SBJ/Aug. 12-18, 2013/Opinion

Industry standouts lead sports into new era of decision-making

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More than 20 years ago when working with a client, I used a regression analysis to explain why certain giveaway items were not driving attendance the way the team thought they were. (This team had more than 72 such promotions in an 81-game schedule). After I showed the analysis and implied that there were other factors at play, the marketing executive took me to his office where he had a white board listing comparative dates from the previous year and the weather for those date.

“This is all you need to know,” he explained. “What we did last year on this date and what the weather was like.” Despite evidence to the contrary, I lost that argument, but my bewilderment regarding the lack of openness to research, along with the perception that I was just an academic, stayed with me for some time.

I was determined to change that perception. I left academics for a time to work at DelWilber & Associates, a sports marketing firm where we developed a computerized data-collection system in the early 1990s called RAPS — the Rapid Audience Profile System. The system allowed us to analyze the data on-site immediately after the day’s activities had ended. For our client Mazda, we were able to show that the demographic composition of the audience at a golf or tennis event varies significantly depending upon the day of the week. Thus, we convinced them to change the car displays each night to have more age-, gender- and household income-appropriate models in place for the next day, instead of the same display. It was a big step because it demonstrated the value in collecting data and using it to make business decisions.
 
Morey brought analytics to the court and boardroom.
Photo by: GETTY IMAGES
But that was then and this is now. I decided to seek out someone who, along with “Moneyball” author Michael Lewis, has caused sports executives to rethink the role of research and analytics on both the player performance and business performance side. That person is Daryl Morey, general manager of the Houston Rockets. Previously, he used analytics to help the Boston Celtics with on-court analysis as well as business performance metrics and growth strategies. According to Morey, one of the underlying factors in this move to more data-driven decision-making was that, “More sophisticated owners were paying bigger sums in ownership groups and coming from more advanced management backgrounds, which necessitated a change to also bring in people with more advanced and sophisticated management experiences.”

Morey added, “The overwhelming success of analytics to improve decision-making in financial services, consumer products, etc., is finally being applied to sports. Sports are late to this party. Baseball proved the model, and success in basketball will likely be next.”

An MIT graduate and adjunct professor, Morey also is the co-founder of the annual Sloan Sports Analytics Conference at MIT. This conference has grown dramatically and serves as the nexus point for academics, students and practitioners to come together, learn new approaches and possibilities and share best practices. It is without question the best interaction and sharing between the real world and academics and their research that I’ve seen.

Anthony Perez (far left) leads Orlando’s research team.
Photo by: ORLANDO MAGIC
The NBA through its team management and business operations division has been preaching this gospel for the past five years. It started with a philosophical move from the “art of marketing” to a combined approach featuring the science of marketing, which has led to a strategic business focus on data-driven decision-making. The Orlando Magic ranks near the top of NBA teams with its approach and corresponding investment in research and analytics. Anthony Perez, vice president, business strategy, has a team of seven researchers, data miners and analysts charged with weaving an analytic thread through all Magic business areas, including digital and most recently basketball operations.

According to Perez, “Our primary objective is to help the organization make strategic, data-driven decisions that maximize business performance and efficiency. We work with every department to do that, from corporate partnerships to ticket sales to marketing. This requires thinking about how we can enhance the customer experience. How do we deliver a more personalized, relevant experience to every customer? We use data and analytics to help us understand that challenge, and a variety of technologies to help us deliver on it.”

Data-driven decision-making: The way forward

Include analytics, data mining in sports management curriculum.

Invest in data analysis at the team level.

Seek out best practices.

Marry art and science of doing business.

Anther individual who has been hugely responsible for the growth of sports analytics is researcher, author and consultant Rich Luker. He created the ESPN Sports Poll in 1994 as the first dedicated intelligence service reporting on American consumers’ interests and activities and economic trends related to the impact of sports in our culture. Luker gives meaning to research and statistics that is easily understood. Luker’s insights, particularly in the areas of consumer behavior and customer profiling, are easily applied and encourage the user to dig deeper and learn more.

Mark McCormack, in his book “Staying Street Smart in the Internet Age,” cautions against abandoning relationship marketing in favor of technology. He emphasizes that technology and information are tools that enhance the sales and marketing process.

So where are we going, or where should we be going in the area of sports analytics and data-driven decision-making?

All sports business academic programs should restructure their curriculum to include courses in analytics and data mining (one of the first things we did in developing the program at USF).

Sports organizations should invest in hiring individuals to analyze data, trends and operations to improve performance, efficiency and financial optimization (this is not a one-person hire).

Seek out best practices from other organizations to help secure resources to justify and implement a comprehensive data-driven decision-making process.

Embrace the art of doing business along with the science of how you should do business.

Bill Sutton (wsutton1@usf.edu) is the founding director of the sport and entertainment business management MBA at the University of South Florida, and principal of Bill Sutton & Associates. Follow him on Twitter @Sutton_Impact.

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