just speculatin' based on some anecdotal evidence. Tim Marchman actually thinks about it a bit:

Moreover, in historical terms, recession has been, if anything, good for baseball. Since the end of World War II, five recessions have started during the off-season and lasted into the season. None of them harmed attendance at all: Baseball fans are a hardy and dedicated lot.

To support this conclusion, Tim cites some attendance figures for years in which recessions stretched into the baseball season. In all cases, Tim notes, attendance either held more or less steady or increased a tad.

But looking at attendance figures for the seasons which take place during recessions may be a bit misleading. I say this because it's often the case that the general public does not really feel the effects of a recession until after it has already occurred. The best recent evidence of this can be found in the example of the 1992 Presidential election, which was decided by an economic downturn that had ended over a year before people went to the polls. Even though I was a Clinton guy back then, hindsight gives me no small amount of sympathy for then-President Bush who correctly, albeit vainly, tried to argue that the economy was on the upswing and had been for many months before people went to the polls. Didn't matter of course, because Joe public was still feeling the pinch no matter what the leading economic indicators had to say.

For this reason it may be more profitable to look at the year or two after a recession is over in order to gauge its effect on baseball attendance. Eyeballing Marchman's examples -- the recessions of 1949, 1970, 1980, and 2001 -- shows that, at the very least, it's a mixed bag. The 1970 recession truly appears to not have had any material impact on attendance either at the time or in the following year or two. We can't truly assess post-1980 recession attendance because the 1981 strike gums up the data, but I will grant that 1982 and 1983 were strong. The other two examples, however, show a sharp decline in the seasons immediately following the recession:

1948-49 Recession
pre-recession attendance (1948): 20,938,388
recession year attendance (1949): 20,215,365
post-recession year one attendance: (1950): 17,462,977*
post-recession year two attendance: (1951): 16,126,676*

2001 Recession
pre-recession attendance (2000): 72,702,420
recession year attendance (2001): 72,567,108
post recession year one attendance (2002): 67,944,389
post recession year two attendance (2003): 67,630,052

I'm not suggesting the attendance decline in these two examples was caused by post-recession ennui. Indeed, in each example there were factors -- the Korean War and September 11th/Afghanistan/Iraq War -- which may have contributed to people turning their attention to things other than baseball in the ensuing years. That said, none of these events had such a great impact that they themselves led to recessions, so we shouldn't overstate their impact on baseball attendance.

What does this all mean as we head into what appears to be The Great 2008 Recession? Hard to say. It's quite possible that this time around attendance hits will occur contemporaneously with the recession because, unlike in previous years, reports of economic doom and gloom have been circulating for some time prior to the technical downturn. Indeed, given the speed at which information is obtained and processed these days, it's not out of the question that, by the time the recession is ending, baseball fans will have already dealt with their vanishing home equity and devalued currency, regrouped, and renewed their season ticket packages for 2009.

But baseball certainly can't bank on that for a couple of reasons. For starters, this recession may be a very different and scarier beast than those in the past. If so, ticket sales will no doubt suffer more than they usually do when things get bleak.

But what may give baseball a larger headache is the same thing which has given it so much joy in recent years: the game's economic expansion and diversification. Even if assume ticket sales will be resilient because hardcore, ticket-buying fans will be willing to scrimp in order to continue to go to games, so much more of the game's income these days is driven by more passive, and therefore more easily jettisoned, fan behavior. Fantasy games. packages. Video game and merch sales. These are products which, while lucrative, don't require the same investment of time and mental energy as does spending years on season ticket waiting lists or making the sorts of sacrifices occasioned by actually leaving one's home and going to a ballgame. In other words, those more recently-realized income streams were easy come, but in an economic downturn, they may also be more easy-go.

All that said, I still tend to share Marchman's cautious optimism because he's right in noting that (a) season tickets are purchased by richer, more recession-resistant folks; and (b) during recessions, sports and entertainment are often the only things keeping folks away from the ledge. In the end, baseball may weather the coming economic storm just fine.

But I certainly wouldn't bet my home equity on it.

*The link only shows 17,153,172 in attendance for 1950 and 15,661,207 for 1951. For some reason, however, the figure seems to exclude attendance for the Philiadelphia A's, which I've added to the total. It also lists the St. Louis Browns totals under Baltimore which, while understandable for purposes of later numbers in the decade, is inaccurate as the move east had not yet been made. Somebody please let me know if these totals are still off.


Pete Toms said...

C, nice work, hadn't seen that Marchman piece.

MLB ticket sales are ahead of last season's record pace but I think that is coming to an end. The reason? Smaller ballparks are the trend. I.E. In 09 both NYC teams will play in stadiums with smaller capacities.

"The Lords" don't appear too concerned. I have read many reports this offseason of teams hiking ticket prices - they seem to concur that folks who will be impacted by a recession aren't their base. I wonder if "secondary ticketing" isn't helping fuel the record pace of ticket sales and boosting the prices.

So, attendance is about to peak but more importantly the amount of revenue that teams are generating per home date is increasing.

Don't worry about Brett Tomko robbing David Glass.

Roger Moore said...

There's an obvious reason why the worst effects of a recession are felt after it's technically over. It's because recessions are measured in terms of change in GDP rather than absolute GDP. Recessions are defined as periods of falling GDP. That means that the low point is at the very end of the recession, not in the middle.

Also, AFAIK, there's a tendency for wages to lag GDP. They don't start falling immediately when the recession starts, and they don't start going up again immediately when it's over. Since most fans are paying for their tickets out of wages, their purchasing decisions will tend to lag behind the recession a bit.