QUANTITATIVE TECHNIQUES FOR BUSINESS DECISIONS

REPORT ON

ARSENAL FOOTBALL CLUB

Submitted by: SAMIKSHA KALRA (2012267) SAURABH SURANA (2012283) SHREYAS TIWARI (2012299) SUNEET SHOME (2012315)

Industry/company profile

Arsenal Football Club is an English Premier League football club based in Holloway, London. One of the most successful clubs in English football, it has won 13 First Division and Premier League titles and 10 FA Cups. Arsenal holds the record for the longest uninterrupted period in the English top flight and would be placed first in an aggregated league of the entire 20th century. It is the second side to complete an English top flight season unbeaten (in the 200304 season), and the only one to do it across 38 matches. Arsenal was founded in 1886 in Woolwich and in 1893 became the first club from the south of England to join the Football League. In 1913, it moved north across the city to Arsenal Stadium in Highbury. In the 1930s the club won five League Championship titles and two FA Cups. After a lean period in the post-war years it won the League and FA Cup Double, in the 197071 season, and in the 1990s and first decade of the 21st century won two more Doubles and reached the 2006 UEFA Champions League Final. Arsenal has a long-standing rivalry with neighbours Tottenham Hotspur, with whom it contests the North London derby. Arsenal is the fourth most valuable association football club in the world as of 2012, valued at $1.3 billion.

Objectives of the study 1. To analyze previous years data on Player Trading, Broadcasting rights and Corporate Rights to understand the central tendencies and dispersions in these factors. 2. To apply the understanding of statistical techniques to forecast the values of the mentioned factors. 3. Forecast the values of Broadcasting Rights, Corporate Rights and Player Trading figures to estimate the availability of funds for payer trading in the next season.

Methodology To arrive at the objective, we have used the following statistical tools 1. 2. 3. i) ii) Computation of mean, median, standard deviation and variance. Hypothesis testing. Forecast the values of Broadcasting Rights, Corporate Rights and Player Trading using Semi average method MS Excel software package

4. Multiple regression analysis to forecast value of Player Trading depending on forecasted values of Broadcasting Rights and Corporate Rights using MS Excel software package.

Analysis and findings with implications

Data, Measures of Central Tendency & Measures of Dispersion
The three variables used in the study are: Broadcasting Rights Corporate Rights Player Trading Where Broadcasting Rights and Corporate Rights form a major part of the Total Revenue and are treated as Independent Variable, while Player Trading forms a major part of the total expenses and is treated is Dependent Variable.

Year 2004 2005 2006 2007 2008 2009 2010 2011 MEDIAN MEAN STANDARD DEVIATION VARIANCE

Broadcasting 59.87 48.6 54.87 44.312 68.4 73.2 84.584 85.244 64.135 64.885 15.57440178 242.5619908

Corporate -12.18 -8.736 3.9 0.2 5.2 2.9 0.14 0.394 0.297 -1.02275 6.178034726 38.16811308

Player Trading 0.5 0 0.139 0.544 0.472 3.589 0.46 0.735 0.486 0.804875 1.148800422 1.3197241

Note: All values are in million pounds.

Forecasting
Forecasting has been done for the 3 variables: Broadcasting Rights Corporate Rights Player Trading Forecasting has been done using two approaches: Using Ms Excel Semi Averages Method Calculation done with confidence level of 95%

Forecasting for broadcasting

Year 2004 2005 2006 2007 2008 2009 2010 2011 Forecast using MS Excel (2012) Semi-Averages Method Average of first 4 years (2004 to 2007) Average of last 4 years (2008 to 2011) Slope of the trend line (b) Intercept ( a ) Forecasted value for the year 2012 = a+bx, where x=B
120

Broadcasting 59.87 48.6 54.87 44.312 68.4 73.2 84.584 85.244 88.27514286

51.913 77.857 6.486 51.913 103.801

Broadcasting Rights

100 Actual Values (in m)

80

60 Actual Values 40 Linear (Actual Values)

20

0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Years

Forecasting For Corporate

Year 2004 2005 2006 2007 2008 2009 2010 2011 Forecast using MS Excel (2012) Semi-Averages Method Average of first 4 years (2004 to 2007) Average of last 4 years (2008 to 2011) Slope of the trend line (b) Intercept ( a ) Forecasted value for the year 2012 = a+bx, where x=B Corporate -12.18 -8.736 3.9 0.2 5.2 2.9 0.14 0.394 6.177142857

-4.204 2.1585 1.590625 -4.204 8.521

15 10

Corporate Rights

Actual Values (in m)

5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Years Actual Values Linear (Actual Values)

-5

-10 -15

Forecasting for Player Trading

Year 2004 2005 2006 2007 2008 2009 2010 2011 Forecast using MS Excel (2012) Semi-Averages Method Average of first 4 years (2004 to 2007) Average of last 4 years (2008 to 2011) Slope of the trend line (b) Intercept ( a ) Forecasted value for the year 2012 = a+bx, where x=B Player Trading 0.5 0 0.139 0.544 0.472 3.589 0.46 0.735 1.566821429

0.29575 1.314 0.2545625 0.29575 2.33225

Player Trading
4 Actual Values (in m) 3.5 3 2.5 2 1.5 1 0.5 0 1 3 5 Years 7 9 11 Actual Values Linear (Actual Values)

REGRESSION ANALYSIS
Regression Analysis has been done using multiple regression model with two independent variable, Broadcasting Rights and Corporate Rights and the dependent variable, Player Trading. Using the model, the value of Player Trading has been forecasted from the forecasted values (obtained using MS Excel) of Broadcasting Rights and Corporate Rights.

Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations

Column1 0.378201867 0.143036652 0.199748687 1.258316027 8

ANOVA

Column1 Df 2 5 7

Column2 SS 1.321400753 7.916796122 9.238196875

Column3 MS 0.660700376 1.583359224

Regression Residual Total

Column5 Significance F F 0.41727762 0.679838286

Column4

Column1 Intercept X Variable 1 X Variable 2

Coefficients 0.38601547 2.162978463 0.01896255 0.03861597

Standard Error

t Stat -0.17846478

Lower Upper P-value Lower 95% Upper 95% 95.0% 95.0% 0.86536369 5.94612862 5.174097674 5.94612862 5.17409767 -0.0637974 0.1017225 -0.0637974 0.1017225 0.17001619 0.247248129 0.17001619 0.24724813

0.032195027 0.588989982 0.58147058 0.081161455 0.475791956 0.6542841

RESIDUAL OUTPUT Observation 1 2 3 4 5 6 Predicted Y 0.278929818 0.198215289 0.805061831 0.461976166 1.111825868 1.114029376 Residuals 0.221070182 -0.198215289 -0.666061831 0.082023834 -0.639825868 2.474970624 Standard Residuals 0.207876051 -0.186385207 -0.626309265 0.077128406 -0.601639143 2.327256962

7 8

1.223318957 1.245642694

-0.763318957 -0.510642694

-0.717761794 -0.480166008

Probability Output
Percentile 6.25 18.75 31.25 43.75 56.25 68.75 81.25 93.75 Y 0 0.139 0.46 0.472 0.5 0.544 0.735 3.589

Equation for Multiple Regression line with two Independent variables, Y- hat = B0+B1X1+B2X2 Where, B0= -0.38602 B1= 0.018963 B2= 0.038616 X1, Forecasted value of Broadcasting Rights through MS Excel = 88.27514286 X2, Forecasted value of Corporate Rights through MS Excel = 6.1771429 Y-hat = Proposed forecast of player trading Therefore from calculations Y-hat= 1.526 The proposed forecast of player trading calculated using multiple regression analysis is similar to the forecasted value calculated using the forecast method of MS Excel.

Conclusion and scope for further study As per our objectives, we analyzed previous years data on Player Trading, Broadcasting rights and Corporate Rights and computed the trends in central tendencies and dispersion. The Forecasted values calculated using the two approaches with confidence level of 95%: Using Ms Excel for i) ii) iii) Broadcasting Rights 88.27514286 Corporate Rights 6.177142857 Player Trading 1.566821429

Using Semi Averages Method for i) ii) iii) Broadcasting Rights Corporate Rights Player Trading 103.801 8.521 2.33225

Comparing with previous year data, Year 2011 Broadcasting 85.244 Corporate 0.394 Player Trading 0.735

Revenue from the Broadcasting rights and the Corporate rights are expected to increase hence, funds available for Player trading would be greater for the next season which is confirmed from the forecasting as well. Regression Analysis has been done using multiple regression model with two independent variable, Broadcasting Rights and Corporate Rights and the dependent variable, Player Trading The proposed forecast of player trading calculated using multiple regression analysis (Y-hat= 1.526) is similar to the forecasted value calculated using the forecast method of MS Excel.

Scope of further study. When analyzing a Football club business, we have to consider multiple factors to do a comparative study in real business scenario. The study can be completed with considering more factors such as Ticket sales Property Development Retail Merchandising Returns on Investment

Amortization of player registrations and others to get a accurate model for statistical analysis.

Bibliography www.arsenal.com Delloite Football Money Leage Feb. 2012 document. www.bbc.co.uk www.office.com