The effectiveness of promotions in minor league baseball : a study of the Eastern League

Minor League Baseball (MiLB) is comprised of 247 teams playing in 17 leagues at six different levels. Every team in these leagues is an affiliate of a Major League Baseball (MLB) team, but many are privately owned and are therefore financially independent. While MiLB primarily serves as a development environment for future MLB players, profit maximization is still a goal of various front offices. Minor League Baseball has existed for over a century but only recently have teams been regarded as profitable investments. In Forbes’ “Most Valuable Minor League Teams” list published in 2016, the average value of the top 30 teams was $37.5 million, an increase of 35% since 2013 (Klebnikov, 2016). While these valuations dwarf those of even the least valuable Major League team, they should not be ignored. Most of the top 30 teams also boast top attendance figures and eighteen teams on were also a top 25 merchandise seller (Klebnikov, 2016). The main source of revenue for teams comes from getting fans to the ballpark, such as tickets, parking, concessions, and merchandise sales. For this reason, figuring out the best strategy for increasing attendance is a top priority of MiLB executives. This paper examines the attendance of six teams who play in the AA-level Eastern League, during the 2015-2017 seasons. Various factors that affect attendance are included in the model, but promotional efforts are the key variables of interest. To determine which promotions are the most effective, various dummy variables are created for each category of promotion. Team fixed effects are also utilized to account for differing features between the teams such as size of the market, sustained success, and distance to their Major League affiliate. A pooled regression is run on the entire league, and a regression is run just on the Richmond Flying Squirrels. I hypothesize that promotions will be one of the largest determinants of additional attendants for Eastern League teams studied. Every promotion should have a positive effect relative to a game without a promotion, though the magnitudes will certainly differ