Assignment:
Revenues, Payrolls and Winning
Problem Statement
One of the most important debates in pro sports concerns the relationship between payrolls, winning, and revenues. Since data exist on all of these factors, you can examine this relationship for yourself. The data you need are at the Sports Business Data Directory.
Procedure
A. Use all available NHL team payroll, income-expense, and total points data from the 2001-2002 season to the 2011-2012 season (You should have 10 years, the 04-05 season was cancelled). For each year where all data are available, produce a separate MSExcel spreadsheet for each year with the following columns: team name, total points, payroll, and revenue (this is overall revenue (Revenue $mil) from the income-expense file, not TV revenue). Convert payroll and revenue to $millions for charting.
B. Sort the data by payroll in ascending order. For each year, produce a separate scatter chart with payroll on the x-axis and total points on the y-axis. Calculate the simple correlation between total points and payroll for each year.
C. Using the same spreadsheets, sort the data by total points in ascending order. For each year, produce a separate scatter chart with total points on the x-axis and revenue on the y-axis. Calculate the simple correlation between total points and revenue for each year.
Hand In
Hard copy of all MSExcel files, tables, and charts created, plus a paragraph for each of the following questions:
1. Explain the chain of analysis from payroll to total points (in part B) and then on to total points and revenue (in part C). What other factors might affect these relationships that are outside of the data looked at in this project?
2. In part B, what do the graphs tell you about the relationship between payroll and total points? Do the simple correlation statistics add any more information about this relationship? Explain.
3. In part C, what do the graphs tell you about the relationship between total points and revenue? Do the simple correlation statistics add any more information about this relationship? Explain.