Major League Baseball

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MBA 512 Final

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Major League Baseball

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

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