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 purchasing the Boston Red Sox, the new owners also got an 80% interest in the New England Sports Network. The table below shows data for the 30 major league teams ( Forbes, April 15, 2002) and is also presented in MLB.xls. 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 earnings before interest, taxes, and depreciation.

1. Develop numerical and graphical summaries of the data.

2. Use regression analysis to investigate the relationship between value and income. Discuss your findings.

3. Use regression analysis to investigate the relationship between value and revenue. Discuss your findings.

4. What conclusions and recommendations can you derive from your analysis?