Showing posts with label Attendance. Show all posts
Showing posts with label Attendance. Show all posts

Tuesday, June 15, 2021

Have I got news for you!

An exciting announcement: some of my recent research was the subject of a news article on Sportico.com where I was interviewed for some sounds bites.

Wednesday, June 2, 2021

New Published Articles

Dear readers,

I have taken a short break (as I am wont to do from time-to-time) to focus on some research. I am happy to now announce the fruit of this labour:

First, "Doping in Sports: A Compliance Conundrum" has been included as a chapter in the textbook The Cambridge Handbook of Compliance. It is chapter 65 of 69, which leads me to believe they followed the age-old adage, 'save your best for [almost] last.' (I will update the link with a version of the text if/when I can find one).

Second, "Stadium Giveaway Promotions: How Many Items to Give and the Impact on Ticket Sales in Live Sports" has been published (online) at the Journal of Sport Management. Avid readers will find it takes a familiar spin on the bobblehead topic I have been taking about ad nauseum

Thank you for all your support and stayed tuned for more research updates and (most importantly) future posts on Sports and Economics (in that order).

Jeffrey

Monday, March 2, 2020

Bobbleheads 2020

It's the most wonderful time of the year!

Players have reported to camp, pitchers are stretching out, and Spring Training is underway.

But the best part is that teams have announced their 2020 promotional schedules which gives way to the question: has Major League Baseball begun to appreciate the potential of the bobblehead?

Hint, the San Diego Padres may have figured it out...



There are two things team must consider when making decisions about promotional giveaways (items that I loosely consider to have a resale value of at least $10) at sporting events:
  1. Promos increase ticket sales by a significant amount; and,
  2. Promos allow the team to charge more for tickets.
To understand the promotional impacts on attendance, I undertake the following steps, following the same procedure that I have done for the previous four years:
  • Scrape each team's website for their promotional giveaway schedule for 2020,
  • Parse through the text of each schedule to identify dates with promos such as:
    • replica World Series rings;
    • collectible coins;
    • collectible pins; and
    • Bobbleheads!
  • Predict attendance at each game with and without a hypothetical promo using a simple regression model,
  • Choose the best dates for which promos would provide the most value to the team; and,
  • Compare my hypothetical promo schedule to the actual promo schedule and estimate the additional revenue from my promo schedule.
There are currently 223 promo days scheduled for the 2020 MLB season. While a few teams either have not yet published their promotional schedule or are not offering meaningful promotions this year (Miami and Colorado), 2020 should ultimately feature a similar number of promo days as we are accustomed to seeing.

In 2020, the model says there are 172 games that have been sub-optimally chosen to feature a promo. I therefore reassign 77% of promo days (172/223) and find that the entire league may be foregoing ticket sales to the tune of ...

... $6.4 million!

Here's this years number in some historical context.

Year   Total Promos   Reassigned Promos   Forgone Revenue ($)
             
             
2016   232   166   3.2M
             
2017   231   170   4.0M
             
2018   254   185   3.8M
             
2019   227   180   5.0M
             
2020   223   172   6.4M
             

As seen in past years, the St. Louis Cardinals, Los Angeles Dodgers, and Chicago Cubs lead the league in terms of foregone revenue, but an appearance at the top of the list of losers is largely in part due to the fact that these teams have either a) above-average number of promos; or, b) above-average ticket price (i.e., Chicago Cubs).

Excluding the aforementioned clubs without promos, the San Diego Padres had the least foregone revenue. This is partially because of their more reasonably priced tickets (3rd cheapest in the league) but also because the two games they chose to feature promos were ranked the 4th and 5th best options by the model: the model chose to reassign the promo games but picked games that would sell only ~109 more tickets each.

Way to show them how it's done, Padres!

Below are the results for each individual team. How did your team do?        
  Team   Total Promos   Reassigned Promos   Forgone Tickets (#)   Forgone Revenue ($)
                   
                   
1 St. Louis Cardinals   19   13   34,635   1,230,942
                   
2 Los Angeles Dodgers   18   15   20,469   872,393
                   
3 Chicago Cubs   7   6   14,007   833,292
                   
4 San Francisco Giants   6   5   13,562   519,681
                   
5 Milwaukee Brewers   20   11   18,055   513,493
                   
6 Atlanta Braves   18   15   14,224   418,746
                   
7 Washington Nationals   10   9   5,630   248,415
                   
8 New York Yankees   8   6   4,910   233,829
                   
9 Toronto Blue Jays   8   7   7,631   226,562
                   
10 Boston Red Sox   3   3   2,604   154,445
                   
11 Philadelphia Phillies   5   4   3,650   131,529
                   
12 New York Mets   11   8   4,743   130,916
                   
13 Minnesota Twins   6   5   3,277   107,104
                   
14 Houston Astros   5   4   1,822   90,822
                   
15 Seattle Mariners   4   4   2,165   81,762
                   
16 Chicago White Sox   5   5   2,401   68,133
                   
17 Pittsburgh Pirates   10   8   2,861   65,253
                   
18 Texas Rangers   4   3   2,281   58,740
                   
19 Cleveland   6   4   1,776   55,344
                   
20 Cincinnati Reds   11   7   2,468   52,175
                   
21 Baltimore Orioles   9   5   1,618   48,465
                   
22 Tampa Bay Rays   8   7   2,144   48,314
                   
23 Los Angeles Angels   4   4   1,545   47,773
                   
24 Arizona Diamondbacks   5   4   1,492   31,132
                   
25 Detroit Tigers   6   4   1,076   30,461
                   
26 Oakland A's   3   3   1,116   27,127
                   
27 Kansas City Royals   2   1   774   25,433
                   
28 San Diego Padres   2   2   217   4,818
                   
T-29 Colorado Rockies   0   0   0   0
                   
T-29 Miami Marlins   0   0   0   0
                   
  Total MLB   223   172   173,153   6,357,099

Monday, February 17, 2020

Let's Clear the Air: Pollution affects soccer attendance in China

TLDR: China, one of the world’s top air polluters, is home to Chinese Super League (CSL) soccer, where each team plays its matches outdoors, exposed to the elements - including all the elements that make up common air pollutants.

Just how might these air pollutants impact the attendance at these CSL matches? And what might this say about the broader impact to all human activity in light of increased air pollution?

The answers are below.


While the blog’s name is Sports and Economics (in that order), let us not forget that the results driven from sports data may just have implications for the wider world around us. As I have argued in the past, a concept such as defensive decision making is a human phenomenon that occurs in real life but can be verified using the Major League Baseball's (MLB's) infield-fly rule, or that we do not need to design and implement complex studies to observe risk aversion but instead simply watch golfers when they change their strategy based on putting for birdie versus bogie. And while we can use the easily accessible sports data to test consumers behaviour in light of bad publicity by way of MLB attendance and steroid revelations, we can also use sports data to evaluate even more general real-world issues, such as the impacts of air pollution on human activity.

But first, let me kick things off with a bit of background before we do such a thing.

China, one of the world’s top air polluters, is home to a brand of soccer, the Chinese Super League (CSL), which is ranked about the same as the top North American league, Major League Soccer (MLS). Both leagues have similar global rankings and experience a similar number of ticket sales per game. However, unlike a handful of MLS-employed stadiums, all CSL teams play in open roof stadiums - exposed to all the elements.

Elements including nitrogen and oxygen - which happen to form NO2 (more on this in a minute).

I want to build a model to predict the CSL attendance to evaluate the impact of the air quality experienced in China. This is motivated by an interesting study that had taken a different approach while using older data and ultimately found no effect. In order to build my own model, I first downloaded the 2014 to 2019 CSL attendance from FBref.com. Then, through the help of my colleague and interpreter, Chloe Sun, I was able to download air quality data from the Chinese Ministry of Ecology and Environment (MEE). Next I build the model to predict the attendance, controlling for information about each soccer match including the identities of the home and away teams and the prominence/skill thereof, day of the week, month, year, yada, yada, yada.

Now, despite this being a very different sport in a very different market, I employ a similar model for the CSL data as I have done in the past for MLB, with equal success: while the MLB models typically explain about 80% of the variation in the data, the CSL model explains 73% of the variation.

But the most important part of this model is the additional controls for the air pollution. Each day, the MEE provides a list of major pollutants when they begin to appear in levels beyond thresholds that could impact human health. These pollutants include Nitrogen Dioxide (NO2) or Particulate Matter less than 2.5μm or less than 10μm (PM2.5 and PM10 respectively). While these warnings from the MEE do not imply imminent death, those particularly sensitive to decreased air quality, i.e. asthmatics, can experience exacerbated respiratory conditions and all individuals may even experience some inflammation of their airways.

When I include indicators for matches that occurred on days with warnings for NO2, PM2.5, or PM10, I find some startling results that I am sure the league organisers wish I had plucked out of thin air:


The results indicate that on days where NO2 pollution is particularly pronounced, the soccer match loses about 7.2% of the attendance it would otherwise see. The yellow lines show the 95% confidence interval band indicating this effect is statistically significant (i.e., the yellow lines do not intersect the x-axis).

Similarly, all else equal, the soccer match loses about 4.9% and 4.5% of attendance for days with PM2.5 and PM10 pollution, respectively (however, note that the yellow 95% confidence interval spans zero for PM10 which indicates that there is not enough evidence to say that this effect is any different from zero).

Taking a step away from the specifics of soccer, this estimated effect due to pollution may have a more general implication: what if this 7.2% loss in ticket sales also implied that days with high levels of NO2 pollution require the same share of the entire population to stay indoors for health concerns? This would mean that one in fourteen individuals (in China) are impacted by NO2 - and that is even before considering that paid attendance often underestimates the true impact of negative demand shocks!

But for all the impact this air pollution has on attendance or the general population, an obvious solution would be to focus on limiting the number of days with adverse NO2 pollution. So let's ask, over the course of the sample, how is each Chinese city with a CSL team trending with number of days of NO2 pollution?

Well...


From 2015 to 2019, the average city added 8.4 days with NO2 warnings. And poor Wuhan - it led the way with the greatest number of NO2 days all before becoming the most googled Chinese city and not for tourism reasons.

While sports provide entertainment to a select portion of the overall population, the data and patterns therein provide unique insight into the human condition. And if this study is to tell you anything, it's a bit of a tough time for those humans with respiratory conditions.

If nothing else, these types of analyses can provide valuable insight to policy makers as to how large of a population their decisions could affect for the better.

Friday, November 1, 2019

How to Pump Up Your Bobblehead Revenue: it’s not a question of when, but of how many

As you have come to know by now, there is perhaps no subject I am better versed in than the bobblehead.

I have argued ad nauseam about how Major League Baseball (MLB) teams are not revenue maximising when it comes to scheduling which home games will feature the cherished novelty. 

And while I have suggested that teams are losing out on as much as $5 million on this inefficiency in 2019 only, I now have evidence to suggest that teams are leaving even more money on the table by offering the wrong number of bobbleheads on the days they choose to offer them.


Scarcity is the concept that there are finite resources yet possibly infinite desires. It is the decisions and actions made by individuals in the face of scarcity makes up the very root of the study of economics. In the supply and demand framework, an item's scarcity impacts it's supply and thereby it's price.

Alternatively, scarcity bias in behavioural economics suggests that individuals value a good more if they perceive it to be scarce. Mixed with human's inane sense of loss aversion, or Fear Of Missing Out (FOMO), scarcity can be used to induce demand. Think of the times you have heard the phrase 'Act Now' or 'Limited Time Only' or the McDonald's McRib.

Major League Baseball teams have been known to use scarcity on their promotional giveaways to induce demand for tickets. You will see conditions attached to their promotional giveaway schedules such as "first 20,000 fans," or "while supplies last," used to signal their rareness of the item. While teams may deploy various strategies, one thing that becomes clear is the 20,000 bobbleheads promised by the Los Angeles Dodgers would not satiate the same share of fans as it would if promised by, say, the Miami Marlins: 20,000 bobbleheads would imply on average 40% of Dodgers fans get one, while nearly every Marlins fan could have two.

I calculate the probability of a consumer receiving a bobblehead as the number of bobbleheads promised divided by the capacity of the stadium. If a team does not provide a number of bobbleheads, I assume they plan to give everyone a bobblehead, or that the probability is 100%. Below is a histogram of these probabilities.


What can be observed from this histogram is that there is a slightly skewed distribution of the probability of receiving a bobblehead, with a giant spike at 90-100% (note that no team signaled what could be interpreted as 'false' scarcity - a limit of bobbleheads that is greater than it's capacity - although it could be a very interesting strategy). Ignoring the 100% values, the average bobblehead day sees a 40% probability a fans receives one. Including the 100%, the average is closer to 50%.

To determine what sort of effect the scarcity generates in ticket sales, I create a model to predict the paid attendance at MLB games during these years. Similar to other studies by yours truly, the unit of observation is the attendance at a single game and I include controls for the following:
  • Home team fixed effects,
  • Away team fixed effects,
  • Day of the week fixed effects,
  • Month fixed effects,
  • Year fixed effects,
  • Day/evening game indicator,
  • Divisional rival indicator,
  • Interleague indicator,
  • Opening day (team's first home game of the season) indicator, and
  • Predicted Season Wins.1
Then, if all is done correctly, the only thing I do not control for is idiosyncratic shocks and ... the bobblehead scarcity. (Yes, I understand that there are likely more things I do not control for than things that I do, but this is a free blog).

The leftover attendance that is not explained by the list of controls from above is known as the residual. If the residual is positive then the actual attendance is higher than what the model predicts. Conversely, if the residual is negative, the model predicts a higher attendance than is actually observed.

If we plot the residuals, we begin to see a pattern emerge for bobblehead days that is correlated with the probability of consumers receiving one. Computers are much better at recognising these types of patterns, so just in case you are not able to see it, I have drawn in a non-parametric line of best fit.


What this non-parametric pattern reveals is that there appears to be a local maximum at around 40%, a local minimum at around 80%, and an uptick at the 100% mark, although there is lots of variation in between. 

What is also illustrates is that perhaps a parametric approximation is appropriate - this is beneficial sa it allows us to calculate the actual value of the local minimum and maximum, as well as test what the maximum value is over the range of bobblehead probabilities [0,1]. I therefore fit a cubic function in order to test this hypothesis. This is accomplished by adding four more controls to the model described above:
  • Bobblehead Day indicator (the cubic's constant term)
  • Probability of a Bobblehead,
  • Probability of a Bobblehead-Squared, and
  • Probability of a Bobblehead-Cubed.
I graph cubic function returned by the regression below. The function tells us what percent increase in fans we should expect at a bobblehead game on the Y-axis given the probability of receiving a bobblehead on the X-axis.


The results suggest  the most fans attend when the probability of receiving a bobblehead is 38.7%. This is also known as the revenue maximising strategy and it will bring in about 13.6% more fans, all else equal. This means that 65% of bobblehead days give out too many bobbleheads.

The strategy of offering 100% is not quite as lucrative, although it is very close, bringing in about 10.5% more fans on average. Conversely, a bobblehead probability of 80.9% is revenue minimising, and it is not predicted to bring in any additional fans.

But how much does choosing the bobblehead probability actually matter? To answer this, we could calculate the change in attendance if every team chose the revenue maximising value of bobbleheads.

Similarly to how I reassign bobblehead days, I reassign the number of bobbleheads given out on the bobblehead days to 38.7%, and predict attendance. Because the predicted attendance will be higher than the observed attendance, I cap the predicted attendance at the stadium's capacity to avoid overestimating the impact.

Then I take the difference of revenue-maximising predicted and observed attendance and multiple it by the team's average ticket cost from Team Marketing Report. The end result is the forgone revenue due to an inefficient bobblehead strategy. Below is a graphical depiction with the forgone revenue from bobblehead day reassignment added for comparison (I estimated the latter back in March - see here).


The sum total of revenue gained from changing the bobblehead day schedule is approximately $16M from 2016 to 2019. But the sum total from handing out the correct number of bobbleheads is ...

$25.6 million!


A sobering thought ...

If my model is correct, most teams do not revenue maxmise when deciding the number of bobbleheads to give out on promo days. About 65% of days promise too many bobbleheads. Therefore, from 2016 to 2019, more than 4 million extra bobbleheads were handed out than would
have otherwise been suggested.

At 18cm (7 inches) in height, 4 million bobbleheads is enough to stretch from San Franscisco to San Diego!
(or, for my readers in Canada, from Winnipeg to the Paris of the Prairies, Saskatoon)

But in other not-so-fun terms, a bobblehead weighs about 700g (~1.5lbs) and a garbage truck holds 12.5 tonnes (~14 US tons) meaning MLB produced 227 extra garbage trucks worth of bobbleheads and lost $25.6 million at the same time.

While a bobblehead day can be a fun way for teams to attract fans, it has also been shown that not getting the timing and quantity correct may be quite costly and not just in forgone revenue...


[1] Predicted Season Wins is the number of wins a team can expect to end the season with given their play in prior games and the probability of winning in future games. It is calculated as the actual number of wins prior to the observation plus the expected future number of wins from the observation to the end of the season (using the moneyline odds for information on the probability of winning each future game). 

Thursday, August 1, 2019

$1 Hot Dogs in Chicago: the White Sox Wiener's Winnings

Last year, I asked "Are the White Sox Winners or Wieners?" And now, we may be able to answer the question!

Every Wednesday since August 2, 2017, the White Sox have offered hot dogs (regularly priced $4.50) for just $1 at home games. While I first noticed that attendance was not very responsive to this promo, I also said that since only a handful of games had featured the promo, it was perhaps too early to tell and we would need to ketchup with the Sox later to see how the fans are relishing the experience.

Now, twenty-five $1 Hot Dog Days later and the results are in: everyone and their dog is enjoying the promo. The question remains, just how much money can the White Sox expect to profit from their wieners?

In order to calculate this, I first estimate how many additional tickets are sold on Wednesdays. To do this, I turn to my regular regression that I have used numerous times to predict home-game attendance (e.g., Chicago White Sox, Miami Marlins, Oakland Athletics, San Diego Padres, and, of course, Bobbleheads). This includes controlling for the day of the week, month, year, opponent, and $1 Hot Dog Days. The final result is a model that is able to explain nearly 80% of the variation in attendance.

As for the effect of the promo in question, what I find is that $1 Hot Dog Days bring in about 15% more fans than would otherwise attend - this amounts to nearly 2,500 more tickets!

But what about the cost of selling all those extra wieners? And just how many wieners are actually sold? Just how much profit does a $1 Hot Dog Day provide to the Chicago White Sox???

Unfortunately, they keep those numbers pretty heavily under wraps. But, we can make some educated guess as to what the numbers might actually be.

First, let us define how to calculate profit on a regular day:


where Π is the profit and pt and ph are the prices of tickets and hot dogs, respectively, a is the attendance, and qh is the quantity of hot dogs sold. Note that the subscript H- denotes a non-$1 Hot Dog Day. Lastly, CF and ch denote fixed costs and cost of a hot dog, respectively, both of which are unknown.

The National Hot Dog and Sausage Council suggest that one in four fans buy a hot dog when faced with the full price, so we can simplify the above equation:


Next, we can define a similar equation for the profit on a $1 Hot Dog Day:


Notice the subscript H for $1 Hot Dog Day and that ph is now equal to one (I remove it entirely from the notation for simplicity).

To understand the marginal profit, we take the difference of the two aforementioned profit equations:



which simplifies down to:


And if we consider the cost of a hot dog, ch , as a function of the price and margin, mh , then the equation can be written as:

Since we know the change in the attendance at $1 Hot Dog Days, the average price of a ticket ($28.38), and the price of a hot dog ($4.50), the above equation is now expressed in terms of three unknowns: quantity of hot dogs sold on $1 Hot Dog Days, the margin of a regularly priced hot dog, and the marginal profit.

I can then make some educated guesses at the former two unknowns and calculate the latter. Below is a graphical depiction of the iso-profit lines, or the estimated additional profit due to $1 Hot Dog Days for various scenarios of quantity of hot dogs sold and hot dog margin.
What we see is not only that there is a huge range of possible values for $1 Hot Dog Day profit - anywhere from $30,000 to $65,000 - but also that the range is all above zero! Anyway you slice it, $1 Hot Dog Days appears to be quite the financial success.

But how much of a success depends: if the margin is below 77.8%, each additional hot dog sale has a negative impact on profit (i.e., it costs more to make a hot dog than it sells for). 

If we take an estimate of the margin from online articles, we can imagine some different scenarios:

This article suggests that Costco uses its $1.50 hot dogs as a loss-leader to entertain their members. That would imply the cost of supplying a hot dog would be greater than $1.50, and therefore the White Sox would face a upper bound margin of 67%. According to the figure above, the $1 Hot Dog Day profit would be right around the $55,000 range, almost regardless of how many additional hot dogs were consumed.

Instead, if we consider this article, the cost of supply hot dogs in bulk is stated to be 40 cents per wiener, implying a margin of +90%. Now consider that a colleague of mine just attended a $1 Hot Dog Day game bought three hot dogs: 200% more than she would have otherwise purchased! Together, these two estimates suggest the White Sox could be making a profit in that elusive $60,000+ range!

All-in-all, we can say $1 Hot Dog Days are no dog-and-pony shows, and maybe, just maybe, the top dogs running the White Sox may just know what their doing.



If I had a dollar for every reader ...

Turns out I actually can! (or at least fractions of a dollar).

If you are enjoying what you are reading and want to support Sports and Economics (in that order), please consider turning off any ad-blocker and clicking some ads and some ad revenue will be sent my way!