Background
The National Basketball Association’s Orlando Magic franchise, like other franchises, such as the Cleveland Cavaliers, the Indiana Pacers, the Memphis Grizzlies, and the Oklahoma City Thunder to name a few, is considered a small market team. This means they exist in a city that has a small population and therefore a small fan base. These teams are contrasted to teams like the New York Knicks, the Los Angeles Lakers, and the Boston Celtics, that are big market teams and therefore have a very large fan base and as a result sell out all of their home games. The Orlando Magic’s ability to put “butts in seats” is further challenged by the fact that they compete with Walt Disney and other vacation attractions and resorts for attendance.
The leagues policy of revenue sharing helps these small market teams stay in business, but they are challenged to be autonomous and profitable. Their profitability helps to expand the pool of available dollars to compensate the owners, players, and management. Like everything in life, if you are able to control your own destiny you can call your own shots. This is the motivation behind the team’s efforts to achieve autonomy and profitability to help them control their own destiny.
The Approach
The Orlando Magic made a decision to use business analytics to help them drive profitability and autonomy. Anthony Perez, Director of Business Strategy put in place a business analytics team that spent two years honing their skills on the business side of basketball. When the Magic's business analytics team got started in 2010, they grossly miscalculated the time it would take to prepare the data. "We didn't set the right expectations. All of us were thinking that it would be easier than it was," Perez said. Pulling together data from Ticketmaster, concession vendors and other business partners into a data warehouse took much longer