Question
A billionaire wants to buy a pro sports team. He hires you to determine what price he should pay. This is the regression equation TmVal
A billionaire wants to buy a pro sports team. He hires you to determine what price he should pay. This is the regression equation
TmVal = 636 - 4.86 Player% + 645 NFL - 112 MLB - 183 NHL + 6.62 PopMetro + 37.1 Pop*MLB
TmVal Team value (in $ millions)
PLAYER% Player Salaries/Total Team Revenues
NFL, MLB, NHL dummies: if the team is in the NFL, MLB, or NHL (NBA being the default)
PopMetro Metro population where team plays its home games (in millions)
Pop*MLB PopMetro if a MLB team, = 0 if not [specified in model because MLB teams dont share profits of local broadcasts the way other pro sports must]
and the regression output for the n = 118 pro teams is:
S = 125.495 R-Sq = 87.8% R-Sq(adj) = 87.2%
Predictor Coef SE Coef T P VIF
Constant 636.24 89.21 7.13 0.000
Player% -4.864 1.328 -3.66 0.000 1.136
NFL 645.45 32.97 19.58 0.000 1.578
MLB -112.14 46.98 -2.39 0.019 3.065
NHL -182.89 34.22 -5.34 0.000 1.626
PopMetro 6.619 2.778 2.38 0.019 1.343
Pop*MLB 37.077 5.882 6.30 0.000 2.704
All other things constant, an additional one million in the metro population adds approximately $_____ to a MLB team's value, while all other sport teams gain $_____ in value.
(Hint: round up coefficients to whole numbers before your calculations, then enter answers in whole numbers like this: 123,456,789. PAY ATTENTION TO THE UNITS OF MEASURE!)
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