Chaos erupted at a fashion brand's $5,000 cash giveaway, with police forced to use pepper spray to control the crowd on the street.

Bad Apples was holding its 'Newcastle vs The World' event on Sunday at Mayfield Skatepark, where 300 free T-shirts and 450 other items were up for grabs. 

Footage showed hundreds of people descending into chaos as they scrambled for clothes thrown from a ute, while one man rode his bike over another and a rider performed a burnout on the grass. 

NSW Police, who were not notified of the event, could also be seen using pepper spray and physically pulling people away from brawls. 

PolAir, highway patrol, Newcastle police and the Public Order and Riot Squad rushed to the park on Ingall Street where an arrest was made. 

'On arrival, police found between 150-200 people had gathered in the park, while a further 30-40 people were riding unregistered trail bikes in parkland and on surrounding streets,' a NSW Police spokesman said.

'Streets were closed nearby with traffic redirected due to safety concerns.

'A woman was arrested following an alleged assault in the park area and has since been released pending further inquiries.' 

Two trail bikes were seized at the scene. 

Superintendent Kylie Endemi said that although only one arrest was made, people behaved 'deplorably' and that more could be on the way.

'Let me make it clear that people are allowed to attend public spaces and participate in a harmonious and peaceful environment, but what happened yesterday in Mayfield was far from that,' she said.

'Just because we did not make arrests yesterday does not mean that won't occur.

'I want to make it clear to all those who chose to behave in that unlawful manner, that you might not have been arrested yesterday, but that does not mean police will not come and knock on your door.

'We will identify those who chose to behave in such a deplorable manner, and we will take the necessary action against them to ensure we do not see a repeat of this incident on our streets again.'

She said that some officers were also 'taunted', while some of those nearby were 'intimidated'. 

Police defended their response to the operation, saying they managed to keep the community safe.  

'Getting the balance right in terms of intervening in this unlawful behaviour is extremely important. Police face a difficult challenge in these circumstances,' Superintendent Endemi said.

'We need to be extremely careful in how we intervene so as not to cause injury to the riders of those bikes, or to innocent members of the public, or to police.'

One bystander was Ellen who told the ABC the poor behaviour went on for hours and that fear was a common feeling among residents.  

'They were in the park doing 360s … tearing up the ground and spewing out the dirt, ducking and diving between pedestrians [and it became] a whole day that was pretty much a riot,' she said.

'The fear and concern kept going when it rolled over to three hours of increasing intensity.

'You start feeling powerless at hour one and you feel absolutely like it's never going to end by hour three.'