Abstract
Team owners often argue that a new venue will lead to more wins for the team. This premise is examined here by modeling teams as multiproduct, profit-maximizing firms. Teams' competitive quality and playing venues are two inputs in the production of outputs (e.g., game tickets sold, media programming, etc.). The degree of input complementarity or substitutability between competitive quality and venue quality plays a critical role. The authors empirically test the effect of new venues on winning percentage for Major League Baseball (MLB), National Football League (NFL), National Basketball Association (NBA), and National Hockey League (NHL) teams, finding no significant effect except in the case of MLB teams.
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