Investigating the interplay between policy change and incentives in sport and recreation

Steven Michael Howell, Purdue University

Abstract

The overarching objective of this dissertation was to explore how changes in policy create incentive-like situations within the sport and recreation industries. The first objective was to organize prior research by offering a comprehensive review of the incentive effects and sport policy change literature. Based on the review of this literature, the second objective was to empirically investigate, through three independent studies, the extent to which incentives are created and impacted by policy changes in different sports and recreation settings. The first study examined a major policy change in Major League Baseball (i.e., the Wild Card playoff format). The second explored how uncontrollable and controllable factors (which can be considered as changes in short-term policies) impact in-game attendance in Minor League Baseball. And the third study investigated the factors impacting attendance for both an indoor and outdoor recreation attraction—which addresses the potential for longer-term changes in an organization's product policy. To address the dissertation's first objective, the existing 'policy change' and 'incentive effects' literature base was reviewed and the research in this area was organized into four categories: (1) initial research examining the impact of tournament structures (i.e., tournament theory); (2) studies extending tournament theory and their resulting incentive effects in non-sports/workplace settings; (3) analyses extending and applying tournament theory and incentive effects in sports settings; and (4) research extending and applying tournament theory and their incentive effects which have focused on rule and policy change research in sports settings. Additionally, an integrative model of the controllable and uncontrollable forces impacting policy change and incentives is proposed. Based on this review and proposed integrative model, as well as to address the dissertation's second objective, three separate empirical studies were conducted. The first study explored the incentive effects resulting from the implementation of the Wild Card (WC) playoff system. The study findings demonstrated that the WC playoff format created an incentive for additional teams to spend money in the offseason based on their relative- and absolute-finish; however, a team's rank-order finish (i.e., relative finish) had a greater impact on these payroll differences. Second, the additional playoff positions created by the WC system caused additional teams to alter their team payroll (i.e., created an incentive to increase payroll) to improve their divisional rank—suggesting that the policy change increased competitive balance in Major League Baseball. The second study examined the factors that influence attendance in Minor League Baseball—specifically the impacts of two relatively uncontrollable factors (i.e., weather variability and temporal effects) and one controllable factor (i.e., promotional efforts). The findings suggested that special events, promotional giveaways, and non-workdays positively impacted attendance; while less than ideal weather conditions (e.g., rain and lower temperatures) and increased ticket prices negatively affected attendance. Additionally, we found that promotional giveaways, when placed on a weekday, created an incentive to attend a minor league baseball contest. The third study investigated the impact of weather conditions on recreation visitation patterns for both an outdoor and indoor nature-based visitor attraction in Chicago, Illinois. The study findings indicated that attendance for an outdoor attraction tended to peak on optimal weather days (i.e., sunny, moderate temperatures, etc.) and subsequently declined on days when weather is less than ideal (i.e., rainy, more extreme temperatures, etc.). In contrast, the opposite occurred for an indoor facility (i.e., less than ideal conditions led to an increase in visitation). These results also provided evidence of a substitution effect between the two facilities examined resulting from varying weather conditions (i.e., weather variability created an incentive for consumers to choose between an outdoor and indoor attraction). Taken together, the conceptual framework and empirical studies offer timely and meaningful ways to evaluate the interplay between incentives and policy change in sports and recreation settings.

Degree

Ph.D.

Advisors

Klenosky, Purdue University.

Subject Area

Sports Management|Economics|Recreation

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