Attendance at Sports Events Depends on Various Factors $\widehat {\text { Attend }}$

question 49

Essay

Attendance at sports events depends on various factors. Teams typically do not change ticket prices from game to game to attract more spectators to less attractive games. However, there are other marketing tools used, such as fireworks, free hats, etc., for this purpose. You work as a consultant for a sports team, the Los Angeles Dodgers, to help them forecast attendance, so that they can potentially devise strategies for price discrimination. After collecting data over two years for every one of the 162 home games of the 2000 and 2001 season, you run the following regression: $\widehat {\text { Attend }}$ = 15,005 + 201 × Temperat + 465 × DodgNetWin + 82 × OppNetWin
+ 9647 × DFSaSu + 1328 × Drain + 1609 × D150m + 271 × DDiv - 978 × D2001; $R ^ { 2 }$ =0.416, SER = 6983
where Attend is announced stadium attendance, Temperat it the average temperature on game day, DodgNetWin are the net wins of the Dodgers before the game (wins-losses), OppNetWin is the opposing team's net wins at the end of the previous season, and DFSaSu, Drain, D150m, Ddiv, and D2001 are binary variables, taking a value of 1 if the game was played on a weekend, it rained during that day, the opposing team was within a 150 mile radius, the opposing team plays in the same division as the Dodgers, and the game was played during 2001, respectively.
(a)Interpret the regression results. Do the coefficients have the expected signs?
(b)Excluding the last four binary variables results in the following regression result: $\widehat {\text { Attend }}$ = 14,838 + 202 × Temperat + 435 × DodgNetWin + 90 × OppNetWin
+ 10,472 × DFSaSu, $R ^ { 2 }$ =0.410, SER = 6925
According to this regression, what is your forecast of the change in attendance if the temperature increases by 30 degrees? Is it likely that people attend more games if the temperature increases? Is it possible that Temperat picks up the effect of an omitted variable?
(c)Assuming that ticket sales depend on prices, what would your policy advice be for the Dodgers to increase attendance?
(d)Dodger stadium is large and is not often sold out. The Boston Red Sox play in a much smaller stadium, Fenway Park, which often reaches capacity. If you did the same analysis for the Red Sox, what problems would you foresee in your analysis?

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Definitions:

Perpetual Inventory System

An accounting method that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.

FIFO Method

An inventory valuation method where the first goods purchased are the first ones to be sold, "First In, First Out".

Days In Inventory

Days in inventory is a financial metric indicating how long it takes for a company to turn its inventory into sales.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a period.