Michael Hicks: Some thoughts on the Caitlin Clark effect
It is a safe bet that almost no one in Indiana knows less about basketball than me, but only a recluse could miss the hype over the Indianapolis Fever’s draft of Iowa phenom Caitlin Clark.
Clark is the all-time NCAA Division I-leading scorer and leading 3-point scorer — for both men’s and women’s basketball. She was two-time national player of the year and holds a slew of other records and accolades. By almost any measure, she’s the most dominant player, male or female, to ever enter a professional draft. This makes the economics of Caitlin Clark interesting.
I recently conducted a traditional analysis of the effect Clark could have on the Indianapolis economy. To do so, I used previous studies on the effect of superstar basketball players on game attendance. This analysis assumes Clark would have roughly the same proportional effect on WNBA games that Michael Jordan had on NBA games, which yielded pretty decent effects for the team and city.
By that estimate, the Fever could expect about 26,000 more visitors to games this season. Their total annual spending would be more than $6 million on the games and lodging. That’s a big number for an individual player, but it doesn’t count the endorsements, or what’s known as name, image and likeness (or NIL) in today’s jargon. Nor did it account for potential changes to televised game revenue.
Having watched the past two weeks, though, I think a conventional economic analysis is insufficient to judge the Caitlin Clark effect on women’s basketball — and women’s sports in general. Her fandom, and its effects, are moving well past traditional analysis.
A few data points will make this clear. A typical WNBA game attracts 4,000-plus attendees. This puts them in line with mid-level college game attendance. Advance ticket sales in Indianapolis are at record levels — and record prices. Season tickets are sold out. The team is even offering a new system where you can electronically line up each day to get tickets for the upcoming game. This clever process is doubtless done to broaden the number of folks who can attend home games. Clark’s away games are also selling briskly, so expect an excellent sales boost to teams across the league in 2024.
Right now, the Caitlin Clark effect on ticket sales and likely game attendance appears to exceed that of any male superstar basketball player of the past four decades. However, the real money, and the real benefit to the WNBA, comes from TV.
The typical WNBA game receives about a half-million viewers. But, out of a 40-game regular season, only four or five games will likely be televised. For the 2024 season, 36 out of 40 Fever games will be televised across seven networks.
The analytics teams across these networks have concluded that the WNBA is a potential money-maker for them. They’re almost surely correct.
About 1 in every 700 Americans watched those rarely televised WNBA games last year. But, a whopping 1 in 20 Americans watched the NCAA women’s championship game between Iowa and South Carolina, more than double that of the previous season.
Networks don’t broadcast sporting events because they like sports. They broadcast sporting events because sports economists and marketers have models telling them prime-time broadcasts will be profitable.
Television revenues are important to host cities because televised sports tend to highlight the city. Most Hoosiers will remember how well Indianapolis showed during the Super Bowl. That event was worth tens of millions of dollars in advertising. There’s even some evidence that broadcasts push more folks to attend games.
Televised audiences also boost NIL deals for other WNBA players and teams. Caitlin Clark is already a multimillionaire and has inked deals with Nike, Gatorade and dozens of other brands. The increase in TV spots makes every other player more likely to pick up deals both nationally and locally. So, this is a big boon to WNBA players who are paid very little through the league’s collective bargaining arrangement.
The WNBA pays athletes a starting salary in the mid-$70,000 per year range, with modest bonuses. The lowest-paid NBA player this year earned almost $290,000 from the team, and only 20 earned less than $1 million. The NIL compensation makes this sport financially viable for most WNBA players.
The WNBA’s low pay is primarily a result of low TV ratings. Although NBA players share more TV revenues than the WNBA, available revenues for players are modest. If the WNBA collective bargaining agreement had the same revenue share as the NBA, the women would still only be paid a bit more than $250,000 per year.
This season is likely to change that calculation significantly.
Amid all the hype, the advance sales tickets and sold-out jerseys, there are surely many women, especially former professional athletes, who might feel they were treated unfairly by circumstance. I think particularly about Chamique Holdsclaw and Tamika Catchings, who should be household names.
Let me put those feelings into some perspective. The greatest running back of all time, Jim Brown, never earned more than $600,000 per year in inflation-adjusted dollars from the NFL. He got rich via acting, but he also helped propel the NFL into the revenue-generating behemoth it is today.
Clark benefits from those who went before her, and her presence is already influencing the game for a generation to come. If you doubt me on that issue, try ordering a Clark jersey in girls’ size small.
Clark is also that rare athlete whose advertisements will cross over into other sports. Fans will get to see her on ads during MLB, NFL, NBA and most NCAA games this year. Again, that boosts every WNBA player.
It is also difficult to gauge what Clark’s cultural significance may be. Clark might be the type of feminist icon who Hoosiers come to love and respect.
Michael J. Hicks is the director of the Center for Business and Economic Research and the George and Frances Ball Distinguished Professor of Economics in the Miller College of Business at Ball State University. Send comments to [email protected].
