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Superstar Effect Research Paper

Professional athletes are some of the most recognizable figures in the entire world. Generally, fans of a sport or of a team have a favorite player and often times pursue opportunities to see that athlete compete live. The more fans admire an individual player, the greater the demand for that player is. The higher the demand for a product, the higher the price for that product is. The organizations that these athletes play for recognize this and take advantage of the opportunity to maximize profits.

When professional sport leagues identify the marketable players that fans love like LeBron James, Michael Jordan, and others, they use the athlete’s names as a way to promote their product. These leagues, owners, and even cities that the athletes compete for do a variety of different things to draw people to attend the games, buy memorabilia, and stay in the city. Even teams that the top-tier athletes are playing against take advantage of the marketability of star players. The leagues schedule nationally televised primetime games around these superstars that bring in millions of viewers and generate millions of dollars.

The owners lock these players down with big-time contacts that will ensure that the stars stay in that city Research has shown that even teams that are struggling to win games can still bring fans in the door by promoting the superstar on their team or by promoting the superstar that they are playing against. This study illustrates how superstars in the National Basketball Association (NBA) have an impact on many different spectrums of the sports world. First, this study will look the effect that superstars have on fan interest and attendance to home games.

Second, this study will focus its attention on the importance of superstars to their own team’s revenue. And finally, this study discusses how revenues are affected around the national basketball league by the basketball superstars. Literature Review Fan Interest Nowadays, sports are continuing to grow in popularity around the world. According to Taylor (2008), the production of a team is important because franchises make money by providing an entertaining experience for their fan base. As a result of this, it is safe to believe that if the fans enjoy the experience more, the team makes more money (Taylor 2008).

We can also assume that loyalty to a team and fan attendance will increase the more entertaining the experience (Taylor 2008). A problem that Taylor (2008) found is that in order for a franchise to provide the best experience, the team needs to win more games. The ability to win more games responds to the number of great players on a team, and the best players come at a big cost (Taylor 2008). In basketball, there are fewer players on the court at one time than in many others sports, so teammates must constantly work together to win the contest (Taylor 2008).

So are these stars worth it? Taylor (2008) breaks down the productivity of LeBron James during his first few years playing for the Cleveland Cavaliers to determine if the addition of James played a role in an increase of fan interest. In each of his first four seasons, LeBron impacted the team by scoring over 20% of the team’s points per year as well as leading the Cavaliers to a progressively better record (Taylor 2008). The impact of LeBron on the court quickly translated to an increase in attendance for all Cavaliers games.

The year before James was drafted, the Cavaliers season attendance was a low of roughly 470,000 (Taylor 2008). Over the next four years, the number would skyrocket to a high of a season total of over 837,000 (Taylor 2008)! It is clearly demonstrated that superstar athletes such as LeBron James have an astounding effect on fan attendance. Revenue The amount of fans who attend these games because of a star player like LeBron have a huge impact on the revenue at the gate for a team. According to Hausman and Leonard (1997) Michael Jordan had a similar effect on the Chicago Bulls in the 1980s and 1990s.

The year before Jordan arrived, the Bulls average home attendance per game was a mere 6,000 (Hausman & Leonard 1997). Attendance to Chicago Bulls games doubled after Jordan arrived and, in each of the six years leading up to his first retirement, the Bulls sold out every season (Hausman & Leonard 1997). Because Jordan’s addition to the Chicago Bulls increased the average attendance from 6,000 to over 12,000, it is conservatively estimated that the Bull’s revenue for Jordan’s rookie season was an additional $8. higher than it was projected to be (Hausman & Leonard 1997).

Similar to Jordan, LeBron was also estimated to increase revenue at the gate for his team. During LeBron’s rookie season, it is calculated that the Cavaliers possibly earned an additional $16 million in revenue because of the new fans that LeBron attracted (Taylor 2008). The amount of fans who attend these game increase the amount of gate revenue a team can make each night. Every ticket sold can eventually lead to that fan paying for transportation, parking, food, and memorabilia.

These additional purchases benefit the NBA franchise as well as the economy of the city that the game is taking place in. After LeBron’s rookie season, the Cavalier’s revenue jumped from $72 million the previous year to an astounding $93 million (Taylor 2008). In each year following his arrival to Cleveland, the Cavalier’s revenue has increased as well as the valuation of the franchise (Taylor 2008). According Forbes. com revenue data for 2007, The Cavaliers were valued at $222 million in 2002 but only a few years after LeBron’s arrival that number more than doubled to $455 million (Taylor 2008).

The numbers prove that the addition of a superstar to an NBA franchise increases the revenue for their own team, but do these elite athletes have an effect on the entire basketball league as well? Around the League As mentioned earlier, superstars successfully generate more revenue for home games. However, according to studies from Hausman and Leonard (1997), Berri, Schmidt, and Brook (2004), Taylor (2008), and Berri and Schmidt (2006), these athletes also generate substantial additional revenues for their opponents in away games as well.

Berri, Schmidt, and Brook (2004) claim that the true power a superstar carries lies in his ability to enhance attendance, and therefore revenues, on the road. We have already identified that Michael Jordan increased his own team’s revenue, but did he enhance the revenues of his opponents as well? From 1989-1998, every road game that Jordan played in, excluding only a single contest, was sold out (Hausman & Leonard 1997). Some of the struggling teams at the time experienced an increase of fan attendance by upwards of 50% when playing the Bulls (Hausman & Leonard 1997).

Jordan’s influence on fan attendance increased revenue at the gate by over $2. 5 million for other teams during the 1991-92 season (Hausman & Leonard 1997). And perhaps the most astounding figure is that when all factors are taken into account including TV deals, NBA properties, and gate revenue is that during the 1991-1992 season, Jordan’s estimated value to other NBA teams was $53. 2 million (Hausman & Leonard 1997). Jordan exemplified what it meant to be a superstar and possess to ‘star power’ and generated millions of additional dollars in revenue.

Conclusion The results of these studies illuminate the importance that superstars have in the NBA. Stars like LeBron James and Michael Jordan attract larger fan bases and both increased attendance to their respective teams significantly starting from their rookie seasons (Hausman & Leonard 1997) (Taylor 2008). These rises in attendance increase the total revenue for the player’s teams. LeBron and Jordan are both estimated to have increased their team’s revenue by $16 million and $8. million respectively their rookie seasons (Hausman & Leonard 1997) (Taylor 2008).

But additional revenue didn’t just occur at the home games, these players brought additional revenue at away games and even if the team they were playing was not strong. During his 1991-1992 campaign, Jordan increased other team’s revenue by an estimated $53. 2 million (Hausman & Leonard). Furthermore, all teams in the NBA, whether they have a superstar player or not, benefit from the existence of star players in their league.

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