This study advances the literature in minor league baseball demand (attendance) modeling by proposing and testing a set of major league affiliate factors based on strategic alliance research. The results suggest implications particularly applicable to minor league team administrators. Whereas previously, team executives had little research to reference in regards to their choice of major league affiliate, this study indicates that MLB parent clubs with a higher winning percentage can significantly contribute to minor league team attendance, and in the case of AAA, this factor is more influential than the minor league team’s own winning percentage. However, at the AA level, administrators should temper their enthusiasm to switch affiliates because such a change can negatively influence team attendance.

1. Farm Team Shuffle:
The Effects of Major League Affiliations in
Minor League Baseball
Nola Agha, University of San Francisco
Joe Cobbs, Northern Kentucky University
1

2. Minor League Baseball (MiLB)
2
• 19 leagues
• 6-16 teams per
league
• Attendance gains
24 of last 29
seasons
• 40+ million
attendees (2010)
• Shifting geographic
trend in parent
affiliation

3. Club Affiliation Decision
• Major League Administrators
o Cannibalize attendance?
o Player/Administrator travel time
o Administrative costs
o Managerial oversight/ownership
• Minor League Administrators
o Attendance +/-
o Fan identification
o Brand association/equity
3

4. Research Questions
1. Does geographical proximity benefit
the minor league team?
2. Do quality features of the major
league club benefit the minor league
team?
3. Does switching to a
4
better affiliation
benefit the minor
league team?
4. Is there a switching
cost?

5. Demand Theory in Baseball
• Attendance = f[price, quality,
substitutes, income]
• MiLB: classifications not homogeneous
(Agha, 2012; Branvold, Pan, & Gabert, 1997; Gitter & Rhoads, 2010)
o Win percentage non-significant at AAA;
5
significant at AA
• New MiLB stadium
• MLB team within 100 miles (-)
• New MLB stadium
H1
H2
H3
H4

6. Organizational Alliance Theory
• Smaller firms align with larger firms to
establish marketplace legitimacy
(Sarkar, Echambadi, & Harrison, 2001)
o Alliance strategy entails switching costs
• Alliance partner characteristics
(Castellucci & Ertug, 2010; Dyer & Singh, 1998)
o Status: enhanced endorsement (Sarkar et
6
al., 2001)
o Proximity: knowledge sharing, relational
assets (Dyer & Singh, 1998)

7. Alliance-based Hypothesis
• Alliance partner characteristics
o Geographic distance (miles)
o Status of MLB affiliate
H5
o Market size
o Popularity (attendance)
o Win percentage H6c
7
H6a
H6b

8. Switching-based Hypothesis
8
• Switching cost
o Negative effect on MiLB team demand
• Attenuated by new partner
characteristics
o Geographic distance (miles)
o Status of MLB affiliate
o Market size
o Popularity (attendance)
o Win percentage
H7
H8
H9a
H9b
H9c

9. 9
Data
• 15 years: 1992-2006
o AAA: American Association, International
League, Pacific Coast League
o AA: Eastern League, Southern League,
Texas League

10. 10
Model
yjt = β1Xjt + β2Zjt + υj + εjt
yjt = natural log annual attendance
β1 = vector of demand parameters
Xjt = vector of demand variables
β2 = vector of MLB club parameters
Zjt = vector of MLB club variables
υj = PMSA specific fixed-effect
εjt = random disturbance

11. Results
• Analysis 1: Do quality and distance to
alliance partner matter? (yes)
Variable AAA AA
H1. 36% Win percent 0.216 ***0.364
H2. 24% New MiLB Stadium ***0.215 0.075
H3. -53%, -13% Number of MLB in PMSA ***-0.749 **-0.141
H4. 6% New MLB Stadium **0.059 0.029
Strike 94/95 0.006 0.057
H5. 0.024% Affiliate Distance -0.00023258 ***0.0002
H5. -0.00001% Affiliate Distance Squared 0.0000001 ***-0.0000001
H6a. -0.000001% Affiliate Population **-0.00000001 0.00000001
H6b. 43% Affiliate Win Percent **0.434 0.343
H6c. -0.00001% Affiliate Attendance **-0.00000005 -0.00000002
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***p<0.01, **p<0.05

12. Results
• Analysis 2: Does switching to a better or
closer affiliate matter? (no)
• Is there a switching cost? (yes)
Variable AAA AA
H1. 42% Win percent 0.280 ***0.424
H2. 22% New MiLB Stadium ***0.200 0.081
H3. -51%, -13% Number of MLB in PMSA ***-0.711 **-0.134
H4. 6% New MLB Stadium **0.060 0.031
Strike 94/95 0.035 **0.075
H7. -25% Affiliate Change Dummy -0.024 ***-0.293
H8. Change to Closer Affiliate -0.129 0.059
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H9a.
Change to Affiliate with
Higher Population -0.096 0.027
H9b.
Change to Affiliate with
Higher Win Percent 0.002 0.132
H9c.
Change to Affiliate with
Higher Attendance -0.144 0.134
***p<0.01, **p<0.05

13. 13
Discussion
• Consistent with demand theory
o AAA fans more concerned with MLB
affiliate success
o MLB is substitute for MiLB
• Alliance implications
o AAA  status as decision criteria for
affiliate decisions
o AA  switching costs, proximity as
decision criteria for affiliate decisions