Numbers Suggest Cubs Management Bluffing or Foolish about Move

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The Chicago Cubs are simultaneously a source of great joy and great pain to Chicago baseball fans.  Almost universally, fans love the Wrigley field area and the traditions of the Cubbies.  And given the Cubs’ history of (a lack of) success, the degree of loyalty exhibited by Cubs fans is amazing.  I should note that I grew up in the Chicago area, and watched many afternoon games on WGN during the summers.

The preceding comments about the loyalty of Cubs fans are on my mind due to the recent news that the Cubs are considering a move out of historical Wrigley Field.  For those who are unaware, the current Cubs ownership groups is attempting to grow its advertising revenues by installing a large video screen on which advertising and highlights can be shown.  The Cubs claim that this addition can generate $20M in incremental revenue.

However, the Cubs currently have contractual agreements in place with neighboring building owners and these owners are concerned that the screen will harm their rooftop viewing businesses.  Tom Ricketts threatened on Wednesday that if the Cubs are not allowed to execute their planned renovations to Wrigley, that they will consider moving the team.  According to ESPN, the city of Rosemont has even offered a free land deal on which the Cubs could build a new facility.

The close connection between the Cubs and the Wrigleyville neighborhood makes this an interesting marketing story.  My conjecture is that it is the Wrigleyville area (and a history of broadcast on WGN) that separates the Cubs from the White Sox.  I tend to think that the Cubs are a unique team that is largely insulated from the pressures faced by most MLB teams.

To investigate this conjecture, we performed a couple of statistical analyses this morning.  For the techies out there we used linear regression and Tobit models to examine the relationship between attendance in MLB and pricing, team winning percentage, team payroll and a large variety of other factors that are likely to affect consumer demand.  When this analysis is conducted across ALL MLB teams using the last 20 years of data, we find a significant positive effect between team winning percentage and attendance.  In contrast, when we limit the analysis to only the Cubs we do not find a significant relationship between winning rate and attendance.

This is an illuminating result as it suggests that consumer demand for the Cubs is largely independent of the Cubs on-field success.  Furthermore, we do find a strong positive coefficient for the Cubs payroll.  Collectively, these results suggest that the Cubs are more about entertainment and environment than the actual baseball product.

What does this mean?  Frankly it suggests that the Cubs are either bluffing about leaving the area or that the Cubs don’t understand their brand or their customer base. Finally, as a Chicagoan I would be very nervous about a move to Rosemont.  The Cubs should ask DePaul how a move to the suburbs worked out.

By Mike Lewis & Manish Tripathi, Emory University 2013

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