Nate Silver has a forecast for professional sports: The use of analytics will grow as Wall Street titans buy more franchises.
“People who have experience in a market understand that you have to innovate to compete,” Silver, the statistics blogger who correctly called every U.S. state in the last presidential election, said in an interview at the MIT Sloan Sports Analytics Conference in Boston.
Silver was a speaker on the featured opening panel of the two-day conference, the theme of which is, “Ripple to Revolution,” a reference to the increased use of statistical analysis in professional sports.
Silver, who last year left the New York Times (NYT:US) to join Walt Disney Co.’s ESPN, taking his FiveThirtyEight website with him, spoke on a panel that included Boston Red Sox consultant Bill James and Houston Rockets General Manager Daryl Morey, holder of a master’s of business administration from the Massachusetts Institute of Technology and co-founder of the conference.
Morey, whose boss, Rockets owner Leslie Alexander, founder of the Alexander Group investment firm, said finance-minded owners like Wyc Grousbeck of the Boston Celtics and John Henry of the Red Sox, both of whom are scheduled to speak at the conference, are accustomed to using analytics in their core businesses and are therefore more comfortable experimenting with them in sports.
Henry, a former hedge fund manager, in 2002 hired James, whom conference co-founder Jessica Gelman called “the godfather of sports and statistics” during her opening remarks this morning.
“As venture capitalists and private equity look at buying into sports, we’ll surely see more use of analytics,” Morey said.
According to Gelman, 76 teams from the four major U.S. sports are represented at the conference, including 22 from the National Football League, up from 14 a year ago.
Silver said there will continue to be more innovation from owners in basketball and baseball because those properties, more than the NFL, are seen by would-be owners as investments.
“Whereas the NFL, they are basically family trusts,” he said, noting that 25 of the 32 franchises have been in the same family for more than one generation.
The inaugural conference was in 2007, drawing fewer than 200 people to the MIT campus. This year, more than 2,000 attendees are expected by organizers.
James said he was “shocked” by the growth of the conference, recalling a 1983 conversation with baseball statistician Pete Palmer, who used to tell students interested in the field that there wasn’t any money in it.
“And I didn’t argue with him,” James said. “Now it seems to be mushrooming.”
Also mushrooming was the crowd around James, a rock star among sports statisticians, as he tried to leave the stage and walk the hallways of the Hynes Convention Center.
Trailing behind him were the hundreds of graduate students seeking employment at the conference, which for the first time included what organizers called “career conversations” in which attendees were matched with more than 30 employers for one-on-one sessions discussing job opportunities in sports.
“Few successful consumer products companies are making the same product they did 10 years ago,” Silver said. “They understand that a profit margin is a pretty thin thing so improving your process by 1 or 2 percent is the difference between thriving and failure sometimes.”
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