Top 5 NBA Draft Picks' Effect on Ticket Prices
October 2024
Top draft picks are what fanbases receive after going through a rough season, full of losing. Especially when once-in-a-generation prospects are entering the NBA, fans will begin to root against their team to secure those sought-after top draft picks. The NBA has tried to combat "tanking" through the NBA lottery, but there is still an incentive to lose.
Once teams receive one of those top 5 picks, fans spend the offseason reaming about their new young star to build their franchise around. This sparked a question in my mind: Do ticket prices increase the following season for teams that secure one of the top five picks? To find out, I collected the necessary data and created a regression model to search for any correlation between a top-five pick and an increase in ticket prices.
The Goal
Gather various datapoints from the 1991 to 2021 NBA seasons to gain insight into draft picks' ultimate effects. Variables taken into account were the win percentage of the previous year, five binary variables for picks one through five, the population of the NBA city, and the price percentage change.
The Method
First, I gathered the data mentioned in the goal description. Wins typically lead to more demand for tickets, so I knew it was necessary to include that statistic. I decided to split the top five pick variable into separate binary variables to hopefully gain better insight into how much more valuable each pick was. I also included the population of each greater city area to capture the market size of each NBA team. Teams in cities such as New York or Los Angeles have high demand for tickets due to large population sizes. Lastly, the percentage change in this regression model will serve as the dependent variable. Once all the data was gathered, cleaned, and reformatted, I imported it into R. Then came the fun part, creating the linear regression model with win percentage, population, and draft picks as the input variables and change in ticket prices as the outcome variable. The table below displays the corresponding regression model, including the coefficient estimates, standard errors, statistics, and p-values.
The Takeaway
Unfortunately, we cannot reach any conclusions on the effect of the top five draft picks on ticket prices. The data was heavily influenced by the population of the NBA city and the winning success of the previous year. This should not come as a surprise, as fans enjoy watching their team win, which drives demand for tickets and increases prices. The hype surrounding new draft prospects may have a more significant impact on early-season ticket prices, only to lose steam as the season progresses. This cannot be confirmed or denied in this study and would require further insight to reach a definitive decision. Overall, this study highlights the overall supply and demand effect with ticket prices, as greater city population and winning proved to have the most significant impacts on NBA ticket prices.
The Results
To determine whether each statistic is significant, we will use a 5% level of significance, meaning the p-value is less than 0.05. The three highlighted variables were the only ones that met this criterion. As we can see, all five binary draft pick variables were insignificant. Population and win percentage from the previous year have a heavy impact on ticket price changes for the following year.