**TLDR: On April 17th, the Oakland A's hosted the Chicago White Sox on what would have been a rather ordinary Tuesday evening game and we would have expected to see less than 8,000 tickets sold.**

**Instead, the A's welcomed 46,028 fans, all the while not charging a single penny for admission.**

**While the event was being touted as a gift to the fans and the community, it ended up being a rather interesting economic experiment: could not charging for admittance to the game actually improve the financial outcomes of the team?**

**I find the Oakland A's were able to forgo all the ticketing revenue for one Tuesday night game against the Chicago White Sox and still turn a profit of more than $800,000.**

By now, most people are familiar with the term Moneyball and the famous 2002 Oakland A's team led by

While Billy Beane's teams originally held an advantage over the majority of the major-leagues, the diffusion of information has since rendered this intellectual advantage irrelevant.

But this has not stopped the Oakland A's from staying ahead of the curve on new ideas to make a successful franchise: this time focusing on financial success.

Cue April 17th, 2018, or "Free Day," which signified the 50th anniversary of the A's inaugural game at the Oakland-Alameda County Coliseum and all tickets for the game were free. The game was held against a relatively pitiful Chicago White Sox on a Tuesday where the average crowd is around 15,000 people. But instead of a mediocre-sized crowd, "Free Day" saw 46,028 in attendance! While the event was being touted as a gift to the fans and the community, it ended up being a rather interesting economic experiment: could not charging for admittance to the game actually improve the financial outcomes of the team?

In order to answer this question, I began by collecting the Oakland A's attendance data from the past three seasons. Unlike the team across the bay, the San Francisco Giants, the Oakland A's do not regularly (almost never?) sell out their stadium and there is tremendous variation in the attendance figures: ranging from as little as 2,500 tickets sold to nearly 55,000.

I organised the data in a similar way to predict the attendance figures as I have done in the past, which I have done to predict attendance at bobblehead night or when a player was just busted for steroid use. My model uses information such as the day of the week, the month, and the opponent, and explains over 70% of the variation in attendance.

I ran the regression up to April 16th, 2018 and used the model to predict the attendance for the remainder of the A's home games for the month of April. Below I have plotted the results of the actual and predicted attendance and the results are quite striking:

Immediately, two noteworthy features appear: (a) the massive influx of attendance in response to "Free Day" (a difference of 38,190 fans), and; (b) the continued increase in attendance in each game after "Free Day" (statistically significant at the 5%).

But this still does not tell us if the event was indeed financially justified, let alone successful. In order to be financially justified, the change in revenue from "Free Day" at least must be non-negative as follows:

Where I allow for "Free Day," abbreviated as FD in the equations, to impact the demand for tickets T games into the future. The equation can then be expanded into the following:

Substituting in the actual and predicted figures we can solve the equation. Note that price here is the average ticket price which Forbes says to be $28 in 2018 and I have simplified the summation to T = 4, or an additional 27,626 tickets sold for the remainder of the A's April home games. Finally we solve for the change in revenue:

Where I allow for "Free Day," abbreviated as FD in the equations, to impact the demand for tickets T games into the future. The equation can then be expanded into the following:

Where R

_{FD}indicated the revenue associated from "Free Day" and R_{FD-}indicates the revenue from no "Free Day." Recall, that I calculated that the average fan's spending on concessions is about one third of the average ticket price. The Oakland A's would only collect concession revenue or 1/3 of the price of the average ticket on "Free Day" instead of gate and concession revenue on a regular Tuesday night game against the Chicago White Sox. The equation then further expands to the following:
Where P is the average ticket price and A

_{FD}and A_{FD-}indicate the attendance of both "Free Day" and not "Free Day." The equation now simplifies to the following:Substituting in the actual and predicted figures we can solve the equation. Note that price here is the average ticket price which Forbes says to be $28 in 2018 and I have simplified the summation to T = 4, or an additional 27,626 tickets sold for the remainder of the A's April home games. Finally we solve for the change in revenue:

"Free Day" drove in an additional $1,168,000 in revenue brought in over the no "Free Day" option. This is made up of $137,000 on "Free Day" itself and an additional $1,031,000 thanks to the uptick in demand for tickets for the each game since "Free Day!"

However, the increase in revenue says nothing about the increase in the costs associated with hosting an additional 65,816 fans during "Free Day" and the following four games. To 'ballpark' this cost figure, I use some historical data, to find that the cost of ballpark operations per ticket is roughly $5.50 in today's dollars. Ballpark operations is probably the best available proxy for the average per-attendee variable cost and it includes costs associated with non-player labour, ballpark supplies, ticket services, scoreboard operations, broadcasting, and ballpark rent. Using this average ballpark operations cost per ticket we can solve for a slightly different equation:

Thus, the Oakland A's were able to forgo all the ticketing revenue for one Tuesday night game against the Chicago White Sox and still turn a profit of more than $800,000, which is quite the feat! Note that if not for the increased attendance in the subsequent four games "Free Day" would have left the A's with a -$73,000 bill.

I'd be curious to take this a step further and extrapolate the revenue impact of the additional food and beverage, as well as parking revenue the free game generated. At $30 per car, the additional fans, the free day would only need to generate an additional 2433 cars to cover the -$73,000 bill calculated in the last line.

ReplyDeleteOreleceph, this is a great comment! I like that you added your own back-of-the-envelope calculation.

DeleteYou have raised a great question worth exploring: what is the ratio of attendees to cars? Perhaps it will be something I will add to future studies.

I like your thinking but, alas, the A's did offer free parking on this night as well as free admittance (parking on Tuesdays is often free)

https://www.mlb.com/athletics/news/as-to-host-50th-anniversary-game-on-tuesday-april-17/c-271966520

Where's your other articles? I am inclined to know more about the fascinating parralels between sports and their statical patterns towards revenue growth. I would also like to know if teams that have more mustaches are typically better hitting teams...

ReplyDeleteThanks for the read "Unknown"!

DeleteI would suggest subscribing to the mailing list using the form at the top of the page and staying tuned for future potential moustache-related articles!

It very well may be very unpleasant to make the fundamental groundwork for the large day. There are so numerous things that can turn out badly. You may up tracking down a couple of wrinkles or pimples preceding the huge day. This is unquestionably something which you would prefer not to see. 야동비즈

ReplyDeleteThis comment has been removed by a blog administrator.

ReplyDeleteThis comment has been removed by a blog administrator.

ReplyDeleteThis comment has been removed by a blog administrator.

ReplyDeleteThis comment has been removed by a blog administrator.

ReplyDelete