What do professional baseball, basketball, football, hockey, motorsports, soccer, and tennis all have in common? They're all sports in which analytics are increasingly used to drive decisions in nearly every aspect of the business, from ticket and merchandise sales to labor agreements to player contracts, to TV and digital media deals.
In baseball, as in other sports, the depth and breadth of performance measures now applied to the game make early pioneers like Oakland Athletics GM Billy Beane--recently portrayed by Brad Pitt in the movie Moneyball--look like dabbling amateurs. In fact, robust analytic capabilities are now table stakes for any professional team hoping to play at even or better odds.
Labor and contract talks are now a big-bucks epicenter of analysis, and it's bringing sober, fact-based decision support to an arena where positioning and persuasion once held sway. "Contract negotiations used to be a lawyer-driven process, but today the analytical people are far more important than the lawyers," said Rob Manfred, Major League Baseball's executive vice president, speaking at last weekend's MIT Sloan Sports Analytics Conference in Boston, a six-year-old event focused on the use of analytics in sports.
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The story's much the same for the National Basketball Association, said Adam Silver, deputy commissioner and chief operating officer. In fact, analytics drove the contract talks that ended that sport's player lockout in December. The players union relied on economist Kevin Murphy from the University of Chicago while the NBA countered with data wonk Barry Nalebuff from the Yale School of Management.
"Analytics were front and center in the negotiations, with competing models looking at predictive behavior in terms of how owners would and could react to various salary cap systems and tax implications," Silver said. He added that the salary caps and revenue-sharing arrangements common across most sports are based on predictive revenue projections.
More than 20 top executives from eight different pro sports spoke at the Sloan Sports Analytics Conference, including execs from the recent-champion Boston Bruins, Dallas Mavericks, New York Giants, St. Louis Cardinals, and Manchester United Reds. Representatives from 73 pro teams were among more than 2,200 in attendance.
What became clear in listening to the speakers is just how much teams consider their analytical techniques to be part of their competitive advantage. Luminaries like Bill James, senior baseball operations advisor at the Boston Red Sox, and Scott Boras, the high-profile agent, spoke at the conference, but they weren't giving away any secrets. What these and other execs did is acknowledge the constant pursuit for more data and meaningful measures of player value.
A player needs great core stats to land a blockbuster contract, but other measures can also figure into the formula. Newly minted phenom Jeremy Lin, for example, has been a boon to the New York Knicks. The point guard was undrafted out of Harvard and waived by the Golden State Warriors and Houston Rockets before being claimed by the Knicks. Thrust into the spotlight after first- and second-string player injuries, Lin seized his moment and turned in seven straight outstanding game performances.
There's nothing like a 38-point game to stoke "Linsanity," but the Knicks also know that the player's Taiwanese background has helped the team tap a whole new fan base. "Every metric that we have has gone through the roof, and you can't even imagine the impact," said Scott O'Neil, president of Madison Square Garden Sports, which owns the Knick as well as the New York Rangers, New York Liberty, and Hartford Wolfpack. The rosy stats include 70% higher merchandise sales (and growing after 50 new Lin-related items were added), record TV ratings for the Garden's 40-year-old MSG cable network, 750% higher Web traffic on the Knicks Web site and video views up 2,000% all since the team win streak that coincided with Lin's first seven games as a starter.
The Knicks had already sold out tickets and put sponsorship deals in place before the season began, so there have been limited opportunities to cash in on Lin's fame beyond merchandise and TV ad sales. But O'Neil said the Knicks are banking on big sponsorship deals in Asia. "We're on our way over there within the next few weeks, and we'll join Jeremy when he goes over there this summer with Nike," he said.