ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel
  • »
  • Business and Employment»
  • Small Businesses & Entrepreneurs»
  • Marketing for Small Business

Lessons from Sports Analytics for Small Businesses

Updated on July 7, 2016

Moneyball is a great book, and from what I've heard, a good movie, as well. It details the analytical tools, known as SABERMetrics, that the Oakland Athletics used in the early aughts to achieve success on a limited budget. There are quite a few lessons that can be drawn from the type of data-drive decisions that were made, and I want to look through some here. Not all are strictly analytics related, but I'm gonna talk about them anyway, because it's my blog. So there.


Here are three important lessons to be learned from Data-Driven Sports Strategy:


1) It's important to weigh the benefits of several smaller, less profitable options versus one bigger, more expensive one:

Think here of sports contracts, especially in a salary cap situation. Would you rather have one five star player and nine mediocre ones? (let's assume a ten player roster for the sake of this discussion). Or, would you rather have five good players and five mediocre ones? Or, would you rather have ten average players? The same logic can be applied to clients. It might be better to have many smaller clients versus one high profile client. Then again, it might not. It depends on how you rate the options. Let's look at this another way to further illustrate my point. We'll give each player a star ranking, and see how that affects things.

Option 1) One Five Star Player Plus Nine One Star Players

1*****+9*

(5X1)+(9X1)=14

Option 2) Five Four Star Players Plus Five One Star Players

5****+5*

(5X4)+(5X1)=25

Option 3) Ten Three Star Players

10***

10X3=30

Now, it's possible that a circumstance arises that means you value the players I've classified as One Star at Two. Maybe they're hidden gems, or maybe they're trainable (in business, think about a customer who starts out only buying one product but eventually buys several more as the equivalent). In that case, Option 2) looks better.

1) (1X5)+(9X2)=23

2) (5X4)+(5X2)=30

3) 10X3=30

It all depends on your circumstances, and it's always something to consider. It may be that the huge player is worth Ten Stars, and the others all worth much less. This situation means that Option 1) looks better (although still not ideal).

1) (1X10)+(9X1)=19

2) (5X2)+(5x1)=15

3) 10x2=20

Of course, there are other factors to consider


2) Risk management is a non-zero factor:

Let's say that your star player goes down with a season ending injury, or retires, or whatever analogy you want to use for loosing a big contract. If that is very likely, you're ahead to manage your risk somewhat. However, if you tend to have longer term contracts or your retention rates are good, you're more likely to be fine. Tying it back to sports, think about the difference between golf and ice hockey in injury rates. If you're a golf style business, having one huge contract could be profitable. But, if you're a hockey style business, having depth and flexibility could be key.


3) Acquisition cost is key:

Let's go back to our first example, and add a bit more to it. Instead of looking at a salary cap and fixed values, let's look at variable values in a sport like baseball with no salary cap (again, assuming that the roster of players is ten and costs are relatively uniform). We're going to try to provide the best value for money (benefit/cost). Even sports teams must be ultimately profitable, and a great team could be extremely expensive. I'll lay out the three alternatives again, and we can add variables to go more in-depth:

1) (1X5)+(9X1)=14

2) (5X4)+(5X1)=25

3) 10X3=30

-

1) (1X5)+(9X2)=23

2) (5X4)+(5X2)=30

3) 10X3=30

-

1) (1X10)+(9X1)=19

2) (5X2)+(5x1)=15

3) 10x2=20

Now, let's assume that a Ten Star Player costs us $20, a Five Star Player costs us $10, a Four Star Player costs us $8, a Three Star Player costs us $6, a Two Star Player costs us $4, and a One Star Player costs us $2. (If you want, you can add a mental million after each number, I'm just saving some zeros.) This leads us to the following:

1) (1X5)+(9X1)=14 / (1X10)+(9X2)=18 | 14/18=.77

2) (5X4)+(5X1)=25 / (5X8)+(5X2)=50 | 25/50=.50

3) 10X3=30 / 10X6=60 | 30/60=.50

-

1) (1X5)+(9X2)=23 / (1X10)+(9X4)=30 | 23/30=.77

2) (5X4)+(5X2)=30 / (5X8)+(5X4)=60 | 30/60=.50

3) 10X3=30 / 10X6=60 | 30/60=.50

-

1) (1X10)+(9X1)=19 / (1X20)+(9X2)=38 | 19/38=.50

2) (5X2)+(5x1)=15 / (5X4)+(5X2)= 30 | 15/30=.50

3) 10x2=20 / 10X4=40 | 20/40=.50

Let's look at what happens if the costs are $30, $15, $12, $9, $6, and $3, respectively:

1) (1X5)+(9X1)=14 / (1X15)+(9X3)=42 | 14/42=.33

2) (5X4)+(5X1)=25 / (5X12)+(5X3)=75 | 25/75=.33

3) 10X3=30 / 10X90=90 | 30/90=.33

-

1) (1X5)+(9X2)=23 / (1X15)+(9X6)=69 | 23/69=.33

2) (5X4)+(5X2)=30 / (5X12)+(5X6)=90 | 30/90=.33

3) 10X3=30 / 10X9=90 | 30/90=.33

-

1) (1X10)+(9X1)=19 / (1X30)+(9X3)=57 | 19/57=.33

2) (5X2)+(5x1)=15 / (5X6)+(5X3)= 45 | 15/45=.33

3) 10x2=20 / 10X6=60 | 20/60=.33


4) Synergy is key:

I'm not going to return to our first example for this one, I'm gonna keep it a bit more simple (mostly because I know I'll be tempted to make a messy table out of everything if I'm have both synergy and cost of acquisition to combine. Let's assume that we are the hiring manager. Instead of our team representing clients, we're looking at our team as our staff. Is it better to have a team of ten with high individual skill and no cohesion? Or a team of low individual skill and low cohesion? Or a team of moderate individual skill and moderate cohesion? Let's take a look at a quick example: (I'll add skill points to each team member's indivual score and multiply it by ten, since the teams are uniform for this example.)

A) (5+1)X10=60

B) (3+2)X10=50

C) (1+3)X10=40

What about if the industry (or sport) is more team focussed and less individual skill intensive (football vs a relay race)? I'll flip the weights and look:

A) (3+1)X10=40

B) (2+3)X10=50

C) (1+5)X10=60

It's important to figure out how each of these metrics applies to your business. Keep in mind, these examples are quite basic, and I did that intentionally.

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: "https://hubpages.com/privacy-policy#gdpr"

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)