> Study tracks role of wealth in NHL innovation

Study tracks role of wealth in NHL innovation

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Contact:
Peter Tingling, 778.782.3473; peter_tingling@sfu.ca
Marianne Meadahl, PAMR, 778.782.4323

The paper is available from Tingling


May 26, 2010
No

T’is the season of assessment for most National Hockey League teams now that only two are vying for the Stanley Cup, but a new study finds that spending more money on innovation may not be the best improvement strategy.

“Wealth can play a role but there is no conclusive evidence that it is the prime driver of innovation,” says SFU business professor Peter Tingling, co-author of Feast or Famine: Does Wealth Help or Hinder Innovation in Sport?

In a study of NHL entry draft decision-making between 1997-2004 Tingling and co-researcher Kamal Masri conclude that levels of innovation are not likely to be improved by simply adding more funding.

“Some teams may innovate out of necessity, but we believe that innovative processes may be best supported by a narrow zone of wealth, between support and motivation as a lower boundary and complacency as a ceiling.

“Although drafting processes and player assessment are one of the few areas where teams are free to innovate, this doesn’t appear to be happening.”

Tingling suggests only a few of the “comfortably rich teams” such as the San Jose Sharks and Buffalo Sabres have pursued truly innovative approaches such as use of statistical analysis and the creation of the “Corsi” number, a measure of shots directed at the net, named after Sabre’s goalie coach Jim Corsi.

He adds that fiscally challenged teams like Edmonton or Phoenix may claim to be “innovatively stifled,” while “filthy rich” Toronto or even Chicago may cave to “an aura of complacency.”

“It would seem that the prevailing approach for many teams is to pursue a strategy of quantity rather than quality, where wealthy teams have simply added or supported the expense of more scouts and greater travel,” Tingling says.

An informal survey of NHL general managers shows that less affluent teams have recently cut back on their scouting budgets while wealthier ones (Toronto now has 20 scouts and the league average is 13) are increasing it to take advantage of their financial capabilities.

“The reality is we simply don’t know if the well-known but expensive approach – allowing employees to experiment freely at resource abundant firms such as Google and Hewlett-Packard  – leads to more success than organizations that are forced to operate under Ernest Rutherford’s famous dictum, ‘We have no money. We must use our brains.’”

Their paper, presented earlier this week at the annual conference of the Administrative Sciences Association of Canada, was named best paper in the association’s Tourism and Sport Management division.

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