Beedie prof. Peter Tingling tests business theories through professional sportSep 04, 2013
Professional sport is undeniably big business. Player contracts and sponsorship deals amount to tens of millions of dollars, with ticket sales, television rights and merchandising totaling billions. One could surmise, therefore, that sport commands a lot of attention in the way of academic research. However, Beedie School of Business associate professor Peter Tingling’s motivation for researching sport is a little less obvious.
Rather than the business of professional sports, Tingling’s true research interests lie in decision-making. Over the course of his career, however, he has discovered that sport, and in particular the National Hockey League (NHL), makes for an excellent laboratory to test his hypotheses and he has become an advocate for using sport data to test organizational theories.
In the process, he has become something of an expert, in particular on the NHL draft, an event that he finds a fascinating phenomenon, with many parallels to other business sectors. “Everyone makes decisions” he says “and while I would love to be invited to compare and contrast decision making at the big five Canadian banks, so far that has not happened. On the other hand, however, the NHL has been extremely supportive. I have been to several annual drafts and seen the 30 General Managers make hundreds of high stakes career and performance decisions.”
Tingling says that sports research is important for a number of reasons. Firstly, and perhaps most obviously, professional sport is an important business sector in its own right, with huge sums of money involved at the top level. Secondly, decisions in sport generate more discussion than many other sectors, so the interest in sport demands it be examined further.
The third, and perhaps most important reason for Tingling, revolves around the transparency and availability of data in sport, and the consistency among sporting organizations that allows researchers a proxy for counter factual testing to some degree.
“In business it’s very hard to compare one company against another – it is frequently suggested that organizations are idiosyncratic,” says Tingling. “There is only one HP and only one Apple, but in the NHL there are thirty teams, all operating under the same restrictions. It is a lot easier to compare the Detroit Red Wings to the Vancouver Canucks than it is to compare Intel to Apple. So sport acts as a perfect petri dish to test business theories.”
Tingling can offer many examples of sport playing the role of laboratory in which to conduct experiments relevant to general business practice. In human resources for example, it is possible to study the effect of a contract and coaching changes on employee performance, or on the true cost of terminating an employee’s contract. Two examples of such occurrences fresh in the minds of hockey fans include the recent $22 million dollar buyout of Philadelphia Flyers star Ilya Bryzgalov just two years into a nine year contract, and the Vancouver Canucks hiring of the mercurial John Tortorella to replace the stoic Alain Vigneault.
Similarly, Tingling argues in a current project with Beedie lecturer Kamal Masri, that analyzing income distribution through statistical dispersion measure the Gini coefficient, is far easier and much more comparable than across countries, and that the NHL salary cap is a perfect natural experiment offering unique opportunities.
Sport also offers an exact proxy when looking at the impact of job security on decision-making, with Tingling comparing CEOs to the General Managers of sports team, concluding that the majority of each make decisions based on a short-term approach.
Although his research topics do ultimately delve into sport, it is clear that each adheres to an underlying concept: the reasoning behind the decision-making process involved.
“I believe that my research is very generalizable to a broader population – the notions of performance, employee selection, and payroll and wealth distribution are important to everybody,” says Tingling. “All organizations make decisions. I do not consider myself a sport researcher but a researcher who happens to use the context of sport as a laboratory to examine theories.”
Along with fellow Beedie associate professor Michael Brydon, Tingling has presented some of his research on the NHL draft at the 2010 MIT Sloan Sports Analytics Conference, an annual conference for industry professionals to discuss the increasing role of analytics in the global sports industry. His presentation has become one of the top ten most viewed videos on the MIT Sloan website, with over 5000 views.
In addition, his paper, “Does Order Matter? An Empirical Analysis of the NHL Draft,” examined the success of NHL teams in choosing which players they draft. Published in Sport, Business and Management: An International Journal in 2011, and co-written by Beedie colleagues Kamal Masri and Matt Martell, the research found that NHL teams were missing out on potential gems in the later rounds of the draft by devoting the majority of their resources to the early rounds.
According to Tingling, however, the research has far wider-reaching applicability than merely NHL teams seeking to increase the effectiveness of their drafting decisions. He maintains that the research can be applied to normal business scenarios, with benefits that can be derived for organizations outside of the sporting arena.
“I’ve always been interested in decision-making – it’s the one thing that everyone in life has in common – and who organizations hire is probably one of the most important decisions they can make,” explains Tingling. “My research is not just about drafting athletes. All organizations hire, appraise, reward and terminate employees, so if we can provide some instrumentation and insight into how that process could be better, that would be a good thing for society.”
By his own admission, Tingling is not a particular fan of sports – indeed, he admits to having only a passing familiarity with the rules of ice hockey. Rather than being a disadvantage in conducting research in the field, however, he refers to it as a blessing in disguise. It is a trait that provides him with an objective viewpoint when conducting research in the field, one that someone with a vested interest in sport may not possess.
A case in point: when the Vancouver Canucks were losing 8-3 to the Detroit Red Wings earlier this year, the majority of fans watching would have had an opinion on the result tinged with emotion. Tingling, however, looked on while pondering the managerial reasoning in leaving Canuck’s goalkeeper Roberto Luongo on the ice.
“I often see people online saying that I know nothing about sport, and ultimately they are correct,” says Tingling. “However, sport offers generalizability, clean test tubes and lots of data. Although some hockey executives have emotionally told me that they are better decisions makers than the evidence suggests, in the majority of cases they have come around to Deming’s aphorism: ‘In God we trust. All others must bring data’.”
This story was first published in the August edition of Ideas@Beedie magazine, the Beedie School of Business’ iPad, Android and desktop magazine showcasing the business school’s academic research, industry impact and engagement with the community. To view the full digital magazine or download the iPad and Android apps, visit http://beedie.sfu.ca/ideas