Does signing a high priced player make a MLB team

more profitable?By: Brad Tuffy and Lynn Kilduff

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

Background

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…

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

Reasons

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

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.

Philadelphia

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.

Philadelphia

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

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?

Extremely excited

More excited than usual

No more excited than usual

Less excited0

2

4

6

8

10

12

14

16

11

15

10

1

Level of Excitement

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?

76%

24%

Watch TV Games

Yes

No

41%

59%

Attend Live Games

YesNo

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?

73%

27%

TV Market Availabilty

YesNo

0

5

10

15

20

Purchase TV Package

Survey Questions

Q07:What would you buy more of if your team signed such a player?

General merchandise

Merchandise with the signed player's name and number

No more merhcandise than usual

0 2 4 6 8 10 12 14 16 18 20

Merchandise

Survey Questions

Q08: How much do you agree with the following statements?

Strongly agree Agree Disagree Strongly disagree0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2 11

20

4

7 17

9

4

6 25

42

I would root for any team that signs my favorite player.I would root against any team that signs my least favorite player.I would still root for my favorite team, but somewhat follow the team that signs my favorite player.

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?

97%

3%

Tune In For First Start

Yes No

A chance to win more games

26%

A chance to win the World Series

54%

His individual performance and statistics

17%

Not intrigued at all2%

Intrigue the Most

HYPOTHESIS TESTShypothesized

valuepoint

estimate xsample

size std error

for the proportion 0.510.75675675

7 28 370.0821830

5

NULL : μ>=.51 Most fans would not want to view more games on TV if their favorite team signed a high profile player

ALTERNATIVE: μ<.51 Most fans would want to view more games on TV if their favorite team signed a high profile player

test statistic (obs) (3.003)

critical measure 1.645

one-tailed or two-tailed? 1  

|obs| > critical? Yes

p-value 0.001    

a-level 0.050

p-value < a-level?Yes Reject the NULL

The hypothesis is that most fans would want to view more games on TV if their favorite team signed a high profile player

HYPOTHESIS TESTShypothesized

valuepoint

estimate xsample

size std error

for the proportion 0.510.405405

4 15 370.082183

1

NULL : μ>=.51 Most fans would want to attend more games if their favorite team signed a high profile player

ALTERNATIVE: μ<.51 Most fans would not want to attend more games if their favorite team signed a high profile player

test statistic (obs) 1.273

critical measure 1.645

one-tailed or two-tailed? 1  

|obs| > critical? No

p-value 0.102    

a-level 0.050

p-value < a-level? No Accept the ALT.

The hypothesis is that most fans would not want to attend more games if their favorite team signed a high profile player

HYPOTHESIS TESTShypothesized value

point estimate x

sample size

std error

for the proportion 0.51 0.972972973 36 370.0821

8

NULL : μ>=.51 Most fans would not tune in if such a player was making his first start for their favorite team

ALTERNATIVE: μ<.51 Most fans would tune in if such a player was making his first start for their favorite team

test statistic (obs) (5.633)

critical measure 1.645 one-tailed or two-tailed? 1  

|obs| > critical? Yes

p-value 0.000    

a-level 0.050

p-value < a-level? Yes Reject the NULL

The hypothesis is that most fans would tune in if such a player was making his first start for their favorite team

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.

Reporting

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.

Reporting

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• Watch TV .026• Attend Live Games .722• 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”

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).

Reporting

Any Questions?