Sports Analytics: How leading Sports Organisations leverage and monetize Data

Tim Behrens & Frank Ohnesorge

Elite sports are loved for their close finishes and extremely fine margins. Heartbreak and euphoria are so closely related that the advent of one, almost without fail, summons the other into existence as well – only for another set of supporters. It is for this reason that leading sports organisations have long attempted to analyse every bit of data accessible to them in the hopes of tipping the scales of fortune in their favour. The collection of this data and the attempt of discerning signal from noise are driven by the idea of the knowledge-based view, which identifies knowledge and information as the leading factors of a sustainable competitive advantage.

 Spectator sports in the United States alone are estimated to be worth hundreds of billions of dollars and represent a top 10 business market worldwide. Therefore, it comes as no surprise that the literature on sports analytics is abundant. And as abundant as the body of literature itself, are also the applications for sports analytics.

 Many analytical attempts have been made to better facilitate and evaluate the performance of athletes and teams. Where there was once the “eye-test” for scouts looking for the next big thing on the football pitches of Europe, there are now q-values plotted along a q-function to derive the Goal-Impact-Metric, which acts as the best currently known predictor of performance in football (Liu et al. 2020).

 And where there was once the idea of team chemistry and bonding to form individual players into a well-oiled team, we now have player types derived from different clusters, which are – via regression – related to overall team performance and evaluated based on contribution and fit.

 Times are truly changing in the world of elite sports. But sports analytics also find application in more graspable subjects – like the pricing of tickets. Generally, there are three advanced pricing methods discussed in the modern literature. Tiered pricing concerns the discrimination between different seats within a stadium. It involves the creation of seat categories, which are offered at different prices. Variable pricing is all about game categorization and setting different price floors for games of different attractiveness and importance. Lastly, dynamic pricing is a technique in which single game ticket prices are refreshed and re-optimized dynamically and in real time according to supply and demand. All three are shown to outperform traditional and more static pricing models by several percentage points and implementation in real life is becoming more and more frequent.

 Sponsoring is another field which is heavily observed by sports analysts. Are all the fancy sponsorships we see, reaching from big tournaments like the world cup to the shirt of our local football team, really worth it? The answer might really shock you: It depends…

Though to get into more detail; generally, sponsorships are positively regarded in the literature. But there are different drivers of the creation and the destruction of value through sponsoring.

 Sponsoring firms should always look to find a functional and geographical fit between themselves and the organisation they choose to sponsor. To better illustrate this, we may look at one of the biggest success stories of sponsorship in modern history. In 1968, the unknown American sports drink Gatorade signed a sponsorship deal with the NFL for 25.000USD. In 1983, it became the NFL’s official sports drink and was presented on the side-lines and consumed by players during matches. Today, Gatorade creates billions of dollars in revenue and is owned by PepsiCo. It is regarded as the sports drink for athletes and still, to no surprise, sponsors the NFL.

 Consequently, geographical distance is shown to destroy sponsorship value along with the sponsoring of very niche events, where sponsorship can be viewed as intrusion. Another factor is the time-context in which the sponsorship happens. During economic crisis and recession, sponsoring is more often viewed negatively than during more hopeful periods in the fiscal cycle.

 Sports analytics can also grant us insights into the future of advertising. Virtual advertising is a form of technology that allows for the seamless insertion of computer-generated images into a broadcast or livestream. These advertisements are not seen by viewers at the actual event, but rather overlay traditional billboards within the stadium or can be placed onto the field or in the stands. Virtual advertising allows for the multiple sale of one and the same advertising space and can be customized and differentiated within countries and regions increasing the efficiency of the advertisement.

The advent of sports streaming services like DAZN and Amazon Prime is changing the sports streaming rights market and virtual advertising along with it. These sites function through recommendation algorithms which create user profiles and further increase the efficiency of personalization and differentiation within the virtual advertising industry. Technology and big data could revolutionize virtual advertising in sports to a point where advertisements are personalized to the account accessing the stream.

To summarize, the accumulation and analysis of data can assist managers with the knowledge to achieve sustainable competitive advantage and facilitate topline growth. Data has the ability of making us aware of our biases and exposing gaps in knowledge.

Regarding ticket selling, the presented methods need should be evaluated by every organization dealing with the sale of tickets, as serious upside potential is rather realistic with good implementation.

Sponsoring should be embraced and good sponsorship fits should be actively searched for. A good sponsorship can make a brand and build relationships with existing and new customer bases much more efficiently than advertising ever could.

References
  • Abril, Sanchez and Recio (2017), “Does Wall Street love sports Sponsorship? Stock market reactions to the announcement of global official sponsorships”Journal of Advertising Research, 58 (3),1–27.<\li>

  • Alarcón, Fernando, Guillermo Durán, Mario Guajardo, Jaime Miranda, Hugo Muñoz, Luis Ramírez, Mario Ramírez, Denis Sauré, Matías Siebert, Sebastián Souyris, Andrés Weintraub, Rodrigo Wolf-Yadlin, and Gonzalo Zamorano (2017), “Operations research transforms the scheduling of chilean soccer leagues and south American world cup qualifiers,” Interfaces, 47 (1), 52–69.<\li>

  • Alavi, Maryam and Dorothy E. Leidner (2001), “Review: Knowledge management and knowledge management systems: Conceptual foundations and research issues,” MIS Quarterly: Management Information Systems, 25 (1), 107–36.<\li>

  • Amorós, Javier, Laureano F. Escudero, Juan F. Monge, José V. Segura, and Oscar Reinoso (2012), “Team ASPAR uses binary optimization to obtain optimal gearbox ratios in motorcycle racing,” Interfaces, 42 (2), 191–98.<\li>

  • Arslan, Hayri A., Robert F. Easley, Ruxian Wang, and Övünç Yılmaz (2022), “Data-Driven Sports Ticket Pricing for Multiple Sales Channels with Heterogeneous Customers,” Manufacturing & Service Operations Management, 24 (2), 1241–60.<\li>

  • Arslan, Hayri Alper, Necati Tereyagoglu, and Ovunc Yilmaz (2019), “Scoring a Touchdown with Variable Pricing: Evidence from a Quasi-Experiment in the NFL Ticket Markets,” SSRN Electronic Journal, (PwC).<\li>

  • Barney, Jay (1991), “Firm Resources and Sustained Competitive Advantage,” Journal of Management, 17 (1), 99–120.<\li>

  • Broadie, Mark (2010), “Assessing golfer performance on the PGA tour,” Interfaces, 42 (2), 146–65.<\li>

  • Chan, Timothy C.Y., Justin A. Cho, and David C. Novati (2012), “Quantifying the contribution of NHL player types to team performance,” Interfaces, 42 (2), 131–45.<\li>

  • Cianfrone, Beth, Gregg Bennett, Ron Siders, and Yosuke Tsuji (2006), “Virtual advertising and brand awareness,” International Journal of Sport Management and Marketing, 1 (4), 289–310.<\li>

  • Coleman, B. Jay (2012), “Identifying the “Players” in Sports Analytics Research,” Interfaces, 42 (2), 109–118.<\li>

  • Cornwell, T. Bettina, Stephen W. Pruitt, and John M. Clark (2005), “The relationship between major-league sports’ official sponsorship announcements and the stock prices of sponsoring firms,” Journal of the Academy of Marketing Science, 33 (4), 401–12.<\li>

  • Davenport, Thomas H. (2006), „Competing on Analytics,” Harvard Business Review, 84 (1), 98–107.<\li>

  • Durán, Guillermo (2021), „Sports scheduling and other topics in sports analytics: a survey with special reference to Latin America,“ Sociedad Estadistica e Investigacion Operativa TOP, 29, 125-155 .<\li>

  • Easton, Kelly, George Nemhauser, and Michael Trick (2001), “The traveling tournament problem description and benchmarks,” Lecture Notes in Computer Science (including subseries Lecture Notes in Artificial Intelligence and Lecture Notes in Bioinformatics), 2239 (December 2001), 580–84.<\li>

  • Eshghi, Kamran (2021), “Are sports sponsorship announcements good news for shareholders? A meta-analysis,” International Journal of Research in Marketing, 39 (1), 268–87.<\li>

  • Fama, Eugene F. (1970), “Efficient Market Hypothesis: A Review of Theory and Empirical Work,” The Journal of Finance.<\li>

  • Fry, Michael J and Jeffrey W Ohlmann (2012), “Introduction to the Special Issue on Analytics in Sports, Part I: General Sports Applications,” Journal on Applied Analytics, 42 (2), 104–8.<\li>

  • Goossens, Dries and Frits Spieksma (2009), “Scheduling the Belgian Soccer League,” Interfaces, 39 (2), 109–118.<\li>

  • Grant, Robert M.,“Toward a Knowledge-Based Theory of the Firm,”Strategic Management Journal, 17 (Winter Special Issue), 109-122<\li>

  • Hurley, W. J. (2002), “How should team captains order golfers on the final day of the Ryder Cup matches?,” Interfaces, 32 (2), 74–77.<\li>

  • Hurley, W. J., A. Pavlov, and W. Andrews (2011), “A valuation model for NFL and NHL draft positions,” Journal of the Operational Research Society, 63 (7), 890–98.<\li>

  • Hutchins, Brett, Bo Li, and David Rowe (2019), “Over-the-top sport: live streaming services, changing coverage rights markets and the growth of media sport portals,” Media, Culture and Society, 41 (7), 975–94.<\li>

  • Isinkaye, F. O., Y. O. Folajimi, and B. A. Ojokoh (2015), “Recommendation systems: Principles, methods and evaluation,” Egyptian Informatics Journal, 16 (3), 261–73.<\li>

  • Kemeny, John G. (1993), “Mathematics Without Numbers,” Daedalus, 88 (4), 577-591.<\li>

  • Kwon, Youngbum and T Bettina Cornwell (2018), “Sport sponsorship announcement and stock returns: a meta-analytic review,” International Journal of Sports Marketing and Sponsorship, 22 (3), 608–30.<\li>

  • Liberatore, Matthew J. and Wenhong Luo (2010), “The analytics movement: Implications for operations research,” Interfaces, 40 (4), 313–24.<\li>

  • Liu, Guiliang, Yudong Luo, Oliver Schulte, and Tarak Kharrat (2020), “Deep soccer analytics: learning an action-value function for evaluating soccer players,” Data Mining and Knowledge Discovery, 34 (5), 1531–59.<\li>

  • Massey, Cade and Richard H. Thaler (2010), “The Loser’s Curse: Decision Making & <\li>

  • Market Efficiency in the National Football League Draft,“ University of Chicago, mimeo.<\li>

  • Mcclure, Brian, Richard Cassady, Chase Rainwater, and Justin R. Chimka (2012), “Optimizing the sunday singles lineup for a ryder cup captain,” Interfaces, 42 (2), 180–90.<\li>

  • Noll, Roger G. (2003), “The Organization of Sports Leagues,” Oxford Review of Economic Policy, 19 (4), 530-551.<\li>

  • Pifer, N. David, Yan Wang, Glaucio Scremin, Brenda G. Pitts, and James J. Zhang (2019), „Contemporary global football industry: An introduction,” The Global Football Industry.<\li>

  • Sainam, Preethika, Sridhar Balasubramanian, and Barry L. Bayus (2010), “Consumer options: Theory and an empirical application to a sports market,” Journal of Marketing Research, 47 (3), 401–14.<\li>

  • Sander, Matthias and Claudia Fantapié Altobelli (2011), “Virtual advertising in sports events: Does it really work?,” International Journal of Sports Marketing and Sponsorship, 12 (3), 225–39.<\li>

  • Schuckers, Michael (2011), “An alternative to the NFL draft pick value chart based upon player performance,” Journal of Quantitative Analysis in Sports, 7 (2).<\li>

  • Streib, Noah, Stephen J Young, Joel Sokol, Stephen J Young, and Joel Sokol (2012), “A Major League Baseball Team Uses Operations Research to Improve Draft Preparation,” Interfaces, 42 (2), 119–130.<\li>

  • Trick, Michael A., Hakan Yildiz, and Tallys Yunes (2012), “Scheduling major league baseball umpires and the traveling umpire problem,” Interfaces, 42 (3), 232–44.<\li>

  • Tsuji, Yosuke, Gregg Bennett, and James H. Leigh (2009), “Investigating factors affecting brand awareness of virtual advertising,” Journal of Sport Management, 23 (4), 511–44.<\li>

  • Turner, Paul and Sam Cusumano (2000), “Virtual Advertising: Legal Implications for Sport,” Sport Management Review, 3, 47–70.<\li>

  • Van Voorhis, T. (2002), “Highly constrained college basketball scheduling,” Journal of the Operational Research Society, 53 (6), 603–9.<\li>

  • Veeraraghavan, Senthil and Ramnath Vaidyanathan (2012), “Measuring seat value in stadiums and theaters,” Production and Operations Management, 21 (1), 49–68.<\li>

  • Wernerfelt, Birger (1984), “A Resource-Based View of the Firm,” Strategic Management Journal, 5 (2), 171–80.<\li>

  • Westphal, Stephan (2014), “Scheduling the German Basketball League,” Interfaces, 44 (5), 498–508.<\li>

  • Xu, Joseph Jiaqi, Peter S. Fader, and Senthil Veeraraghavan (2018), “Designing and evaluating dynamic pricing policies for major league baseball tickets,” Manufacturing and Service Operations Management, 21 (1), 121–38.<\li>

  • Yang, Yupin and Avi Goldfarb (2015), “Banning controversial sponsors: Understanding equilibrium outcomes when sports sponsorships are viewed as two-sided matches,” Journal of Marketing Research, 52 (5), 593–615.
  • Photo by Pixabay

Leave a Reply

Your email address will not be published. Required fields are marked *