Data Management Summative MDM 4U1 Alex Bouma June 14, Sporting Cities Major League Locations

Transcription

1 Data Management Summative MDM 4U1 Alex Bouma June 14, 2007 Sporting Cities Major League Locations

2 Table of Contents Title Page 1 Table of Contents...2 Introduction.3 Background.3 Results 5-11 Future Work...11 Conclusion Annotated Bibliography 14 2

3 Introduction Each spanning metropolis in North America is uniquely situated with defining characteristics; things like architectural and natural landmarks, typical weather patterns, and the predominant cultural majorities that influence the city s character. While San Francisco s China Town district is a far cry from New York s Brooklyn borough, each city is connected inadvertently through professional sports and the economics behind it. Every city deemed capable to support a professional sports team becomes a market, and the market is tapped in accordance with its characteristics. What combination of factors produces the best location to house a professional sports team? Do these factors affect the team s performance or are they strictly limited to economic success? These questions will be addressed and answered mathematically in this report. Background Professional sports have been the entertaining byproduct of our developing culture over the years. The history of professional organized sport has been exciting, socially aesthetic and memorable. As our culture rapidly evolves, the science behind professional sports changes drastically. An increasingly consumer-oriented society has twisted many of the original principals of sports clubs such as sportsmanship and friendly competition into money driven principals. Fans have become consumers and the game has become a product that is marketed. Today, it matters less if a sports team has a losing record. As long as it is profiting economically, its success is granted. Team owners will completely ignore historical significance to and mutual connections with a city by relocating a team in attempt to secure profits. Canada has suffered the losses of many pro sports teams throughout recent history. In 2005, the MLB (Major League Baseball) 3

4 Montreal Expos relocated to Washington DC. In 2001, the NBA (National Basketball Association) Vancouver Grizzlies moved to Memphis. In two years the NHL (National Hockey League) lost two of its Canadian franchises to American cities. In 1995, the Quebec Nordiques left for Colorado and in 1996 the Winnipeg Jets migrated to Phoenix. Clearly there are factors that make one city a better candidate for a pro sports team then another. Population alone must be a major primary factor of a team s economic success and therefore an incentive to relocate. The difference in population between Phoenix and Winnipeg is testament to this observation, as Phoenix checks in at more than twice the size of Winnipeg demographically. In this report, the population of cities will be measured corresponding to their respective team s success both economically and as defined by a winning record in a team s respective league. This report should be a good indicator of whether or not Hamilton Ontario would be a suitable contender for the Nashville Predators to relocate to. The purchase and relocation of the Predators is a major issue in professional sports because Nashville has invested millions of dollars into the franchise and because the club is only nine years young. Relocating to Canada would go against the current trend of testing American cities for hockey markets, an expansion that doesn t seem to be favourable as many American teams are losing money. Another roadblock to Jim Ballsillie, the owner of Research in Motion, and his plan to relocate the Predators, is the territorial agreement both Buffalo and Toronto have with the NHL. This means Ballsillie would be subject to immense fees should he choose to relocate into a market that the Toronto Maple Leafs and Buffalo Sabres would argue is already crowded. What are the intentions when locating a team in a large market? Does a large population actually affect a team s ability 4

5 to win games, or is it purely an economic advantage for teams to be in a larger market? I believe that the size of the market in which a team plays determines its economic success, but has little to do with whether or not the team wins. Results The data collected is cities populations versus each professional sports team s winning percentage and cities populations versus each professional sports team s economic value. The leagues examined are the National Hockey League, the National Basketball Association and Major League Baseball. The population data was collected in 2000, so the team records and values were taken from , when the population would have been very close to the 2000 census numbers. NHL Facts: Gary Bettman is the Commissioner of the premier ice hockey league in the world that is comprised of 30 franchises, including 6 Canadian franchises. MLB Facts: Bud Selig 5

6 The National Hockey League The NHL is profitable, but it seems that only specific markets embrace hockey. Many southern cities are not able to provide enough support for NHL teams. The NHL has its major market teams secure, teams such as Detroit, Boston and New York, but its expansion teams such as Nashville and Columbus are facing bankruptcy. The first data collected was the population of cities with an NHL franchise compared to the respective franchise s Win %. Figure 1: City Population Vs. NHL Franchise Win % As expected, the population of a city had little to do with the percentage at which an NHL franchise won its games. The outlier is the New York Rangers, in a location with an extremely large population (Manhattan). It is most likely that the quality of the players, not the population of a city, determines a winning season in the NHL. There was a miniscule negative correlation calculated at an insignificant Next, the data comparing population to NHL Franchise Value was plotted. 6

7 Figure 2: City Population Vs. NHL Franchise Value The moderate trend shows that cities with a higher population have more valuable NHL clubs, or in other words, NHL teams in a larger market tend to be more valuable. A moderate positive correlation of 0.56 is observable on the data spreadsheet. The New York Rangers continue to be an outlier with not only the highest population for an NHL city, but the most valuable franchise as judged by Forbes as well. There are likely more sellouts due to higher demand for tickets in cities with higher populations, and it is likely that more revenue is generated from merchandise then the smaller cities. Also, heavily populated cities are more likely to build larger, greater income generating arenas and sell out these arenas as well as more seasons ticket holders. Major League Baseball The MLB produces consistent revenue under the commissioner Bud Selig. However, the salaries in the MLB are not nearly as equal as the NHL. Many teams must 7

8 sign a team within a certain budget while a select few have superior spending power. Teams in the MLB play considerably more games and are worth more than the average NHL franchise. The average win percentage is slightly higher than the NHL because the NHL was still using the win/loss/tie format for points. The winning percentages of MLB teams were plotted against the populations of their respective cities. Figure 3: City Population Vs. MLB Franchise Win % No seeable relationship, similar to NHL Win % data No correlation was expected after the NHL Win % data was plotted, but an extremely small positive correlation is apparent between a city s population and the winning percentage of its MLB team. New York continues will be a Y-axis outlier for the entirety of this report, but it is important to include New York as a significant anomaly in 8

9 analyzing the data. City population compared to MLB Franchise Value showed increasingly interesting results. Figure 4: City Population Vs. MLB Franchise Value Moderate Correlation, possible relationship There are similarities between the positive correlation in Figure 2 and the results when the values of MLB teams are plotted against their city s populations. There is still no reason to fully believe, however, that the most valuable teams are found in locations with high populations because a correlation of 0.42 does not prove a complete relationship. Perhaps the NBA could provide a more convincing link. The National Basketball Association The NBA is a highly profitable league under Commissioner David Stern. There are many opportunities for players to endorse themselves outside of the league as well. 9

10 Cities were once again plotted based on their population and the winning percentage their NBA teams produced in the season. Figure 5: City Population Vs. NBA Franchise Win % Weak correlation resembles findings in Figures 1 and 3 Another weak correlation is produced between the success of a pro sports team and its surrounding city s population statistics. The correlation is a weak Data comparing NBA Franchise Value and City Population shows a much stronger relationship. 10

11 Figure 6: City Population Vs. NBA Franchise Value This is moderately concise evidence that the more valuable NBA franchises are located in cities with greater populations. This agrees with the fact that a pro sports team can be more profitable in a large market. Future Work There are several ways to extend this research and analyze it further but more extensive research and data collection would be needed. For example, more seasons could be recorded with the population changes for those years to prove if any of the trends are continuous as the population changes. Collecting all of this data would be tedious because it took quite long to allot the data for 2000 alone. A limitation I encountered is that the data is only from one year and one season. This prevented me from seeing continuing trends over multiple seasons to truly confirm the results that more sports teams in heavily populated cities are more valuable. Another 11

12 limitation arose in data collection when a city had two sports teams in the same league. The method I used when I encountered this was averaging the Win % and Value of the teams and plotting it as a single point. The cities with two teams were always in an area of heavy population. The population of a team s city was also somewhat questionable in this report, which was a significant limitation to its credibility. The population was recorded as the city only and not the surrounding area. Some of the smaller cities have a surrounding area of high population. I would most likely factor this into my next results for this topic. Conclusions In conclusion, the population of a city has little meaning to the winning success of a team teams in small markets can still win. However, winning isn t everything in pro sports today. A winning team is useless unless it generates profit while doing so. Winning teams that lose money are not secure against bankruptcy and relocation. A city s population is related to how valuable the team can be, and this is measurable and predictable. More people allow for a larger and more diverse market. The market might last longer and embrace the product of pro sports longer than a small market city. Large cities can afford larger facilities that generate more revenue, which can be spent on more marketing of the team. More expensive and potentially more skilled players can be signed in larger markets, which could lead to a more successful team and a more exciting product. In the debate on whether or not to move the Nashville Predators and invade the territory of the Toronto Maple Leafs and Buffalo Sabres, I believe there is no legitimate cause for concern. Even though there is a designated market that the Sabres and Leafs 12

13 have in the area, Hamilton can support an NHL team without leeching on Toronto s revenue or team winning percentage because there is a market capable of supporting more than two teams in the Southern Ontario/Northwest New York area. The market is deep in both size and demand for the sport of hockey. Another team in the Greater Toronto Area would thrive, but another team in California, a state with many more people than in the GTA and even Ontario, might not make it. One limitation is that there is no definite way to measure the demand for a sport and if it will catch on or not in an untypical location. Major markets are reliable as consistent revenue producers while expansion teams are a gamble for those willing to risk losing money. Even though Nashville has a slightly higher population than Hamilton, the type of market should be analyzed primarily when choosing the spot for a pro sports team. Overall Hamilton would make a successful location of an NHL franchise based on my findings. 13

14 Annotated Bibliography Forbes NBA Team Valuation Charts < This flash program conveniently represents an NBA team s valuation from by selecting a team on a drop down bar. It displays the information as a line graph. Forbes NHL Team Valuation Charts < &passlisttype=misc&uniqueid=310760&datatype=misc> The same type of flash program allows users to select any team and graph their changing value from Forbes MLB Team Valuation Charts < The MLB valuations from are represented on a flash graphing tool. Andrew s Dallas Stars Page NHL Revenue < This web site is a fan site with some very good economic information embedded in its pages, such as the overall revenues of the NHL over the last dozen years. Database Hockey Standings < The win percentages for the season were calculated from this sight, it just shows the overall standings for the NHL season, including wins, losses and ties. The Relocation of Sports Teams < This is an interesting article on the history of the relocation of many professional sports teams over the years. Final NBA Division Standings < This is simply the data collected on the records of NBA teams in the season including their winning percentages. Final MLB Division Standings < This is the data collected on the records of MLB teams in the season that included their winning percentages. All the population data was recorded from Wikipedia. 14