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SWU Case Study

Southwestern University is experiencing increasing football attendance that is approaching the 54,000 capacity of its stadium. It wants to forecast attendance to determine when to expand. Seasonal additive decomposition was the best forecasting method due to cyclical attendance patterns. Forecasts show the 2009 homecoming game will exceed capacity, so expansion should be completed before the 2009 season. Revenues are projected to be over $4.7 million in 2008 and $5.2 million in 2009 with a ticket price increase.

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565 views

SWU Case Study

Southwestern University is experiencing increasing football attendance that is approaching the 54,000 capacity of its stadium. It wants to forecast attendance to determine when to expand. Seasonal additive decomposition was the best forecasting method due to cyclical attendance patterns. Forecasts show the 2009 homecoming game will exceed capacity, so expansion should be completed before the 2009 season. Revenues are projected to be over $4.7 million in 2008 and $5.2 million in 2009 with a ticket price increase.

Uploaded by

schoolsam
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Southwestern University Case Study

Problem: Southwestern University is experiencing a quickly expanding football program. As a


result, attendance for home games is increasing and approaching capacity. It is in the best
interest of SWU to forecast attendance to aid them in deciding when the best time to expand the
present stadium, which now holds 54,000.

Data: The following data is from the past six seasons, 2002-2007.

Game
Year Game Opponent
Attendance
2002-1 Baylor 34200
2002-2 Texas 39800
2002-3 LSU 38200
2002-4 Arkansas 26900
2002-5 USC 35100
2003-1 Oklahoma 36100
2003-2 Nebraska 40200
2003-3 UCLA 39100
2003-4 Nevada 25300
2003-5 Ohio State 36200
2004-1 TCU 35900
2004-2 Texas Tech 46500
2004-3 Alaska 43100
2004-4 Arizona 27900
2004-5 Rice 39200
2005-1 Arkansas 41900
2005-2 Missouri 46100
2005-3 Florida 43900
2005-4 Miami 30100
2005-5 Duke 40500
2006-1 Indiana 42500
2006-2 North Texas 48200
2006-3 Texas A&M 44200
2006-4 Southern 33900
2006-5 Oklahoma 47800
2007-1 LSU 46900
2007-2 Texas 50100
2007-3 Prairie View A&M 45900
2007-4 Montana 36300
2007-5 Arizona State 49900

An important thing to note is that the homecoming game of every season is the second home
game (bold), and is always well attended. Also the forth home game always corresponds with a
local festival that always draws from attendance (italics).

Summary of Forecasting Methods: Below is a table of the forecasting methods. The
correlation coefficient, bias, mean absolute deviation (MAD), mean squared error
(MSE), and mean absolute percent error (MAPE) are shown.

Correlation Bias MAD MSE MAPE
Nave

-- 541.38 6865.52 69,856,200 .19
Moving Average
(3 periods)
-- 491.36 6,138.27 59,540,560 .17
Weighted Moving Average
(3 period; .6, .3, .1)
-- 424.81 6,501.58 61,107,180 .18
Exponential smoothing
(alpha = 0.5)
-- 794.28 5,880.56 50,755,960 .16
Trend Analysis

.54 0.00 4,355.70 31,285,700 .12
Seasonal Additive
Decomposition
.97 0.00 1,251.26 2,386,650 .03

It is obvious that the superior method is seasonal additive decomposition. This makes
sense because of the cyclical nature each season follows, largely due to the homecoming
game and local festival. The other methods cannot take those variations into account,
and this adversely affects their error. Because of this they are not suitable for predicting
at which point the demand of attendance will surpass the stadiums capacity. They will
show when the average or smoothed demand will reach capacity, but this will occur after
attendance for one or two games will consistently surpass capacity.
Seasonal additive decomposition is definitely the best method, and all indications
support that. The bias for trend analysis is just the same as seasonal, however the
correlation coefficient is not acceptable for this method, well below .70, but the seasonal
correlation is outstanding at .97.
So, now the management has a decision to make whether or not it is worth putting off
expansion of the stadium until the average attendance of a season is above capacity, and
losing potential ticket sales for the games that are above capacity, or to go ahead and
expand before capacity is ever reached in a single game.



Forecasting: The following table shows the forecasted attendance of the next two
seasons of home games.

Game Attendance
2008 1 46540.23
2008 2 52555.73
2008 3 50254.56
2008 4 38370.06
2008 5 50202.22
2009 1 48784.39
2009 2 54799.89
2009 3 52498.72
2009 4 40614.22
2009 5 52446.38

According to this analysis, the second game of 2009, the homecoming game, will be the
first game that the demand for attendance will exceed capacity. The management can
wait until after the 2008 season to start the completion, so long as it is completed before
the 2009 season starts. One thing they should consider is that a refurbished stadium
would cause a spike in attendance because fans would want to see and experience the
new facilities. With this in mind, these figures could be much lower than what would
actually happen if an expansion were built.

Revenues: Ticket sales will average $20 in 2008 and $21 in 2009 due to a 5% price
increase. Total sales can be found for each season by summing the attendance from each
game and multiplying by the ticket price. The results are displayed in the table below.

Season Total Attendance Revenue
2008 237,922.8 $4,758,456
2009 249,143.6 $5,232,016

Again, it should be emphasized that depending on when the expansion is built, these
values could be lower than what actually comes in. It would be smart for them to build
the expansion sooner than later, so that the spike in ticket sales will come sooner. This
could offset some extra costs that could incur from building it sooner.

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