Revenue variation is one of the primary determinants of the on-field performance differences among teams in a given league. Here's a chance to explore the size of this variation. The data you need are at the Sports Business Data Directory.
Procedure
A. Using the major league income-expense data, use 2012 as the year for analysis (that would be the 2012-13 season for the NHL and NBA). Produce an MSExcel spreadsheet for each of the four major leagues with the following columns: team name and revenues. Calculate the standard deviation of revenues in 2012 for each league.
B. Using the major league income-expense data, produce an MSExcel spreadsheet for the NFL, 2003-2012, with the following columns: team name, revenues for 2003, revenues for 2004, and so on to revenues for 2012. Calculate the standard deviation of revenue for each year in your spreadsheet. Use the Federal Reserve Bank of Minneapolis "inflation calculator" to derive the standard deviation of revenue for comparison to 2012 for each year in your spreadsheet. Produce a scatter chart with each year on the x-axis and the calculated standard deviation, both unadjusted and adjusted for inflation, for that year on the y-axis.
1. The NFL has more revenue sharing than any other league. The NHL has the least, along with the NBA. Is this fact consistent with the relationship between the standard deviation of revenue in these leagues from part A? Why or why not?
2. In part B, what has happened to revenue imbalance, unadjusted for inflation, for the NFL over time? Why?
3. What differences do you find between the inflation adjusted outcome and the unadjusted outcome in Question 2? Explain.
4. Is the behavior of revenues over time for the NFL good or bad from the perspective of fans? From the perspective of teams in the league?