Economics of Sports on the Restaurant Industry

As many of you know, UA – Little Rock is exploring a Trojan football program. So we decided to put our new data program to use. We pulled the last year of Little Rock A&P data we could find, 2013, and try to uncover the impact of a football program. One drive down MLK in Fayetteville can tell you that businesses tend to pop up near football stadiums and tend to thrive off the sports season.

While there are many reasons to be excited about this, the most important for us here is the impact sports can have on local business. Importantly we want to see what the difference in sales can be from locations directly impacted by sports in Little Rock. It is a hard gauge considering the Razorbacks played on 2 games that year, one to a chump team, and the Trojans basketball team overall had a down year.

To help factor in the impact, we pulled restaurants immediately around War Memorial and around the Jack Stephens Center. We then looked at their averages for the entire year and their averages for the prime sports months: September and November for football, February and March for basketball.

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We then compared these to the averages against other areas of the city, and found the difference above (or below) average for restaurants in the respective areas.

For football the Razorbacks played in September and again in November at War Memorial. We do not have single day data for the period, but looking at monthly A&P report data we can see an obvious bump. The Razorbacks contributed to a $9,010 average monthly sale swing in September, and a $9,236 in November compared to the rest of the city. You can see that the average city sales were down from average both of those periods. Interestingly enough the UALR area seemed to experience a bump in sales as well during that period, so there appears to be a knock on effect for neighboring areas. We may run this again against Hillcrest.

Basketball again is a slightly different story. We took the bulk of the conference schedule period to examine. The average attendance was in the low 2,000’s for the two months we looked at, so considerably lower than football attendance. The bump is similarly not quite as high, but still certainly exists. There was a $6,949 average swing in profit in February, and a $3,751 average swing in profit in March (only two games, but the most attended of the year). Note that War Memorial area does not show the same bump, showing that the Trojan Basketball games likely do not have a wide reaching impact.

So what does this all mean? The single year data does seem to show a solid bump in sales in the area of sports. Again we are dealing with a single day on both football months, and low out of town attendance on basketball games. We will also try to dig up further A&P data from different years to see if this is the same case annually, or if it was a one time thing. It will also be interesting to check attendance records and team performance against sales data.

The other thing to consider is how few restaurants exists near War Memorial. Certainly a more stable team that will consistently draw crowds throughout a season should have a higher impact all around on sales in the general area. I would expect to see several new restaurants pop up along Markham having an even bigger impact in the overall economy.

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Economics of Sports on the Restaurant Industry