Major league baseball team values

Reference no: EM131136159

Major League Baseball Team Values

A group led by John Henry paid $700 million to purchase the Boston Red Sox in 2002, even though the Red Sox had not won the World Series since 1918 and posted an operating loss of $11.4 million for 2001. Moreover,Forbesmagazine estimates that the current value of the team is actually $426 million.Forbesattributes the difference between the current value for a team and the price investors are willing to pay to the fact that the purchase of a team often includes the acquisition of a grossly undervalued cable network. For instance, in purchasing the Boston Red Sox, the new owners also got an 80% interest in the New England Sports Network. Table 12.11 shows data for the 30 major league teams (Forbes,April 15, 2002). The column labeled Value contains the values of the teams based on current stadium deals, without deduction for debt. The column labeled Income indicates the earnings before interest, taxes, and depreciation.

TABLE 12.11 DATA FOR MAJOR LEAGUE BASEBALL TEAMS

Team	Value	Revenue	Income
New York Yankees	730	215	18.7
New York Mets	482	169	14.3
Los Angeles Dodgers	435	143	-29.6
Boston Red Sox	426	152	-11.4
Atlanta Braves	424	160	9.5
Seattle Mariners	373	166	14.1
Cleveland Indians	360	150	-3.6
Texas Rangers	356	134	-6.5
San Francisco Giants	355	142	16.8
Colorado Rockies	347	129	6.7
Houston Astros	337	125	4.1
Baltimore Orioles	319	133	3.2
Chicago Cubs	287	131	7.9
Arizona Diamondbacks	280	127	-3.9
St. Louis Cardinals	271	123	-5.1
Detroit Tigers	262	114	12.3
Pittsburgh Pirates	242	108	9.5
Milwaukee Brewers	238	108	18.8
Philadelphia Phillies	231	94	2.6
Chicago White Sox	223	101	-3.8
San Diego Padres	207	92	5.7
Cincinnati Reds	204	87	4.3
Anaheim Angels	195	103	5.7
Toronto Blue Jays	182	91	-20.6
Oakland Athletics	157	90	6.8
Kansas City Royals	152	85	2.2
Tampa Bay Devil Rays	142	92	-6.1
Florida Marlins	137	81	1.4
Minnesota Twins	127	75	3.6
Montreal Expos	108	63	-3.4

Managerial Report

1. Develop numerical and graphical summaries of the data.

2. Use regression analysis to investigate the relationship between value and income. Discuss your findings.

3. Use regression analysis to investigate the relationship between value and revenue. Discuss your findings.

4. What conclusions and recommendations can you derive from your analysis?

Reference no: EM131136159

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