Michael Jordan at the Washington Gate

Last week I noted the impact star players have on home gate revenue and road attendance in the NBA. The punch line: The star power of a player does attract a significant number of fans on the road but has little impact on a home team’s gate revenue.

In response to this post someone asked about Michael Jordan’s impact on the Washington Wizards. The year before Jordan came out of retirement – for the second time – the Wizards finished 18th in home attendance. With Jordan playing the next two seasons the Wizards finished second in home attendance each time. Given that the Wizards only won 37 games each season with Jordan playing, it looks like the Wizards were able to attract fans with Jordan’s star appeal.

When we do analysis we are looking at trends in the data. So something can be true in general yet not true in every specific instance. And that was going to be my reaction to this comment. Although in general star power does not have much impact on a home team’s gate, one might expect a player who may be the greatest to ever play the game to defy the general trend.

After a bit more thought…

When you look at the data in a bit more detail, though, it looks like Jordan and the Wizards may not be that big of an exception to the rule. Remember that we did not look at home attendance, but home gate revenue. We calculated gate revenue by multiplying the average ticket price (found at Rodney Fort’s Sports Business Data page) by the home attendance. And when we look at gate revenue, we see that the Wizards took in $38.6 million in 2000-01 without Jordan. The next season with Jordan gate revenue rose to $44.1 million.

Is this increase attributable to Jordan? It is important to note that the team won 19 games without Jordan and then 37 games the next season with MJ. Our model indicates that each additional win for the Wizards was worth about $389,000 in gate revenue. So the 18 additional wins were worth about $7 million and therefore one can argue that the increase in gate revenue we observe was simply a result of the team playing better. Since Jordan did not play particularly well for the Wizards in 2001-02, one could argue that Jordan was not the primary reason the Wizards were more successful at the gate.

Added to this story is what happened to average price of a Wizards ticket. In 2000-01 the Wizards charged $60.46 for a ticket. The next season the Wizards average ticket price fell to $52.06. Lower ticket prices can also lead to an increase in attendance, which is further evidence that the story is not just about Jordan.

In 2002-03, Jordan’s last year in the NBA (so far), the Wizards again won 37 games. Jordan played much better his last season – leading Washington with 10.1 Wins Produced. The Wizards again cut average ticket prices but attendance actually declined slightly. Consequently gate revenue fell to $38.7 million, or roughly what it was the year before Jordan arrived. In sum, the Wizards did as well winning 19 games without Jordan as they did in Jordan’s farewell season.

After Jordan retired the team slumped to 25 wins. And gate revenue fell to $30.2 million, a bit more of a decline than what we would expect for a team that only lost 12 more games. So what we see in 2003-04 is a bit of evidence that Jordan’s star power had some ability to attract fans in Washington. But overall it looks like our story – wins are more important than star power to the home team – still stands even when we look at the specific instance of Jordan and the Wizards.

On the Road it’s a Different Story

It is important to note that on the road Jordan clearly had an impact on Washington’s attendance. In 2000-01 the Wizards ranked 26th in the league in road attendance. With Jordan, the Wizards finished second on the road in 2001-02 and led the NBA in road attendance in Jordan’s farewell season. In 2003-04 with Jordan both retired and banished from Washington, the Wizards were ranked 28th. Given that with or without Jordan the Wizards were a below average team, one suspects – and the data clearly indicates – that Jordan’s star appeal is what made the Wizards so attractive on the road. Unfortunately for the Wizards, the NBA does not share regular season gate revenue. So the teams Jordan and the Wizards played against on the road got to keep all the revenue Jordan generated.

In 1997 Jerry Hausman and Gregory Leonard published a paper in the Journal of Labor Economics that indicated Jordan generated $53.2 million in revenue for teams other than the Chicago Bulls in 1991-92. It is interesting to see that Jordan’s ability to generate revenue for teams other than his employer continued to the very end of his career.

Perhaps all this indicates that the NBA should pay Jordan to come out of retirement one more time. But this time, everyone in the NBA should pay his salary.

– DJ

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