The Impact of Money in Sports: Correlation or Causality?

According to the Wall Street Journal's sports metrics column, The Count, the NHL shows the strongest link between team payroll and winning percentage of all professional sports. It's a provocative and counter-intuitive conclusion, as many sports fans assume that baseball is most impacted by financial disparities between big-city teams and other, smaller market competitors.

The column compares the correlation between payroll and winning percentage in the 4 major sports:

1. NHL shows the highest correlation between payrool and winning: .49
2. MLB places a close second at .43,
3. The NBA and NFL lag behind at .24 and .15, respectively.

I'm intrigued, but also skeptical, and most of all curious to see more comprehensive analysis of the dynamics at play here. Glad to see the info, but several "open questions" remain:

1. Causality: since correlation does not prove causality, it may be premature to conclude (as the column does) that in the NHL "More Dollars Equal More Wins." What if causality runs in the other direction, with winning teams earning more revenue, which they in-turn spend retaining their best players?
   
2. What's The Mechanism?: how does extra money generate additional wins? If the NHL is really the league where money buys success most consistently, how is that investment achieved? One could think of this as the "Return on Investment" on professional sports payrolls....
   
3. Role of Sabermetrics? -- In most businesses, ROI is higher when investments are better screened and selected. Facts and analysis are used to make better decisions which achieve superior returns. This is where the NHL and MLB are especially different: player-valuation metrics are advanced and heavily used in Baseball, while they are less well developed in the NHL. I'm curious to investigate further how the "metrics environment" affects ability of team owners to "buy wins" in one sport versus another....
4. Effects of League Financial Structure?: the financial dynamics, salary cap rules, and revenue-sharing arrangements vary significantly amongst the professional sports leagues. What impact might those differences have on the "causal impact" of money in each league?

Posted By:
Jaime Fitzgerald, Alex Roberts

Clear Line of Sight into the Value of HR Executives

Awareness of the value of HR Executives is growing. Clear "line of sight" between Human Capital contributions and the bottom line has resulted in more measurable and better understood definitions of HR impact. A recent WSJ article points out that:

"At least 65 current and former human-resources managers serve as outside directors on 101 boards...Ten years ago, the number would have been no more than a half dozen..."

An interesting trend, for sure -- HR pros have increased their role in corporate boards by an order of magnitude.

Based on our experience working with executives in the Human Capital function, my team and I believe that the respect HR Pros are receiving is driven by two key factors:

1. Measurement: it's become easier (and more common) to measure the contribution of HR Pros to bottom line results. So the value that's always been there is now being measured more consistently.
2. Results-Orientation of Human Capital Pros: the HR function has evolved, increasingly, towards a "Human Capital" paradigm, which is inherently results oriented, ROI-driven, and does a better job of "connecting the dots" between HR functions and business outcomes. As a result, the best Human Capital professions in their field have become high impact, high value, and highly coveted C-level executives

It's great see see the huge intangible value added by Human Capital professionals becoming more visible!

Posted By:
Jaime Fitzgerald, Alex Roberts

Themes from the 2009 MDM Summit in NYC

For the third year in a row, I attended the MDM Summit in NYC with teammates from Fitzgerald Analytics and with clients whose interests dovetail with the subject matter at hand. As usual, the event was thought-provoking and at times, even inspiring.


For those of us who are passionate about the challenges, but also the opportunities in the emergent field of data management, the event reminds us that "the wind is at our back." A mixture of technology trends and business imperatives means Data Management will continue to grow as a field, and the quality of solutions will continue to mature.


This year I was struck by several "highlight themes":

1. Emphasis on doing "first things first," which means for example:
   
   ...doing enough data profiling before data integration...
   
   and
   
   ...establishing viable data governance before rolling out major solutions or change programs...
   
   This realism was positive, and a sign that more "real cases" are leading to more consensus around "preconditions to success" in the MDM realm.
   
   
2. Linking strong Data Management with revenue upside.
   
   John Fleming, Head of Strategy & Governance for Client Data at MERRILL LYNCH, was especially impressive in articulating the connection between better integrated and managed data, and better customer retention, more innovative revenue capture, etc.

Posted By:
Jaime Fitzgerald 

Data Management Conference

Together with teammates and clients, I'm about to head uptown for the long-awaited MDM New York Conference. Having attended annually since 2007, I've found the event always thought-provoking regarding this critical topic which is becoming a fast-growing but still emergent discipline/function.


Some of the "highlight topics" we expect to be especially resonant:

1. MDM: NOUN OR VERB -- explores the key question "is Master Data Management something you buy or is it a long term commitment?"
2. MDM in the Health Care Industry -- obviously a hugely important topic with regard to digital medical records
3. Data Governance -- and "oldie but goodie" topic, a perennial, because it's such a "key precondition" to success in data management, so essential to getting ROI on MDM investments

More to come...


Posted By:
Jaime Fitzgerald