Baseball Musings
Baseball Musings
February 11, 2007
MIT Sloan Sports Business Conference

My thanks go out to the staff of the MIT Sloan Sports Business Conference, especially Patricia Favreau for the press credential. The group staged informative sessions with high powered executives and decision makers. The logistics were excellent, from the food to the classrooms and lecture halls used for the presentations. They're to be congratulated!

The conference left me hopeful for the future of the sports industry. Given the attendance, there are a very large number of young business people looking to make their mark in the world of sports. Unfortunately for them, there are only a limited number of jobs. With supply outstripping demand, the sports industry gets to hire the most extraordinary applicants and pay them ordinary wages (at least as entry level employees). I hope this means we're in for an era of business innovation among all sports.

It also means some of these students will create new businesses to complement the sports world. Creating markets for tickets, predictive modeling and data visualization are some of the niche companies already selling their products. So through further infiltration of the management ranks and entrepreneurship, smart young business men and women are going to change the landscape of sports over the generation.

One thing that was disappointing to the students, however, was that there's not a clear path to take to a job in sports. The people who led the career panel, and others the students spoke with all talked about how their careers were not planned, they came about by a series of lucky coincidences (that's certainly the case with me).

Ricciardi's keynote session was very good. He mostly talked of Toronto's successes in the last few years, mainly bringing a large financial loss down to near break even, even profit in some years. Interestingly, the biggest reason he gave for that was the purchase of the Rogers Center. By owning the stadium, the Jays control all the revenue generated by the park, with works greatly to their advantage. Maybe other teams want to think about that before they have the public build them a stadium.

He also spoke of some of the successes and failures they've had bringing players to Toronto. Kerry Ligtenberg was a pitcher that the stats loved. He failed in Toronto, however, because his makeup wasn't suited for the AL East. Scott Shoenweiss was a pitcher the Blue Jays analyzed and decided he should be a lefty specialist. That worked well for the 2005 season. Mike Bordick was at the end of his career. Ricciardi loved Mike from their time in Oakland, and brought Bordick over to finish his career. He was a huge help to the young players, especially Orlando Hudson, and Ricciardi said the other players on the team were begging him not to retire. And finally, there was Frank Catalanatto, who they saw as a solid hitter and were able to sign inexpensively. Ricciardi called him the gift that keeps on giving, as his signing by the Texas Rangers yielded the Blue Jays two draft choices.

Ricciardi also had the best line of the day when asked about clutch hitting. He talked about how there are players who don't panic in certain situations, who can "slow the game down." He mentioned how David Ortiz and Manny Ramirez were like that and added, "I've known Manny since he was 15, and I don't think he knows the game is on the line." The Boston crowd loved it.

The Personnel Decisions Panel featured Bill James, and for me the most important idea to come out of that panel didn't involve players. When asked where the research was going next, Bill felt that (at least in baseball), we're spending lots of time looking at the details. Mr. James feels that someone needs to go back to the big picture. Twenty years ago he would sit down and compose letter to teams about what they were doing wrong (although he never sent them). Now he finds himself composing letters to the commissioner. He was trying to answer big questions about what makes teams win and lose back then. Now he wants someone to ask the questions about what make leagues successful. This was driven home during the cocktail hour, when a consultant for an NBA team was explaining how the current salary cap and luxury tax created perverse incentives for teams. It's time to start developing stats on how teams and leagues operate.

The Sports Technology panel provided insight into where the entrepreneurs are heading in the world of sports. I was most excited by yOOnew, a new company that sells ticket futures. Right now, it's just selling hedge tickets. That is, the company offers tickets for major sporting events at a discount, with the risk that you may not go. So, for example, you buy a ticket for the final four that good if UConn makes it that far. The risk of the ticket is spread out among all the fans of teams that might make it that far. So you pay a low price, to go if your teams makes it, and only lose a little if your team doesn't go. What's cool to me is that this company is creating the infrastructure for moving this to a full blown futures market in all tickets.

PROTRADE is a stock market for players. Right now, it's all in virtual dollars with prizes for the people who do the best, but it could be turned into a real market someday. These kinds of markets are great for checking your view of a certain player against what others think. There's great wisdom in crowds (the average of many guesses is better than any one guess). So teams and fantasy players might watch the tends here to get a clue as to how the player's future looks. Looking at the ticker right now, for example, Chien-Ming Wang and Kei Igawa are selling at the same price of about $125, although their move to those prices are by very different paths. People can't make up their mind about Wang, but as it becomes clear Igawa gets the fifth slot, his value is steadily rising. Meanwhile Matsuzaka's price sky-rocketed recently.

I hope this conference continues. Given that it was sold out this year, there's room to grow. I'm looking forward to next year's panels to see where the latest innovations and research are taking us.

Links to other panels attended:


Posted by David Pinto at 08:45 AM | Management | TrackBack (1)
Comments

David, it sounds as if Bill James could have taken part in the panel discussion on "League Management" which followed his. Now that he's given to taken a much bigger picture view, might he by eyeing some sort of position within MLB once the Selig reign is over? Oh, and by the way, I assume that Mr. James receives more responsive replies from the Commissioner than I have. -- Excellent write-up of the proceedings. Thanks for your efforts.

Posted by: Jan Bottone at February 11, 2007 12:29 PM

Thanks seconded - I don't think a lot of us in Toronto would know about the Riccardi speech otherwise.

Posted by: Nick H at February 11, 2007 04:08 PM
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