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MBA 512 Final

MBA 512 Final

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  • 1. Does signing a high priced player make a MLB team more profitable?
    By: Brad Tuffy and Lynn Kilduff
  • 2. No salary cap in MLB.
    NHL cap $56.8 million
    NBA cap $57.7 million
    NFL cap $128 million
    16 of the top 50 highest paid athletes are baseball players
    Basketball, Football, Hockey, Boxing, Racing, Golf
  • 3. Large difference between highest and lowest spending teams.
    2009 New York Yankees payroll: $201.5 million
    2009 Florida Marlins payroll: $36.8 million
    Baseball has an exciting offseason
    GM bidding wars
    Hot stove reports
    Trades to unload expensive contracts
    Hypothesis: spending money on high priced players makes a team more profitable
    Background cont…
  • 4. 162 game season
    April until October
    Longer careers
    It’s America’s pastime
    New York and Boston found success
    2009 Yankees: $201.5 million
    2007 Red Sox: $146.7 million
  • 5. LA Dodgers
    Traded for Manny Ramirez in 08.
    Total attendance in 2009 3,761,669
    NY Yankees
    5 top paid players in MLB. (Jeter, Rodriguez, Texiera, Sabathia)
    Total attendance in 2009 3,719,358
    Philadelphia Phillies
    Traded for Cliff Lee and signed Pedro Martinez in 2009
    Total attendance in 2009 3,600,693
    Oakland A’s
    Traded away Matt Holliday in 09 and released Jason Giambi in 09.
    Total attendance in 2009 1,408,783
    Ticket Sales
  • 6. Phillies acquired Pedro Martinez in July 2009.
    Pedro Martinez is a former CY Young award winner with an impressive resume.
    On August 12th 2009 Pedro Martinez made his first start for the Phillies.
    Comcast Sports Net achieved record setting ratings during this baseball game.
    Most watched program on television in the Philadelphia market during this time slot.
  • 7. Season long average Nielsen rating was 7.1 and for this game the overall rating was 11.1 at times hitting over 13.
    The ratings associated with these high profile players drive up ratings in turn driving up what TV networks can charge for advertising.
    The end result means a bigger television deal for the baseball team.
  • 8. Target Audience – MLB Fans
    Sampling Plan – decided to target specific sites baseball fans frequent
    Summary of respondents – 37 fans
    Administration – MLB.com, ESPN.com
    Potential Sources of error – disgruntled fans, proud fans (won’t really admit the truth)
    Data Collection
  • 9. Survey Questions
    Q01: Who is your favorite baseball team?
    Yankees 9 -Mets 4
    Phillies 7 -Cubs 3
    Dodgers 3
    Q02: How excited would you be if you team signed such a player?
  • 10. Survey Questions
    Q03: Would you want to view more games on TV if your favorite team signed such a player?
    Q04: Would you want to attend more games live?
  • 11. Survey Questions
    Q05: Is your favorite team available in your area without a TV package?
    Q06: If your favorite team is not available in your TV market without the MLB TV package, would you purchase it if your team signed such a player?
  • 12. Survey Questions
    Q07:What would you buy more of if your team signed such a player?
  • 13. Survey Questions
    Q08: How much do you agree with the following statements?
  • 14. Survey Questions
    Q09: If you knew such a player was making his first start on the field for your favorite team, would you tune in?
    Q10: What would intrigue you most about such a player on your favorite team?
  • 15.
  • 16.
  • 17.
  • 18. The results from the hypotheses tests showed us that most fans will view more games on TV both overall and when such a player debuts.
    This supports our original hypothesis.
    Surprisingly the results for live attendance showed us that most fans will not attend more games if such a player is signed.
    This does not support our original hypothesis and would definitely not help the profitability of a baseball team.
  • 19. Collect more results to get a more accurate picture.
    In the future it would make sense to start collecting this information at the beginning of the baseball season and continue the study for the entire season.
    This could be useful information for a baseball organization considering the signing of such a player.
  • 20. Is there a relationship between a fan’s level of excitement over a player and the likelihood they will spend more money on the team (watch TV, live games, more merchandise)?
    Null: There is no relationship between excitement level and likelihood to spend money.
    Alt: There is a relationship between excitement level and excitement level.
    Multiple R: .8155
    R Squared: 66.5%
    Adjusted R Squared: 63.4%
    Standard Error: .5034
    Significance: .000000056
    Regression Analysis
    • P Values
    • 21. Watch TV .026
    • 22. Attend Live Games .722
    • 23. Buy More Merchandise .021
  • Multiple R: .8145
    R Squared: 66.4%
    Adjusted R Squared: 64.4%
    Standard Error: .4967
    Significance: .00000000089
    P Values
    Watch TV: .00448
    Buy More Merchandise: .0000001
    Take Out “Attend Live Games”
  • 24. Scale used for “excitement”
    1=Very excited
    2=More excited than usual
    3=No more excited than usual
    4=Less excited
    Intercept: 3.03
    Watch TV: -.62
    Buy More Merchandise: -1.13
    Person who would watch more TV and buy more merchandise is 1.28 (close to very excited).
  • 25. Any Questions?