What are the determinants of demand for Formula One broadcasts in the United States of America

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Fahy, Ronan
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University College Cork
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This research explores the determinants of demand for Formula One racing in the United States of America and pays specific attention to the relationship between outcome uncertainty and broadcasting demand (viewership figures). The work is timely on two fronts. First, little attention has been paid to demand for Formula One in a growing sports economics literature which considers consumer preferences for different sports. Second, the past decade has witnessed an unprecedented concentration of wins in the hands of a limited number of drivers and teams. As such, this research is motivated by the desire to establish superior measures of race-level balance to reflect this growing dominance. By considering outcome uncertainty using implied probabilities derived from market odds, along with a running total of world drivers and constructors championship points, this work offers a new and improved approach to those currently established in the literature. As the United States is a key broadcasting market for the Formula One Group, the research has practical implications and can offer insights into the determinants of demand in the most important market for the sport. At present research has only examined broadcasting demand in the German Formula One market, (Schreyer and Torgler, 2018). The dataset covers 81 Formula One Grand Prix from 2016 to 2020, broadcast across ESPN, NBC, ABC and CNBC in the United States. Using both Huber and Stepwise regression models, the research aims to discover how various factors influence viewership demand figures. In addition to quantifying outcome uncertainty using a new approach, the research considers the impact of other determinants of viewership such as season long competitive balance, broadcast accessibility, substitute sporting broadcasts, specific track characteristics and scheduling factors. It is discovered that as the difference in betting odds between the first and fifth qualified driver increases, viewership figures increase. These findings do not support the uncertainty of outcome hypothesis (UOH) and show that consumers display a preference for less closely contested races. Furthermore, the scheduling and broadcast accessibility of live Grand Prix races are of high importance in order to maximise viewership figures.
Sport economics , Formula One , Determinants of demand
Fahy, R. 2021. What are the determinants of demand for Formula One broadcasts in the United States of America. MSc Thesis, University College Cork.