Sports Business Simulations' Oakland Baseball Simworld Develops Fiscal Estimate
January 14, 2005 (Press Release) --
Sports Business Simulations creates online simulations of sports organizations for use in the high school and college classroom. "SBS," as its called, currently has two simulations: The Oakland Baseball Simworld and the XFL Simworld.
The Oakland Baseball Simworld is a system-dynamics based simulation constructed using Forio Business Simulations "FML" programing language. It was developed for the college classroom, and to mimic the fiscal behavior of the Oakland Athletics and allows one to test different business strategies over a 15-year period.
To assure a realistic simulation, the Oakland Baseball Simworld is updated every year to match observed fiscal changes in the real Oakland Athletics. This year, calibrating the sim revealed a $23 million loss.
"We believe that estimate is correct plus or minus $5 million," said SBS CEO Zenophon Abraham.
Mr. Abraham developed the Oakland Sim orginally as a tool to help a prospective buyer of the Oakland Athletics, when Abraham was Economic Advisor to then-Oakland Mayor Elihu Harris in 1997. After his stint with the Mayor's Office, Abraham built the simulation into the 968-equation device that exists today. It's used at several universities, including Washington State University, The University of San Francisco, as well as high schools, like North Branch High School in North Branch, MI.
Abraham talked about the recalibration of the sim that revealed the fiscal shortfall "I had to reset the organization simulation to reflect the fiscal position at the end of the season. At that point, the A's payroll had ballooned to $59.6 million. When I set the model equations to start at that player payroll level, and didn't reset the ticket prices, I noticed a huge shortfall in revenues versus expenses.
"At that point, the franchise value the sim produced was $172 million, and a loss of $23 million (which varies by $2 million to $5 million depending on the random variable concerning response to ticket prices and won loss record, but the direction of the response is the same)."
Abraham says that according to reports in the SF Chronicle, other well-placed sources, the team's worth between $150 million and $170 million. "The only way for me to reach $150 million in value would be to further reduce the initial ticket price, and $170 million is very close to that reported in the simulation" Abraham said.
Abraham says this shortfall explains not only why the A's let go of starts like pitcher Tim Hudson, but also marks the limits of the expense level the organization can maintain: "The A's raised player payroll to the highest level its ever been in team history," Abraham observed, "Management was spending for a championship, gambled, and lost."
You can try the Oakland Baseball Simworld yourself at http://www.sbs-world.com Just go to "SBS Free Trial" to run the sim for free for a one day period. A subscription is just $12.50.
You can contact SBS at 510-444-4037 or Mr. Abraham direct at 510-387-9809.
The Oakland Baseball Simworld is a system-dynamics based simulation constructed using Forio Business Simulations "FML" programing language. It was developed for the college classroom, and to mimic the fiscal behavior of the Oakland Athletics and allows one to test different business strategies over a 15-year period.
To assure a realistic simulation, the Oakland Baseball Simworld is updated every year to match observed fiscal changes in the real Oakland Athletics. This year, calibrating the sim revealed a $23 million loss.
"We believe that estimate is correct plus or minus $5 million," said SBS CEO Zenophon Abraham.
Mr. Abraham developed the Oakland Sim orginally as a tool to help a prospective buyer of the Oakland Athletics, when Abraham was Economic Advisor to then-Oakland Mayor Elihu Harris in 1997. After his stint with the Mayor's Office, Abraham built the simulation into the 968-equation device that exists today. It's used at several universities, including Washington State University, The University of San Francisco, as well as high schools, like North Branch High School in North Branch, MI.
Abraham talked about the recalibration of the sim that revealed the fiscal shortfall "I had to reset the organization simulation to reflect the fiscal position at the end of the season. At that point, the A's payroll had ballooned to $59.6 million. When I set the model equations to start at that player payroll level, and didn't reset the ticket prices, I noticed a huge shortfall in revenues versus expenses.
"At that point, the franchise value the sim produced was $172 million, and a loss of $23 million (which varies by $2 million to $5 million depending on the random variable concerning response to ticket prices and won loss record, but the direction of the response is the same)."
Abraham says that according to reports in the SF Chronicle, other well-placed sources, the team's worth between $150 million and $170 million. "The only way for me to reach $150 million in value would be to further reduce the initial ticket price, and $170 million is very close to that reported in the simulation" Abraham said.
Abraham says this shortfall explains not only why the A's let go of starts like pitcher Tim Hudson, but also marks the limits of the expense level the organization can maintain: "The A's raised player payroll to the highest level its ever been in team history," Abraham observed, "Management was spending for a championship, gambled, and lost."
You can try the Oakland Baseball Simworld yourself at http://www.sbs-world.com Just go to "SBS Free Trial" to run the sim for free for a one day period. A subscription is just $12.50.
You can contact SBS at 510-444-4037 or Mr. Abraham direct at 510-387-9809.
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