Where Every Team Is Above Average: Home-Field Advantage and its Effects on Revenue

By David Roher

A robust home-field advantage would increase revenue across the board.

Had an incredible time at the Sloan Sports Analytics Conference yesterday. I got to tell so many people how long I’d been reading their books and blogs, or how important they were to my becoming interested in the field. And it was true every time: Michael Lewis, Bill Simmons, Mark Cuban, Rob Neyer, Nate Silver, Jonah Keri, and more. Not to mention the other team executives and a real-life blog reader not related to an HSAC member! Nice to know we have at least one.

There were so many great ideas at the conference that I hardly know where to begin. So I’ll start with the first panel of the day. In a discussion about team ownership, Game Plan LLC President Randy Vataha emphasized an obvious but often-ignored point: no matter how much effort goes into the product on the field, the number of wins and losses on a league level will always be equal.

For a smart owner trying to increase the value of his/her property, Vataha’s message is invaluable. But I couldn’t help but think about a special group of people who, on average, see their teams win more games then they lose. They aren’t from Lake Wobegon, they don’t have good luck, and they aren’t all fans of large-market teams (although that’s another point worth looking at). They’re season-ticket holders.

The effect of home-field advantage is different in each sport and league. In Major League Baseball, home teams win around 54% of the time. The NBA is the highest of the four major sports at 60%, and the NFL and NHL are somewhere in the middle.

The competitive advantage is well established, but it’s harder to determine the effect on business. I haven’t analyzed the data that would hold the truth, but I have to imagine that a team that wins more games at home (relative to its overall record) is going to be more profitable, especially for teams and leagues that rely most heavily on ticket sales (as opposed to TV deals) for revenue.

However, this effect is in danger. Over the last few decades, even as teams and leagues have become much more intelligent, home field advantage has declined. We can attribute that to a variety of factors, including cushier conditions for traveling teams. Are franchises and leagues losing out on a revenue source?

Granted, it can be difficult to skew games towards the home team without damaging the integrity of the sport. All but one major sport have equal dimensions across all their fields. But there are legitimate ways to go about it. At last year’s conference, Jeff Van Gundy said that if he were designing the NBA schedule, he would make teams play many more back-to-back games on the road. The players’ union might not be wild about that proposal, but the league could still make a more home-friendly schedule without turning many heads. The NHL could do this too. And while the NFL can’t, it’s also the league that relies the least on ticket sales.

If there’s one league that could take a strong initiative, it’s MLB. Don’t be fooled by the raw numbers – because the outcome of a single baseball game is a lot more random than those in other sports, 54% might be a higher figure than the NBA’s 60%, relatively speaking. Teams have been building their teams around their parks (and vice versa) for a long time, and baseball is the only sport whose structure provides an inherent home advantage, thanks to the privilege of batting last. But owners and GMs might want to take another step: if they have an opportunity (in an acquisition or stadium alteration) to sacrifice one road win for one home win, they should do so.

The commissioner’s office should love this – after all, if another win at home means another loss on the road, then that loss on the road equals a home win for another team. Drastic splits like the Red Sox and Rays had in 2009 are ideal: their home fans got what they wanted, and when the teams were on the road, the opposing crowd got the satisfaction of watching a great team lose (more often than not). It’s anything but a zero-sum game.

I’d be surprised if most of the league offices did not already have something like this in mind. If they don’t, however, they might want to start thinking about it. Why pass up the opportunity to make your average team a winning one?

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  • It’d be interesting if you took a look at Forbes data on Local Ticket Receipts over the past few years and ran a regression using home winning percentage controlling for overall record. I think that might help you figure out if being better at home actually gets you more money at the gate.

  • Jake, that would be an interesting regression to analyze. I’ve done some light research on home court fan attendance and winning percentage for the 2008 NBA season. I found the correlation to be lower then I expected.

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