Anticipating the Honeymoon: Event Study Estimation of New Stadium Effects in Major League Baseball Using the Imputation Method

Abstract

This paper estimates the impact of new stadiums on attendance and revenues of Major League Baseball teams between 1970 and 2019. Recent studies have shown that conventional two-way fixed effects (TWFE) models may produce biased estimates, proposing an “imputation” method instead. This paper uses the imputation method to generate a counterfactual estimate, based on untreated observations, so that the average treatment effect on the treated (ATT) equals the difference between actual and counterfactual estimates. Additionally, almost ideal unconditional estimates of the ATT are calculated, using a subset of the control group consisting of games played in the same season against treated teams. These approaches reveal that there were significant anticipation effects associated with new stadiums, up to three seasons before opening. They suggest that previous estimates may significantly understate the revenue gains from new stadiums.

Keywords: Event study, Imputation, Stadium attendance

JEL Classification: C21, L83, Z20