Case Problem Major League Baseball Team Values A group led by John Henry paid $700 million to purchase the Boston Red Sox in 2002, even though the Red Sox had not won the World Series since 1918 and posted an operating loss of $11.4 million for 2001. Moreover, Forbes magazine estimates that the current value of the team is actually $426 million. Forbes attributes the difference between the current value for a team and the price investors are willing to pay to the fact that the purchase of a team often includes the acquisition of a grossly undervalued cable network. For instance, in par chasing the Boston Red Sox, the new owners also got an 80% interest in the New England Sports Network. Table 12.9 shows data for the 30 major league teams (Forbes, April 15, 2002). The column labeled Value contains the values of the teams based on current stadium deals, without deduction for debt. The column labeled Income indicates the eamings before interest, taxes, and depreciation. Managerial Report A. Conduct a correlation and regression analysis to investigate the relationship between value and income. Discuss your findings B. Conduct a correlation and regression analysis to investigate the relationship between value and revenue Discuss your findings What conclusions and recommendations can you drive from your analyses? TABLE 12.9 DATA FOR MAJOR LEAGUE BASEBALL TEAMS Value 730 Revenue 215 169 435 143 CD file 424 373 360 356 MLA 355 Team New York Yankees New York Mets Los Angeles Dodgers Boston Red Sox Atlanta Braves Seattle Marinets Cleveland Indians Texas Rangers San Francisco Giants Colorado Rockies Houston Astros Baltimore Orioles Chicago Cube Arizona Diamondbacks St. Louis Cardinal Detroit Tigers Pittsburgh Pirates Milwaukee Brewers Philadelphia Phillies Chicago White Sox San Diego Padres Cincinnati Reds Anaheim Angels Toronto Blue Jays Oakdand Athletics Kansas City Royals Tampa Bay Devil Rays Florida Marlins Minnesota Twins Montreal Expos 347 337 319 287 280 271 152 160 166 150 134 142 129 125 133 131 127 123 114 108 108 Income 18.7 143 - 29.6 -114 9.5 14.1 -3.6 -65 16.8 6.7 4.1 3.2 7.9 -3.9 - 123 9.5 188 2.6 -3.8 5.7 242 238 231 22 201 200 19 18 157 152 12 137 127 108 101 92 103 91 90 85 92 81 75 63 5.7 -206 68 22 -61 1.4 3.6