Simulation in Sport Finance

Abstract

Simulations have long been used in business schools to give students experience making real-world decisions in a relatively low risk environment. The OAKLAND A’S BASEBALL BUSINESS SIMULATOR takes a traditional business simulation and applies it to the sport industry, in which sales of tangible products are replaced by sales of experiences provided to fans. The simulator asks students to make decisions about prices for concessions, parking, and merchandise; player payroll expenses; funding for a new stadium; and more. On the basis of these inputs, the program provides detailed information about the state of the franchise after each simulated year, including attendance, winning percentage, revenues versus expenses, revenue sharing, and stadium financing. The use of simulations such as this one enhances students’ organizational skills and students’ ability to think critically and imaginatively about the data while applying relevant knowledge and an appropriate strategy to achieve the best possible results. This is particularly important in the field of sport management, in which few, if any, other simulators exist that are specific to the field.