Memorandum submitted by Dr Mark Baimbridge,
University of Bradford
SATELLITE TELEVISION AND RUGBY LEAGUE MATCH
A recent development in the UK television industry
has been the emergence of satellite, cable and latterly digital
broadcasting. This memorandum extends the familiar model of sport
attendance to examine the impact of the BSkyB satellite network
into the coverage of the First Division of the Rugby Football
League over the 1993-1994 season. The entrance of satellite channels
broke the traditional terrestrial competition between the BBC
and the ITV companies. The analysis in this memorandum indicates
that live television transmission of games exerts a negative influence
on attendance, although the net financial consequences are positive
for Super League teams. There are, however, a number of potentially
harmful externalities arising from the switch to non-terrestrial
broadcasters. These comprise issues such as upward pressure on
transfer fees and salaries, together with reduced exposure of
the game through smaller television audiences.
1. This memorandum extends the analysis
of Baimbridge et al (1995) which examined the influence
of satellite television on attendance at First Division Rugby
League matches in the 1993-1994 season.
It finds that satellite television has a significant net negative
effect on attendance. Until 1990 Rugby League coverage was only
available on regional television channels, with Granada and Border
televised live weekend matches, while Yorkshire Television featured
edited highlights. Live coverage of the Silk Cut Challenge Cup
continues to be shown on BBC1 in all regions of the UK. The first
instance of satellite channel broadcasting, by BSkyB Television,
began in 1992.
2. There have been numerous studies of sports
attendance by economists. However, one of the major, but largely
neglected, issues is the influence of television on the demand
for tickets, which has potential significance for the finances
of individual clubs. In a system where facility fees are paid
to the host club there is a risk of spiralling inequality of income
distribution. The rich may become richer with the consequence
that the distribution of more talented ("star") players
becomes increasingly skewed. It could make the outcome of individual
matches and league competitions fall below the optimal level of
uncertainty (Quirk and El-Hodiri, 1974; Jennett, 1984; Peel and
Thomas, 1988; Cairns, 1990).
3. The broadcast media has become an important
factor in the promotion and transmission of sport as a social
product (McPherson et al, 1989). Similarly sport has become
an influential part of the entertainment industry (Hughes and
Coakley, 1984; Neallunsford, 1992), while television has become
intimately involved in the growth, production and control of sport
(Birrell and Loy, 1979; Greendorfer, 1981 and 1983; Powers, 1984;
Rader, 1984; Whannel, 1984).
4. The only previous study of Rugby League
(Burkitt and Cameron, 1992) used pooled cross-section time-series
data of annual average home team attendance. Consequently, the
broadcasting issue has not previously been addressed. Consequently,
the literature with respect to broadcasting, predominately refers
to professional football in the UK, together with American football,
ice hockey and baseball.
5. The literature has largely ignored the
impact of television despite token recognition of its importance
(Sloane, 1980; Cairns et al, 1986). The Chester Report
(1968) considered television to have a major but complex impact
on football, as a substitute, per se, for people's leisure
time. Similarly Hart et al (1975) and Peel and Thomas (1988)
suggested that televised sporting events are specific alternative
attractions. Hence, UK studies had to ignore the impact of live
coverage because, for a long time, the majority of matches were
highlights only. However, terrestrial television has increasingly
shown live matches and the coverage of satellite live showings
has increased rapidly.
6. Wiseman (1977) argued that edited highlights
would raise expectations and hence reduce attendance since actual
games had significant periods of inactivity. Bird (1982) acknowledges
the popularity of televised football highlights, but declined
to incorporate it, asserting that opinion in the game regarded
television coverage as having a detrimental effect. The second
Chester Report (1983) concluded that coverage increased ground
advertising revenue, yet the focus on First Division matches might
lessen attendance at other lower level games. However, no statistical
evidence was provided to support these assertions.
7. Sunday league cricket provided an opportunity
for Schofield (1983) to test for a television effect as matches
were covered on BBC2 at the time of this study. The initial hypothesis
was that advance announcement of the match selected for television
coverage would adversely affect attendance. However, the variable
was ultimately omitted from the preferred model when coverage
proved to be consistently insignificant. In contrast, Hynds and
Smith (1994) when examining demand for test match cricket, were
precluded from analysing the influence of television due to saturation
8. The first study to explicitly examine
the impact of live and edited highlights coverage of English FA
Premiership football in the 1993-94 season (Baimbridge et al,
1996), found that attendance fell by 15.2 per cent for Monday
evening games although there was no evidence of declining attendance
for either satellite televised Sunday matches, or those featured
as edited highlights on terrestrial channels.
9. Subsequently, Kuypers (1997) reviewed
the potential future implications of pay-per-view television,
whilst a number of more general studies (Horsman, 1998; Morrow,
1999; Szymanski and Kuypers, 1999), have sought to review the
inter-relationship between television and sports within the growing
business orientation of professional football in the UK.
10. In the US,
Siegfried and Hinshaw (1979) found that the television status
of a NFL match had no significant effect on non-attendance on
advance ticket holders (no-shows). Arguably, however, the opportunity
cost for such patrons is higher than for spectators in general.
Zuber and Gandar (1988), concluded that no-shows were insignificant
for the League as a whole, but increased in likelihood for less
successful teams. The study of Siegfried and Eisenberg (1980)
suggested that telecasts will not have a significant role in explaining
differences in attendance, but fails to provide supporting empirical
evidence. Thomas and Jolson (1979), on the basis of a survey,
reported that baseball was regarded as a substitute good for television.
With respect to televising baseball matches in the home team's
city, Hill et al (1982) again found no influence on demand.
For American college football, Kaempfer and Pacey (1986) reported
that telecasts and attendance are complementary. Fizel and Bennett
(1989), examining the same sport over a longer period, find that
an increase in television appearances is detrimental to demand,
whilst a complementary relationship existed between the number
of historical broadcasts and attendance.
11. The media have for most of this century
played a central role in the development of sport. Following the
cinematic newsreels of the interwar period, the establishment
of the British Broadcasting Corporation (BBC) brought with it
both radio and television coverage of sport. The significant technological
advances of the late 1960s not only proved important for television
in general, but in particular for sporting events. Moreover, even
the establishment in 1955 of commercial independent television
(ITV) failed to dislodge the BBC from its position of pre-eminence
in sports coverage until 1984 (Williams, 1994). Indeed the position
in relation to major sporting activities had been determined by
government statute declaring top-listed events to be the property
of the whole nation.
12. The historical relationship between
professional sports' governing authorities and broadcasters has
been problematic, taking the view that televising either UK or
even continental matches would significantly reduce attendance.
This difficult relationship was illustrated with respect to professional
football when in 1978 an exclusive agreement for television rights
was reached between London Weekend Television (LWT) and the Football
League for £4.9 million. However, following writs against
both LWT and the Football League by the BBC claiming breach of
previous non-exclusivity arrangements the League signed a four
year contract for £9.2 million jointly with the BBC and ITV
13. This apprehension on the part of sports'
governing bodies is likely to be a consequence of the net effect
of television being theoretically indeterminate. It raises the
relative price of attending a match which induces substitution
away from the game. Additionally there is an income effect. A
fanatical supporter could, for example, watch a live match and
record the televised game. For a sport of minority interest there
is also the possibility of drawing in new live audiences through
initial television viewing (Kaempfer and Pace, 1986; Fizel and
Bennett, 1989; Ingham, 1992). The effect of switching from predominately
regional terrestrial television to BSkyB, as with Rugby League,
is thus complicated whilst the potential television audience is
expanded for the casual fan through continuous national exposure
replacing regionally based coverage, simultaneously it is contracted
for the regular aficionado unless they bought a satellite receiver.
Buying a satellite dish, together with the monthly channel subscription,
would create additional income and substitution effects which
would be expected to mitigate against attending live matches.
The potential future development of a pay-per-view system for
individual matches is likely to exacerbate these forces. Moreover,
it is possible that general sponsorship may be dependent on the
total viewing audience, thus the increased revenue from the move
to satellite/cable/digital broadcasting may be outweighed by lost
income from a net fall in audience.
14. The specification of the basic demand
equation for match attendance (ATT) is a well trodden path.
Although a basic price variable is included, the unemployment
rate has to be used as a proxy for income. The other non-economic
variables represent variously, expected quality of the match,
constraints on attendance and expected level of partisan interest,
in addition to those variables with which we are mainly interested.
15. To analyse the factors influencing attendance
the hypothesised determinants are grouped into four categories.
First, is a series of economic variables. The preferred measurement
of ticket prices was that of average price (PRICE) derived
from unweighted nominal ticket prices for each game, together
with season ticket prices, weighted in relation to the number
of such tickets. However, previous studies have shown limited
success when incorporating this variable resulting in both reported
positive and negative influences upon attendance (Cairns et
16. A further economic variable which is
frequently utilised as a proxy for differences in economic activity
between areas is unemployment. In this study only the home team's
regional unemployment rate (UNEMP) is entered with a hypothesised
negative estimated coefficient.
17. Given the presence of brand loyalty
associated with Rugby League club support, the main potential
direction of substitution will be towards other leisure opportunities
rather than cross-substitution between clubs. Thus the variable
SUBSPORTS measures such possible alternatives within the
club's catchment area. These constitute the other major winter
sporting activities of professional football, Rugby Union and
18. The second category of hypothesised
determinants are those related to demographic and geographic factors.
Attendance will be potentially a function of the market size the
club encompasses, thus a measurement of the population from Census
data for local authority areas for the home team (HOMEPOP)
is included. The away teams' likely travelling support is determined
by the average of their home support weighted by the distance
between the clubs in miles (AWAYSUPP). The initial geographical
factor is the distance in miles between the home and away teams
(DISTANCE). This is taken to indicate the factors such
as the opportunity cost of time (Becker, 1965) and the potential
additional difficulties relevant to away match attendance. However,
this specification assumes a monotonic relationship with respect
to the dependent variable. An alternative hypothesises that for
relatively short distances match attendance will be higher, being
indicative of derby matches with traditionally vociferous rivalry.
To accommodate this feature of professional sport, the variable
DERBY is included to represent matches when teams are situated
less than 20 miles apart.
19. A third series of explanatory variables
focus upon the relative attractiveness of the match identified
by its prospective quality and overall importance. The former
of these is tested through incorporating the number of special
quality or star players in the home (HOMESTAR) and away
(AWAYSTAR) team. Such a player is defined as either an
overseas player or one that has appeared in an international match
during the last three seasons.
20. With respect to the question of seasonal
uncertainty the technique of Jennet (1984) based on the ex
ante championship/relegation significance of each game using
ex post information is problematic. It utilises information
that is unavailable to the agents whose behaviour is being modelled,
namely the eventual points total of the winning/relegated clubs
(Cairns et al, 1986). Moreover, a team is assumed to be
constantly within a mathematical possibility of the championship
or relegation until the mathematical certainty is greater than
zero. Thus no account is taken of the team's anticipated performance
in relation to its own form and that of others.
21. In this study three techniques are employed
to examine the question of seasonal uncertainty. First, two dummy
variables represent when both teams were either in the top four
league positions (TOPPOS) and hence in direct competition
for the championship and in the bottom four places (RELPOS)
and hence in relegation battles. Second, the home team's league
position prior to the match (HOMEPOS), since the majority
of the crowd is likely to constitute home supporters. Finally,
the visiting team's league position (AWAYPOS) is included
to further proxy for likely significance of the match.
22. The fourth general category of explanatory
variables are a miscellaneous series of exogenous determinants.
An intertemporial dimension to attendance is measured by a dummy
variable which is hypothesised to represent residual support following
the club's performance in the previous season (POST-1).
The age of each club relative to the 1993-94 season is examined
to differentiate between established and newly formed teams to
allow for the effect from a build-up over time of both tradition
and support, with the variable FORMATION indicating if
a club is less than 20 years old.
23. Specific exogenous match-day variables
for weekday games (WEEKDAY), evening matches (EVENING)
and those played on public bank holidays (BANKHOL) are
estimated in relation to the traditional fixture time. Further,
improved measures of weather by using three separate types of
variables for warm or cold air temperature (WARM), high
wind (WINDY) and rain (WET), respectively, were
derived from match newspaper reports and general weather summaries.
There is a paucity of evidence for weather effects (Bird, 1982;
Janssens, 1982; Peel and Thomas, 1998), although Cairns (1990)
reported a strong negative impact of rain and weak evidence of
a positive influence of sun, whilst Hynds and Smith (1994) found
that rain was detrimental to cricket attendance. However, the
use of local/regional rather than site specific data questions
the reliability of even these findings. Furthermore, in the context
of this study, the use of inadequate proxies for weather conditions
may cause serious specification error thus biasing the estimate
of the television effect. For instance, the potential attender
who is on the margin of deciding to watch a match on television
is going to find climatic conditions of crucial significance (Thornes,
1977). There are two aspects of prevailing weather conditions,
first they alter the comfort of the attender, and second, they
may also influence the quality of play for an open-air sport such
as Rugby League. Moreover bad weather will also increase the risk
of match cancellation.
24. As previously discussed the net effect
of television is theoretically indeterminate. To examine these
hypothesised effects the variable BSKYB is incorporated
to indicate those matches televised live by satellite by BSkyB
during the 1993-94 season.
25. Table 1 shows the multiple regression
ESTIMATED ATTENDANCE AT RUGBY LEAGUE MATCHES
|Dependent variable: log (ATT)|
|F (22,217) ||63.90**||
Where: ** indicates significance at 1 per cent level; * indicates
significance at 5 per cent level.
26. The price and income variables do not perform well
which is not unknown in sport demand studies. The income proxy
is insignificant while the price variable is wrongly signed according
to orthodox economic theory. This could result from either a price
discrimination policy adopted by clubs relative to the importance
of an individual match, its specific timing within a holiday period,
or merely reflecting that the price elasticity of demand (attendance)
is particularly inelastic (unresponsive) for some clubs, thereby
allowing them to set admission prices in excess of the league
norm without suffering a consequential decline in attendance,
indicating significant supporter loyalty.
27. Of the second category of four geographic and demographic
factors, three are found to significantly influence match attendance.
Both the home teams' local population and the away teams' weighted
travelling support positively impact upon attendance, whilst the
distance between the clubs exerts the expected negative influence
with each mile between the participating teams reducing attendance
by 0.2 per cent. However, the anecdotal suggestion that "local
derby" games attract a more fanatical crowd might be true
in the volume of feelings expressed, although the actual attendance
is not significantly different from non-derby games.
28. The penultimate series of explanatory variables attempted
to analyse the key issues of match quality and seasonal uncertainty.
As with previous studies (Schollaert and Smith, 1987; Jones and
Ferguson, 1988) the quality indicators of star players were significant
for both home and away teams, adding 11 and 3.9 per cent respectively
to attendance. The two indicators of actual league position are
significant, with each single movement of the home team affecting
demand by 17.3 per cent, whilst that of the visitors alters attendance
by 1.1 per cent.
29. Of the nine variables in the final category of match
specific exogenous factors, six are found to be statistically
significant. For those examining games played on alternative occasions
to the traditional time, weekday matches result in an average
fall in crowds of 21.6 per cent, although Bank Holiday games raise
attendance by 11.9 per cent.
30. The negative relationship between the clubs formed
less than 20 years ago and attendance indicates that relatively
newly constituted teams suffer from a slow build-up of support.
Given that their crowds are some 58.1 per cent below those for
clubs established for more than 20 years, this would suggest that
if Rugby League is to prosper through developing a wider geographical
base of teams and thereby support, newly formed clubs might require
particular nurturing until attendance and financial sponsorship
enables them to compete with more established teams.
31. This analysis has striven to produce improved measures
of the prevailing weather, whilst most previous studies have utilised
a single dummy variable for climatic conditions (Cairns, 1990).
In contrast to a contemporaneous study of attendance at Premiership
football matches (Baimbridge et al., 1996), this analysis
indicates that both cold and windy conditions adversely affect
crowds by 9.4 and 10.8 per cent respectively. A possible explanation
for this is that Rugby League stadium facilities remain more spartan
than their top-flight counterparts in professional football, which
have improved through greater investment and as a secondary influence
of the Taylor Report (Cm. 962, 1990).
32. Finally, with respect to the transmission of matches
by BSkyB, the scheduling and corresponding live broadcast leads
to a reduction, certis paribus, of an estimated 25.1 per
cent in attendance. Thus in comparison to a normally timetabled
fixture, a quarter of the usual spectator audience is lost through
simultaneous satellite coverage.
33. Although caution must be exercised when analysing
the results from a limited study, the estimation techniques employed,
together with examination of television coverage would appear
to be complementary extensions to previous studies. It is, however,
the hitherto neglected influence in UK studies of television coverage
that this memorandum has primarily sought to focus upon. Findings
indicate that live transmission of matches result in a significant
decline in demand, certis paribus.
34. The fee for a satellite televised match on BSkyB,
usually on a Friday night, for the period studied was £20,000,
approximately equal to 1/7 or 1/8 the price of a "star"
player. The initial question, however, is whether the lost revenue
is compensated by the fee. Given average ticket prices and attendance
figures, gate receipts for a non-televised match would approximate
to £33,000. With live satellite transmission of the game
we would expect, on average, that receipts would fall to some
£24,700, a loss of £8,300. However, once the match fee
is taken into account the average club will set a net gain of
£11,700. Given the specification used here, a club with lower
attendance, ceteris paribus, stands to gain more as it
loses ticket sales.
35. Therefore the general implication of the analysis
is that Rugby League clubs have secured a lucrative contract from
their arrangement with BSkyB. However, the increased income derived
from television rights has resulted in several fundamental repercussions.
Although the additional revenue has been diverted into team building
not only to maintain Super League status, but also to mount successful
challenges for the lucrative international club competitions;
a limited supply of talented players has led to an inevitable
spiral in transfer fees.
36. A further corollary is the effect of smaller television
audiences following the movement to satellite and away from terrestrial
broadcasters. Although such figures appear not to have been detrimental
to the Super League's income from sponsorship and advertising,
the potential long-term impact might be more fundamental since
clubs require the continued commitment of the public on two key
fronts. First, as spectators to provide the rationale for league
and cup competitions as a spectator sport. Second, as the basic
raw material for the game itself in terms of aspiring players.
The danger is that through screening out the majority of the potential
audience these two factors fundamental to Rugby League's prosperity
could be weakened.
37. The critical finding of this memorandum relates to
the first evidence of the consequences of live broadcasting upon
demand for Rugby League. For BSkyB coverage estimated attendance
fell by 25.1 per cent in the 1993-94 season. However, there is
an overall gain for clubs in terms of both gate receipts and the
broadcast rights fee. Moreover, any future deal between Rugby
League's governing bodies and broadcasters is likely to exploit
a greater breadth of secondary options such as pay-per-view, again
substantially raising the sport's income. However, the distribution
of satellite coverage is skewed in favour of the more successful
clubs, which tend to be wealthier.
Therefore, while the general implication of the analysis is that
clubs are currently receiving a good deal from televised matches,
on the current pattern of live coverage there exists an inherent
risk of widening income inequality between clubs. The relationship
between television and sport therefore possesses profound consequences
for those professional sports which embrace the financial rewards
offered by the new satellite, cable and digital television channels.
Williams (1994) examines two perspectives of the relationship
between satellite television and sport. The contract between
BSkyB and the Football Association for coverage of the English
Premier League and the role of sport in constructing national
identities. Neither aspect therefore directly relates to this
Satellite television began in the UK at the end of the 1980s,
initially offering three channels dedicated to sport. Deregulation,
with the abolition of the listed events clause, raised concerns
that satellite companies would outbid terrestrial stations for
major sporting events (Whannel, 1992). Back
For a review of the history of sports broadcasting in the UK see
Hochberg and Horowitz (1973), Horowitz (1974) and Pacey (1985). Back
The Television Act of 1954 contained a non-exclusivity agreement
such that no broadcasting organisation was permitted to obtain
exclusive rights for the following events: the Boat Race, Test
Match cricket, Wimbledon, the FA Cup Final, the Grand National
and the Epsom Derby (Whannel, 1992). However, the Broadcasting
Act of 1990 stated only that these events shall not be part of
any pay-per-view scheme. Thus satellite, cable and digital companies
would not be prevented in future from bidding for these events. Back
They could now purchase into cable or digital coverage, but that
was not possible at the time covered by the data in this study. Back
See, for instance, Hart et al (1975); Hill et al
(1982); Bird (1982); Janssens (1982); Schofield (1983); Borland
and Lye (1992); Hynds and Smith (1994) and Baimbridge et al
(1995, 1996) for details of the usual model specification in demand
studies of professional team sports. Back
It is estimated by OLS following a logarithmic transformation
of the dependent variable which renders the variables interactive.
For dummy variables the coefficients are biased estimates of the
percentage between group differences (Halvorsen and Palmquist,
1980; Kennedy, 1981). Following the Breusch and Pagan (1979) Lagrange
multiplier test for heteroskedasticity, the reported results show
t-ratios derived from heteroskedastic-consistent standard errors.
Given the semi-logarithmic functional form of the estimated model,
the inclusion of quadratic regressors and relatively small t-statistic
for the intercept term, additional tests such as RESET (Ramsey,
1969) for specification error and non-linearities are not reported.
Indeed, the RESET test although designed to detect missing regressors
is also an effective test for non-linearity. Consequently, this
severely reduces its attractiveness, since rejection of a model
could be due to either non-linearity or an omitted independent
variable (Kennedy, 1992). Back
For the 1993-1994 season of First Division matches covered in
this study the highest rates of satellite coverage were for Wigan
(7), St. Helens (7) and Leeds (5), whilst the lowest levels were
Leigh (3), Castleford (2) and Featherstone (1). Back