HFBoards

Go Back   HFBoards > General Hockey Discussion > The Business of Hockey
Mobile Hockey's Future Become a Sponsor Site Rules Support Forum vBookie Page 2
The Business of Hockey Discuss the financial and business aspects of the NHL. Topics may include the CBA, work stoppages, broadcast contracts, franchise sales, and NHL revenues.

Money well spent?

Reply
 
Thread Tools
Old
12-14-2009, 05:29 PM
  #1
Fugu
Administrator
HFBoards
 
Fugu's Avatar
 
Join Date: Nov 2005
Location: Pac NW
Country:
Posts: 29,629
vCash: 500
Money well spent?

Something for the statisticians, and pro- versus anti-cap crowd.

http://online.wsj.com/article/SB1000...666810246.html

Quote:
In the NHL, More Dollars Equals More Wins
By DAVID BIDERMAN

Many sports fans assume baseball is the game that's most driven by owners' pocketbooks. For proof, they could point to the 2009 playoffs, where the final four teams were all near the top of the league in payroll. But the sport where spending money most closely equates to winning games is played on ice, not grass and dirt.

From 2000 to 2008, NHL teams' winning percentage has a 0.49 correlation to their payroll (where 1 represents a direct correlation and 0 represents no correlation at all). This number doesn't suggest an airtight relationship, but it's a stronger correlation than the three other major sports leagues. Major League Baseball has a 0.43 correlation, and the NFL is at a nearly meaningless 0.15, according to a new study by Dave Berri, a professor of economics at Southern Utah University.
...
Money Well Spent
Here's a look at how total-team payroll correlates to winning percentage in the four major sports leagues in North America. (1 represents a direct relationship, 0 suggests no relationship whatsoever.)

LeaguePayroll Correlation
to Winning Percentage NHL0.49 MLB0.43 NBA0.24 NFL0.15
Setting aside some of the methodology questions, why does winning % appear so low in capped leagues like the NBA and NFL, but the NHL has [apparently] the highest correlation? Could it be that something about the nature of each sport is more predictive of success than spending alone?


Did the NHL model itself after the NBA, as far as capping player salary and the percentage used, etc.? Is that valid?


How do you correct for the hypothesis that winning leads to increased spending, not the other way around? (I suspect there's more to see than any other indicator. Do the other leagues have different spending habits, e.g., contract length, development times, etc., that don't allow spending to correlate very well with performance?)



I'm sure our readers will come up with more questions. I'll add some sabremetrics tidbits, and if anyone can find more about Berri's study, that would be great!

Fugu is online now   Reply With Quote
Old
12-14-2009, 05:37 PM
  #2
jessebelanger
Registered User
 
jessebelanger's Avatar
 
Join Date: Feb 2009
Posts: 2,347
vCash: 500
Link to the actual study?

jessebelanger is offline   Reply With Quote
Old
12-14-2009, 05:40 PM
  #3
Fugu
Administrator
HFBoards
 
Fugu's Avatar
 
Join Date: Nov 2005
Location: Pac NW
Country:
Posts: 29,629
vCash: 500
Additional articles:

http://dberri.wordpress.com/2009/09/...itive-balance/
Quote:
But this is really not anything new. Since the 1970s, the average measure of the Noll-Scully metric has been declining; as shown in the table below. (Note the 2000s doesnt include the 2009-10 season, since it hasnt occurred yet).
Decade
Average Noll-Scully
1970s
2.557
1980s
1.969
1990s
1.796
2000s
1.538
Hence, only focusing on the decline in Noll-Scully measure of competitive balance in the four years since the introduction of the payroll cap ignores the decades of decline in the Noll-Scully measure of competitive balance WITHOUT a payroll cap.
As we argue in The Wages of Wins (and as detailed in our paper The Short Supply of Tall People) competitive balance is declining not because of changes in league institutional rules such as payroll caps but rather due to the increasing pool of talent to play sports, such as hockey. So I am skeptical that the payroll cap really has anything to do with the observed improvements in competitive balance.
http://Sabremetricresearch.blogspot....-caps-and.html
Discussion of above; don't miss the comments section!

http://www.usatoday.com/sports/hocke...lary-cap_N.htm
Claims a leveling of the playing field

Fugu is online now   Reply With Quote
Old
12-14-2009, 05:41 PM
  #4
Fugu
Administrator
HFBoards
 
Fugu's Avatar
 
Join Date: Nov 2005
Location: Pac NW
Country:
Posts: 29,629
vCash: 500
Quote:
Originally Posted by jessebelanger View Post
Link to the actual study?

That's why you're here. I can't find it.


Fugu is online now   Reply With Quote
Old
12-15-2009, 05:54 PM
  #5
Bluefan75
Registered User
 
Join Date: Oct 2007
Posts: 1,131
vCash: 500
Quote:
Originally Posted by Fugu View Post
Something for the statisticians, and pro- versus anti-cap crowd.

http://online.wsj.com/article/SB1000...666810246.html


Setting aside some of the methodology questions, why does winning % appear so low in capped leagues like the NBA and NFL, but the NHL has [apparently] the highest correlation? Could it be that something about the nature of each sport is more predictive of success than spending alone?


Did the NHL model itself after the NBA, as far as capping player salary and the percentage used, etc.? Is that valid?


How do you correct for the hypothesis that winning leads to increased spending, not the other way around? (I suspect there's more to see than any other indicator. Do the other leagues have different spending habits, e.g., contract length, development times, etc., that don't allow spending to correlate very well with performance?)



I'm sure our readers will come up with more questions. I'll add some sabremetrics tidbits, and if anyone can find more about Berri's study, that would be great!
I only have a minute, so I cna't get into this like I would at the moment, but I would posit the NFL's number has something to do with the non-guaranteed contracts. I can't really come up with a methodology to support it at the moment, but just off the top, I tink that may have something to do with it.

Bluefan75 is offline   Reply With Quote
Old
12-17-2009, 10:09 PM
  #6
Enstrom39
Registered User
 
Join Date: Apr 2006
Posts: 2,174
vCash: 500
Quote:
Originally Posted by Bluefan75 View Post
I only have a minute, so I cna't get into this like I would at the moment, but I would posit the NFL's number has something to do with the non-guaranteed contracts. I can't really come up with a methodology to support it at the moment, but just off the top, I tink that may have something to do with it.
Football is easy. 16 game schedule. Randomness plays a much bigger role, a key injury or a couple of bad calls at key moments can produce a large swing in win %.

In NHL, MLB, NBA with 82 or 162 schedule the element of chance variation is less and talent (purchased with money) plays a much bigger.

Also the NFL's very unbalanced schedule facilitates change much more than the NHL schedule.

Enstrom39 is offline   Reply With Quote
Old
12-17-2009, 11:53 PM
  #7
Fugu
Administrator
HFBoards
 
Fugu's Avatar
 
Join Date: Nov 2005
Location: Pac NW
Country:
Posts: 29,629
vCash: 500
Quote:
Originally Posted by The Falconer View Post
Football is easy. 16 game schedule. Randomness plays a much bigger role, a key injury or a couple of bad calls at key moments can produce a large swing in win %.

In NHL, MLB, NBA with 82 or 162 schedule the element of chance variation is less and talent (purchased with money) plays a much bigger.

Also the NFL's very unbalanced schedule facilitates change much more than the NHL schedule.
Yet the difference between the NBA and the other two leagues is worrisome. Basketball teams are the most reliant on a small core group of players. The schedule between the NHL and NBA are very close, yet the NBA is closer to the NFL than the NHL.

Fugu is online now   Reply With Quote
Old
12-18-2009, 11:09 AM
  #8
mouser
Global Moderator
Business of Hockey
 
mouser's Avatar
 
Join Date: Jul 2006
Location: South Mountain
Posts: 11,598
vCash: 500
Couldn't find the actual study from Dave Berri, but an interesting excerpt from his 2006 book discussing the relative competitiveness of the different professional leagues shows the NBA out of kilter with the other leagues.

http://www.wagesofwins.com/WOWCh5.htm

mouser is offline   Reply With Quote
Old
12-19-2009, 07:24 PM
  #9
Hal Incandenza
 
Join Date: Feb 2009
Posts: 256
vCash: 500
Berri has a lot of extremely flawed math in his studies. I wouldn't read too much into any of his conclusions, from what I have seen from him in the past. One of the worst of the new wave of popular "economists", which is saying quite a lot.

Hal Incandenza is offline   Reply With Quote
Old
12-19-2009, 07:58 PM
  #10
pitseleh
Registered User
 
pitseleh's Avatar
 
Join Date: Jul 2005
Location: Vancouver
Country: Canada
Posts: 17,644
vCash: 500
This study is from 2000 to 2008, which may affect the correlations. The NBA and NFL have had a salary cap for the entire period of the study while the NHL has only had one for half that amount of time. I'd imagine the correlation was much stronger pre-lockout than post-lockout (though I could be wrong on that).

In the NBA, I think players on their rookie contracts (which can last up to four years) make a much bigger impact than do players in the NHL. The Larry Bird Exception in the NBA cap may throw things out of whack too. Because most teams are over the cap, expiring contracts (even those of crappy players) are valuable to teams that are rebuilding which means that bad teams have less incentive to trim payroll.

Baseball I think has the biggest gap between the best and worst management groups of any sport. A lot of wealthy teams waste money like nobody's business while some of the poorer teams are managed exceptionally well (mostly based on the wealth of statistical information now available). Now that teams with money like the Red Sox and Yankees have hired smart management I think the correlation between payroll and winning percentage will become stronger.

pitseleh is offline   Reply With Quote
Old
12-21-2009, 10:26 AM
  #11
thinkwild
Veni Vidi Toga
 
thinkwild's Avatar
 
Join Date: Jul 2003
Location: Ottawa
Country: Canada
Posts: 8,278
vCash: 500
The poor complain they always do, but that just idle chatter,
Our system brings rewards to all, at least all those who matter.


It is a great topic, however we may learn just as much by not setting aside the methodology.

My first thought like pitseleh, was to think: why on earth would you make a comparison to the nhl between the years 2000-2008, especially when testing a hypothesis about the effect of caps? The guy certainly doesnt get off to a good start.

Another question would be what is winning percentage? Points percentage? Isnt that a pretty significant apple amongst the oranges? Do we need to adjust for that somehow?

I had always assumed there was little to no variance amongst nfl payrolls, it being covered by the national tv deals, thus making a correlation co-efficient somewhat inapplicable. What a shock I got when I looked them up. Is the top NFL team really spending $70 mil more than the bottom teams like the NHL was when it was deemed they needed to be more like the NFL?

As mentioned in one of the links, the salary cap for the nhl is really limited to just several years. And perhaps one of the only conclusions we can draw from the first several years of nhl salary cap data is that there was change, a shift, and it measures the effects of a turbulent transition. The 2nd 5 year set of data would probably be more reflective of the new system itself.

And of course separating the salary caps effects from all the rule changes, well Ceteris is just not all paribus.

Very interesting is the hypothesis itself, as it was sparked in the article by David Poile saying that: "The salary cap has brought competitive balance to the league,".

I cant help but ask, what does competitive balance mean? In the article itself the usual justification for that seems to be put forward: Detroit used to spend $70 mil more, and now its only $16 mil more at most. See? Competitive balance.

Did financial parity translate to competitive parity? What is that, is it a good thing, and how are we going to measure it?

There was also many claims of the miracle cure that was going to happen once salary cap parity came to town. Now that Atlanta and Fort Lauderdale know that they arent being outspent by so much, fans will flock to those buildings again, revenues will increase, cancer will be cured.

Some state that the purpose of the cap is not create a bunch of .500 teams, as that would be dull wallowing in mediocrity, but rather to provide an environment where any team can spring from nowhere and become a champ, and any champ can easily fall off the face of the earth and toil in the basement.

Is this implying that the effects of good GMs, long term team building decisions, skilled organizations, all need to be somewhat neutered in order to bring about the proper random, any given Sunday, element of luck to winning in the salary cap era? In fact, if we can establish there is a random almost lucky aspect to winning in the league, would that help prove there is parity?

It has to be really hard to sift out the salary caps effect in isolation within the nhl pre-cap to post cap. The inter-league comparisons of similar cap principles but quite differently implemented cbas would have another quite fascinating set of adjustments to understand.

Whether we could actually definitively state those co-efficients with confidence and understanding in the end may not even be as helpful to understanding as working through all the methodology.

thinkwild is offline   Reply With Quote
Old
12-21-2009, 10:52 AM
  #12
Dado
Guest
 
Country:
Posts: n/a
vCash:
Quote:
Originally Posted by The Falconer View Post
In NHL, MLB, NBA with 82 or 162 schedule the element of chance variation is less and talent (purchased with money) plays a much bigger.
I don't know that I agree with this, especially with respect to injuries, as serious injuries take up roughly the same percentage of the season in all sports. If you blow out your knee, you're likely missing all the games, regardless whether it's 162 or 82 or 16.

Etc.

On the blown officiating calls - the league with the fewest games has by far the most extensive au-courrant review process and consequently far fewer "controversial" calls.

Etc.

The NFL's ability to get rid of dead weight by killing contracts is just huge. Without it, a salary cap system doesn't let teams recover quickly from bad management decisions, and they get stuck in long periods of mediocrity or outright suckiness.

  Reply With Quote
Old
12-21-2009, 11:00 AM
  #13
mouser
Global Moderator
Business of Hockey
 
mouser's Avatar
 
Join Date: Jul 2006
Location: South Mountain
Posts: 11,598
vCash: 500
Quote:
Originally Posted by thinkwild View Post
I had always assumed there was little to no variance amongst nfl payrolls, it being covered by the national tv deals, thus making a correlation co-efficient somewhat inapplicable. What a shock I got when I looked them up. Is the top NFL team really spending $70 mil more than the bottom teams like the NHL was when it was deemed they needed to be more like the NFL?
While there are some teams that do spend less than others, most of the variance you see in the NFL is due to contract bonuses [signing, roster, etc] often being disproportionately larger than the regular player salary component. If the study used the actual team salaries rather than the averaged value for cap purposes then yeah it's going to look nearly random.

A good illustration being Oakland's payroll ranking-
2008: 1st, $152m
2007: 30th, $91m
2006: 32nd, $72m
2005: 3rd, $98m
2004: 23rd, $77m
2003: 24th, $75m
2002: 4th, $84m
2001: 7th, $78m
2000: 27th, $49m

mouser is offline   Reply With Quote
Old
12-21-2009, 11:04 AM
  #14
Fugu
Administrator
HFBoards
 
Fugu's Avatar
 
Join Date: Nov 2005
Location: Pac NW
Country:
Posts: 29,629
vCash: 500
It's intriguing that the "Any Given Sunday" mantra comes from the league that seems to have lowest correlation between spending and success. The lack of guaranteed contracts and perhaps free agency age (these items together) may have more to do with that than a hard cap does (theoretically).

I think free agency is the biggest issue of all and have stated on numerous occasions that if protectionism is what the league is after (big vs small market), more was available with deferred free agency age. What some pundits expected to happen with the cap was that teams could get players cheaply because the supply of players being dumped each year into a capped system would be very high, allowing the teams better terms and price. Yet, instead teams are giving out ridiculous terms with cap-circumventing figures to avoid having exactly that happen. (That thinking also neglected to account for the fact that if you lose 5 UFA's/RFA's, your team has five openings...... some do get squeezed but not to the extent anticipated, and certainly not elite players.)


@thinkwild. I agree that it's impossible to separate some of the effects from rule changes (SO's and points allotted, for example) with whatever this metric is of winning:losing and how $$$ enter the picure. As you may recall from my earlier blabber (may even have mentioned Navier-Stokes at some point...lol), the first four years were nothing but turbulence from (a) adjustment to the cap in going from one system to another, (b) doing so under a cap that was increasing in double digits until last year, and (c) an artificially low entry figure in Yr 1 post-lockout.

You have a lot of good points, so I plan to come back to some of those as time permits.

Fugu is online now   Reply With Quote
Old
12-21-2009, 11:29 AM
  #15
mouser
Global Moderator
Business of Hockey
 
mouser's Avatar
 
Join Date: Jul 2006
Location: South Mountain
Posts: 11,598
vCash: 500
Quote:
Originally Posted by Fugu View Post
@thinkwild. I agree that it's impossible to separate some of the effects from rule changes (SO's and points allotted, for example) with whatever this metric is of winning:losing and how $$$ enter the picure. As you may recall from my earlier blabber (may even have mentioned Navier-Stokes at some point...lol), the first four years were nothing but turbulence from (a) adjustment to the cap in going from one system to another, (b) doing so under a cap that was increasing in double digits until last year, and (c) an artificially low entry figure in Yr 1 post-lockout.
I originally had this same thought, however after crunching the season by season figures I'm not so sure 05-06 really was low. If you use the escrow correction %, ideally the cap should have been:

05-06: $39.1m [was $39m]
06-07: $43m [was $44m]
07-08: $50.5m [was $50.3m]
08-09: $50.4m [was $56.7m]

- Methodology: adjust the cap midpoint by the % of escrow withheld or returned, then calculate the upper limit by adding $8m [$8.75m for 05-06].

mouser is offline   Reply With Quote
Old
12-21-2009, 06:58 PM
  #16
Snoil11
Registered User
 
Join Date: Aug 2006
Location: Germany
Country: Germany
Posts: 3,336
vCash: 500
Send a message via ICQ to Snoil11 Send a message via Yahoo to Snoil11
Quote:
Originally Posted by Fugu View Post
I think free agency is the biggest issue of all and have stated on numerous occasions that if protectionism is what the league is after (big vs small market), more was available with deferred free agency age.
It always boggles my mind, that you want to cut the players' right of free agency and free movement to get rid of the salary cap. Even if you don't believe in 'protectionism' (which isn't exactly my understanding of the cap and similar devices), why do you want to replace one 'evil' (in your opinion) with a potentially even bigger one (from a player's POV).
Do you believe that the players (as a whole) would be better of with deferred free agency age rather than a hard salary cap? And what makes you believe that deferred free agency would level the playing field more than a salary cap does?


Last edited by Snoil11: 12-21-2009 at 07:09 PM.
Snoil11 is offline   Reply With Quote
Old
12-21-2009, 08:09 PM
  #17
Fugu
Administrator
HFBoards
 
Fugu's Avatar
 
Join Date: Nov 2005
Location: Pac NW
Country:
Posts: 29,629
vCash: 500
Quote:
Originally Posted by Snoil11 View Post
It always boggles my mind, that you want to cut the players' right of free agency and free movement to get rid of the salary cap. Even if you don't believe in 'protectionism' (which isn't exactly my understanding of the cap and similar devices), why do you want to replace one 'evil' (in your opinion) with a potentially even bigger one (from a player's POV).
Do you believe that the players (as a whole) would be better of with deferred free agency age rather than a hard salary cap? And what makes you believe that deferred free agency would level the playing field more than a salary cap does?

I'm attacking the premise for the cap vis-a-vis free agency, not stating my personal preference. If we're discussing what offers protection to teams, and that smaller market teams deserve some layer of protection, then deferred free agency does that far better than a salary cap, in my opinion.

Why isn't a cap a protectionist instrument? It's supposed to protect teams from the need to set a budget and stick with it.

Replacing one evil with another is the wrong way to look at it. It's what the players had and accepted. They, as a group, seemed willing to risk getting to their UFA years to cash in... The fact that the money wasn't evenly distributed is beside the point since they never seemed to care about that. The right way to look at it is to look at what the league claimed was necessary-- a yearlong lockout to get something that a budget would garner you if you knew how to set one and stick with it. Thus, while you may be saying they're better off without a deferred free agency and a cap, they weren't exactly the guys behind it. If you really want to dig into what's best for each side, no free agency, no guaranteed contracts and a cap would be just peachy for the owners. For the players, they're best off with guaranteed contracts, no cap, and free agency from day 1.

What makes me believe that deferred agency helps even the field? I never bought into the argument that there was no parity. It was, imo, a specious argument then not backed up by stats, and remains a specious argument today. (Fourier and SJSharky crunched some numbers a while back, Dado pitched in if I recall.) However, I never saw anything that convinced me that was the problem from the beginning. Sure, people dug in and presented their opinions, but the irrefutable data is difficult to find (as some of these studies indicate).

Fugu is online now   Reply With Quote
Old
12-28-2009, 10:16 PM
  #18
Mathletic
Registered User
 
Mathletic's Avatar
 
Join Date: Feb 2002
Location: St-Augustin, Qubec
Country: Canada
Posts: 11,850
vCash: 500
Quote:
Originally Posted by Hal Incandenza View Post
Berri has a lot of extremely flawed math in his studies. I wouldn't read too much into any of his conclusions, from what I have seen from him in the past. One of the worst of the new wave of popular "economists", which is saying quite a lot.
you're right on this

like anything else there may be some good things here and there but overall it's crap

Mathletic is offline   Reply With Quote
Reply

Forum Jump


Bookmarks

Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off



All times are GMT -5. The time now is 06:49 PM.

monitoring_string = "e4251c93e2ba248d29da988d93bf5144"
Contact Us - HFBoards - Archive - Privacy Statement - Terms of Use - Advertise - Top - AdChoices

vBulletin Copyright ©2000 - 2014, Jelsoft Enterprises Ltd.
HFBoards.com is a property of CraveOnline Media, LLC, an Evolve Media, LLC company. 2014 All Rights Reserved.