The Best Fan Bases in the Pacific Athletic Conference (PAC-12)

Yesterday, we examined the best fan bases in the Big Ten; today, our series on the Best Fan Bases in college basketball continues with a look at the Pacific Athletic Conference.  Arizona is number one, followed by UCLA, Washington, and Stanford.  USC and Washington State are at the bottom of the list.  Colorado and Utah are not included due their recent addition to the conference.   (Note: For additional information on our methodology, click here)

Arizona placed first in the conference, and also second in our overall rankings.  One may wonder how Arizona finished ahead of the one of the most storied programs in college basketball history, UCLA.  There are several factors drive this result; one key factor is attendance.  Over the ten years of our study, both UCLA and Arizona averaged approximately 22 wins.  However, the Wildcats almost always filled up the McKale Center, while the Bruins had trouble packing Pauley Pavilion.  Even in the 2005-2006 season, when UCLA had over 30 wins and went to the NCAA Championship game, they only averaged approximately 70% of capacity attendance.  In contrast, Arizona had only 16 wins in the 2009-2010 season, but still averaged around 95% of capacity attendance.  Thus, Arizona fans showed up even when the team was underperforming.

It is fair to point out that UCLA plays in a large market, where they have to compete with entertainment alternatives like the Lakers, the Dodgers, the Angels, USC, the beaches, and yes, now even the Clippers; whereas Arizona is the only game in town in Tucson.  However, being the only game in town does not ensure fan loyalty.  A great example of this point is Washington State, which finished last in the conference.  Despite back-to-back 26 win seasons in 2006-2007 & 2007-2008, the Cougars only averaged approximately 60% and 70% of capacity attendance, respectively.

Our next post will take a look at the ACC…

 

 

The Best Fan Bases in the Big 10 & Some Details on Our Methodology


Our post on the Best Fan Bases in college basketball generated several interesting comments and questions.  One common request was to see how other schools stacked up.  There were also a number of questions related to the methodology.

Today we start with the complete results for the Big Ten Conference (Our next post will examine the PAC-12).  Indiana comes out on top followed by Minnesota, Ohio State and Wisconsin.  At the bottom of the list we have Penn State and Michigan.  Nebraska is not included in these ratings due to lack of data.

The difference between Indiana and national runner up Michigan highlights the way our method works. For most of the last decade, Michigan and Indiana both struggled on the court.  Consequently, Michigan fans stayed away, while Indiana continued its streak of ranking in the top 15 in the nation in terms of attendance.  We should also add for those that want to claim some sort of bias, Professor Mike Lewis is a diehard Illini fan, and it pains him to have Indiana rank number 1.

It may also be useful to provide a bit more of the methodology used to generate the rankings.  We start with information on men’s basketball revenues reported by the Department of Education.  As an aside, we should also point out that the analyses reported on the website all rely on publically available data. While this data may not be perfect (like just about any other data set), we do not have any reason to believe that the data is systematically biased.

We then build a regression model that predicts these revenues as a function of data that corresponds to team quality and market potential.  The following equation is a portion of the model used (we are trying to keep the stats to a minimum as we expect that 95% of readers just want to see the results):

The actual statistical model included a number of other factors such as dummy variables for each conference and several nonlinear measures of team quality such as a quadratic term for winning percentage.

We use this model to make a prediction of revenue for each school (i) in each year (t).  We call this prediction Revhat(i,t).  We next compute the residual for each observation in the data (Rev(i,t)-Revhat(i,t)).  This residual represents the difference in actual revenues versus the revenues expected based on market potential and on-court performance.  The fan equity rankings are based on the sum of the residuals for the last 5 years (the model is estimated using ten years of data).

A couple of points are worth noting.  First, we do not use a school fixed effect because we are interested in how this residual changes.  Using the last five years is a compromise between eliminating noise that occurs in a single year and also capturing the enduring but evolving fan equity.

A second issue that merits discussion is the role of conferences.  In our model we estimate a conference effect.  The reason we do this is to eliminate the benefits that a weak school can collect simply by being in the right conference.  For example, if we do not control for conference revenues schools like Northwestern actually do very well in the rankings because their revenues are extreme given their (lack of) on-court success.

The issue of conferences is a tough one and one that is beyond the type of analyses we do for the website.  The issue is that it is difficult to disentangle the conference effects from the school effects.  The outcome of this problem is that a school like Indiana ends up suffering in the overall ratings because some of the Big Ten “equity” should really be allocated to the Hoosiers.

The table below shows the rankings of conferences.  As expected the Big Ten leads the way followed by the ACC.  The key caveat for this chart is that the Big Ten network is what pushes the Big Ten ahead of the ACC.

Look out for our next post that will examine the PAC-12

College Basketball Recruiting and the Best Fan Bases

For Big Ten rankings and a note on our methodology please click here.

For PAC-12 rankings please click here.

For ACC rankings please click here.

For Big 12 rankings please click here.

For SEC rankings please click here.

For Big East rankings please click here.

For the Best of the Rest click here.

While the college basketball season is far away, there are a number of interesting college basketball stories this summer.  Our plan for June is to focus on college basketball issues.  Our main focus will be on topics related to recruiting.

Our starting point, and the subject of today’s post, is a study of college basketball’s best fan bases.  We posted this originally as we launched the site (so very few folks have seen the results).  Fan bases relate to recruiting because they indicate enduring support from the fan base.  We will follow this analysis of fan base quality with more commentary related to the Ed O’Bannon case, and then data on which schools produce the most NBA players after adjusting for recruiting success.

For our College Basketball Fan Equity analysis we use a “Revenue Premium” method.  The intuition of this approach is that fan base quality is reflected in a school’s men’s basketball revenue relative to the team’s performance. To accomplish our analysis, we use a statistical model that predicts team revenues as a function of the team’s performance, as measured by winning rates and post season success.  The key insight is that when a team achieves revenues that greatly exceed what would be expected based on team performance, it is an indication of significant brand equity. The analysis therefore avoids bandwagon effects and gets at the core loyal fan bases.

 

The table provides the top ten overall schools.  Number one on the list also happens to be the most recent NCAA champion Louisville (note these ranking were computed prior to this past tournament).  Louisville scores so well because they have a great tradition, and play in a decent sized metropolitan area that does not have any pro teams.  The list does include many of the usual suspects such as Arizona, Duke and North Carolina.  How does this relate to recruiting?  Simple, strong fan bases equate to strong and high profile programs.  If an athlete wants exposure and opportunities to play on a big stage, then it makes sense to seek out a high brand equity program.  Of course, if the goal is to make it to the NBA, then this may or may not be the best strategy (we will get to this point as the NBA draft approaches).

One possible point of controversy is that Arkansas rates higher than Kentucky.  The key is that while both Arkansas and Kentucky receive outstanding support, Arkansas’ support occurs despite less on-court success.  The other possible interpretation is that Kentucky tends to underprice and may collect less revenues than possible.

Mike Lewis & Manish Tripathi, Emory University 2013

O’Bannon versus the NCAA (Part 3): Okay so Florida Helped Tebow. What did Tebow Provide to UF?

Click here for Part 1 (The marketing perspective)

Click here for Part 2 (The value created by colleges)

Click here for Part 4 (How would paying players change college sports)

In part two of our series on the Ed O’Bannon lawsuit, we considered the value that schools provide athletes.  The gist of the argument was that schools provide a high profile stage that student athletes can use to develop their personal brands.  In that article, we focused on the specific example of Tim Tebow and the Florida Gators.  In this next installment, we switch perspectives and consider the value that athletes provide to universities and colleges.  To keep things consistent we will again examine the specific case of Tim Tebow.

The O’Bannon case is fundamentally about the fairness of NCAA rules that do not allow players to share in revenues.  The O’Bannon case is primarily concerned with rules that prohibit athletes from sharing revenues derived from products that use the athlete’s name and images.  However, the O’Bannon case also highlights the issues associated with whether and how institutions should compensate or pay players.

The arguments for paying players tend to focus on the enormous revenues generated in football and men’s basketball.  For example, in the 2011-2012 season, the University of Texas football program generated $103 million in revenues.  Furthermore, while players are limited to receiving scholarships, coaches and athletic directors can often receive significant compensation.  Nick Saban’s salary has been reported to exceed more than $5 million per year, and Vanderbilt’s athletic director David Williams’ compensation exceeds $2.5 million per year.

In our previous post we considered the value provided to athletes by schools using an argument based on brand equity.  A cornerstone of this argument was that for high profile schools such as Notre Dame or Florida that sell out almost every year, it is difficult to claim that individual athletes improve the school’s revenue.  HOWEVER, a major flaw in this argument was that we did not consider the role that athletes play in maintaining and expanding a school’s brand equity.  To make a simple argument, while Notre Dame will undoubtedly sell out next year, if the team became a perennial loser, at some point Notre Dame would likely need to cut prices, and would suffer a drop in attendance.

To consider the potential long-term impact of a player like Tim Tebow to Florida, we conducted the following analysis.  First, we developed a revenue based measure of brand equity.  The idea behind this model  is that a school’s brand (or fan) equity can be measured by comparing a school’s actual revenues to predicted revenues based on factors such as a team’s record, student population and other factors that reflect on a team’s quality level and market potential.  More details on this method are provided here.

In the second stage of the analysis, we then developed a statistical model that explained this brand equity measure as a function of team past performance metric (prior to the current season) such as total wins, bowl games, major bowl games and national championships.  We also included in this model a variable that measured the number of Heisman trophy winners produced by the school.  We found that this Heisman term yielded a positive and significant parameter.

When translated to dollars (2008 dollars) we found that a Heisman winner added to a school’s brand equity by $2.15 million dollars per year.  While this is in itself a significant number, it is important to note that brand equity is an enduring asset.  For example, the brand equity associated with BMW provides value year after year as consumers are more prone to buy BMW cars, and to pay premium prices for these cars.

Calculating the long-term value of this brand equity asset requires assumptions about growth rates and the rate at which brand equity decays.  If we assume a 2% real growth rate in college football revenues and a 10% discount rate for brand equity, the value of the brand equity created by a Tim Tebow is approximately $27.5 million dollars.

A couple of points should be made about the previous number.  First, it is in several respects a conservative number.  In addition to winning a Heisman trophy, Tebow also contributed to two national championship teams.  The championships also greatly enhance Florida’s brand equity.  Second, a challenge in analyzing the relationship between team success and individual player achievements is that the degree of cooperation in football is enormous.  Mr. Tebow himself would likely credit his teammates with helping him win an individual award such as the Heisman.  Finally, please note that we have again taken a fairly extreme point of view by focusing on an extreme example such as Mr. Tebow.

Our plan is to conclude this series with each of our (Mike and Manish) perspectives on the big question of whether and, if so, how should schools pay players.  On a final note, we could also execute the football-based analysis described above using basketball data.  We just want to know if you guys are interested.  If so, please follow us on Twitter, and let us know.

Next: Part 4 – How Would Paying Players Change College Sports

LeBron Saves the Heat (and the NBA?)

We have seen a number of articles and social media activity speculating about the NBA’s desire to have Miami advance to the NBA finals.  It’s a nervous time for the NBA because the other 3 teams in the conference finals are from “small” markets.  In some ways, the success of small market teams is a welcome outcome as all professional leagues tend to be nervous about large market dominance resulting in competitive imbalance, but the overwhelming short-term concern is obviously about how this situation will impact the television ratings for the final.

We have seen speculation about the impact of having small market teams such as Indiana, San Antonio and Memphis in the finals, but not a great deal of analysis.  To fill this gap, we have developed several statistical models that forecast TV ratings as a function of the characteristics of the two teams who are participating.  As a starting point we collected data on market population, winning percentage, home attendance, pricing, road attendance, and the number of All-star game starters and reserves for each team participating in the NBA finals over the last several years.  In this case, we have only a limited number of data points, so the key to the analysis is in identifying which of the variables are the best predictors.

We tried a great many combinations of the previously listed variables and found that the two best predictors were the sum of the two participants’ home box office revenues and the number of All-star game starters participating in the seriesA model with these two variables yielded an R-squared value of 0.53, and both explanatory variables had t-stats with p values of less than .05.

Our speculation is that combined home revenue captures the market size and fan intensity of the two teams.  This metric seems to be much more effective than population simply because not all large market teams are equivalent draws.  For example, in LA, the Lakers are a more powerful brand than the Clippers, and in New York, the Knicks have dominated the Nets (let’s say the New Jersey Nets to avoid any additional angst from the Brooklyn contingent).

We also found that All-star starters was the right metric rather than total All-stars.  In hindsight, this is also an intuitive finding.  The NBA has long been known as a “Star” driven league.  In fact, if you look back in history, the Michael Jordan era had amazingly high ratings compared to the last decade.  Based on the data, it appears that finals ratings are driven by the number of extremely high profile players.

In the tables below, we report actual ratings for the last six finals and our model’s predictions for the possible NBA Finals matchups.  As expected, the most promising matchup is Miami versus San Antonio.  What are really notable are the predicted ratings for the least promising matchup.  We predict that an Indiana – Memphis matchup would result in an epic failure in terms of ratings.

As a reality check for our prediction, consider the most recent finals matchup of small market teams.  In 2007, San Antonio defeated Cleveland, and the finals achieved a 6.2 rating.  While this number is much higher than our prediction, the San Antonio and Cleveland series had a significant advantage relative to an Indiana-Memphis matchup.  The difference was that the Cleveland and San Antonio series featured LeBron James and a Tim Duncan still close to his prime.  These types of stars would be sorely lacking in a Memphis – Indiana series.  This is, however, not a criticism of the Grizzlies or the Pacers, but more an indictment of how the NBA markets itself.  The NBA’s practice of emphasizing a few marquis players means that ratings will suffer when teams without these high brand-equity players make the finals.

The other problem for the NBA is that fans also understand the league’s dilemma.  This means that a meaningful percentage of fans believe that the NBA clearly prefers a series that features Miami.  This is a significant problem if fans believe that marketing considerations influence outcomes.

Mike Lewis & Manish Tripathi, Emory University 2013.

O’Bannon versus the NCAA (Part 2): Does Tim Tebow Owe Florida?

Click here for Part 1 (The marketing perspective)

Click here for Part 3 (The value  created by athletes)

Click here for Part 4 (How would paying players change college sports)

In a previous post, I began a discussion of the Ed O’Bannon lawsuit.  In this second part of the series, we delve a bit deeper into the nature of sports brands and how these “brands” are related to the antitrust concepts at the core of the case.  In this post, we will take the perspective of the university.  Our next post will examine the issue from the individual athlete viewpoint. The original issue in the O’Bannon lawsuit is that the structure of college sports, where athletes are unable to sell their images violates the Sherman act.  Michael McCann, discussed the antitrust elements of the lawsuit in Sports Illustrated, and describes the suit’s two main claims:

“First, by requiring student-athletes to forgo their identity rights in perpetuity, the NCAA has allegedly restrained trade in violation of the Sherman Act, a core source of federal antitrust law. Here’s why: student-athletes, but for their authorization of the NCAA to license their images and likenesses, would be able to negotiate their own licensing deals after leaving college. If they could do so, more licenses would be sold, which would theoretically produce a more competitive market for those licenses. A more competitive market normally means more choices and better prices for consumers. For example, if former student-athletes could negotiate their own licensing deals, multiple video game publishers could publish games featuring ex-players. More games could enhance technological innovation and lower prices for video game consumers.
Second, according to the plaintiffs, the NCAA has deprived them of their “right of publicity.” The right of publicity refers to the property interest of a person’s name or likeness, i.e. one’s image, voice or even signature. Last year, when explaining why the NCAA has refrained from suing CBS over its use of player information in its fantasy sports game on CBS Sportsline.com, NCAA officials acknowledged that players’ rights of publicity belong to the players, and not to the NCAA.”

Viewed collectively, these two issues really speak to the concept of brand equity, and about whether players should have the ability to “monetize” their individual brands while student athletes.  Branding issues in sports are fairly complex due to the nature of the sports product.  The key point is that sports products and brands are co-created by a collection of players, teams and leagues. What I mean by this is that while sports are inherently about competition, they also require cooperation between multiple entities.  Furthermore, while it is obvious that athletic success is correlated with an athlete’s or team’s brand equity (think Lebron, Michael or the Yankees) this equity is created through competition with other players and teams.  This co-creation is important because while fans may gravitate to star players, it is also obvious that league and team structures are needed for individual athletes to become valuable brands.  It is probably only the rare athlete, such as Michael Jordan, that can grow a league’s overall revenues or fan base.  The vast majority of athletes only temporarily capture some share of the overall brand equity of the teams and leagues with which they are involved.

This is particularly true in the case of college sports.  With a few exceptions, student athletes are relatively unknown prior to joining college football and basketball teams.  When a player puts on a college jersey, they immediately acquire a devoted fan base.  To take an obvious example, a Notre Dame Football player such as Manti Te’o (neglecting the strangeness that became public at the end of his college career) was the focus of a great deal of attention during his senior year.  Manti could have made money by endorsing products or licensing his image during his time at Notre Dame (again, lets clarify that we mean before December 2012).  However, Manti’s fame and marketability was, undoubtedly, largely a function of his playing at Notre Dame.  An argument could be made that Manti had minimal impact on the revenues of the Notre Dame Football program.  Notre Dame has a long and storied history, and already possessed a devoted fan base along with a lucrative television contract.  Notre Dame has a record of consecutive sellouts dating back to the late 1960s.

Tim Tebow is another, and more extreme, example of a high profile college player that could easily have made significant dollars while at Florida.  And again we could argue whether Tebow’s presence on the Gators actually increased Florida’s revenues.  This table shows that Florida’s home attendance increased slightly during the time that Tebow was on campus.  A comparison between 2009 and 2011 shows that attendance dropped by about 1,500 people or 1.7% per game.  At a ticket price of $25 multiplied by 7 home games, this would equate to an incremental $250,000 in revenue.  Of course, it is not entirely clear what these numbers mean, as Florida reported attendance that exceeded stadium capacity in every year (capacity = 88,548).  Also, we are not considering incremental merchandise sales.  Furthermore, given Tebow’s lack of success in the NFL, and his continuing marketability, a claim could be made that Tebow’s brand equity was entirely built at Florida.  Given that Tebow had little effect on Florida’s football revenues, it could be argued that Florida provided an opportunity for Tebow to build his brand while only slightly benefitting them.  Could Tebow have had similar success at another university?  Of course, this is an incomplete example, as Florida may have benefited from increased donations from alumni or seen an increase in applications from prospective students.

Another easy objection to the preceding argument is that it is based on marginal revenues generated by Tebow’s presence.  The distinction between marginal revenues and total revenues is important if one is truly concerned with fairness.  College athletic programs have significant and valuable brand equity.  This brand equity is maintained by current players.  If a team stopped fielding competitive teams, its brand equity would diminish over time.  In a perfectly fair world, players would enjoy rewards equal in value of how well they maintain and grow the school’s brand.  This would, however, be a difficult quantity to measure, as college teams’ brand equities have been built through extensive histories.  In the case of UCLA basketball, I think most would agree that the Bruin brand was primarily built by John Wooden, Kareem Abdul Jabber, Bill Walton and others.  If this is the case, then players like O’Bannon are merely temporary caretakers of the school’s brand.  Would Mr. O’Bannon have been on the cover of the EA sports game if he could not have been pictured wearing a UCLA jersey?

From this perspective, allowing current individual players to market themselves to the highest bidder could be viewed as unfair to past athletes.  If college athletes were suddenly allowed to pursue endorsement deals, I would expect that current high school players like Andrew Wiggins could become instantly wealthy (the fairness of Wiggins not being allowed to go directly to the pros is beyond the scope of this post).  And while many might view this as a fair outcome, I would have to ask the question as to how valuable the Wiggins’ brand would be in the absence of Kansas, the Big Twelve and the NCAA Tournament.  Consider for a moment that the MLB draft takes place in early June.  How well known are the players that are likely to be taken in the first few picks?  Would not a more equitable solution involve compensating past athletes that helped create the pre-existing fan interest that the next generation of athletes would be able to exploit?

Sports and anti-trust laws have a long history, and likely will generate controversy long into the future.  While competition between firms is typically the best way to improve consumer welfare, in the case of sports, sometimes pure competition may not be feasible.  All the major professional leagues now use some form of revenue sharing or salary caps to maintain some level of competitive balance.  As sports continue to morph into an entertainment product (remember the O’Bannon case began with a video game), it will be necessary to include greater consideration of the role of marketing assets such as a player’s brand equity and a college team’s fan equity to moderate future disputes.

Next in the Series: Part 3 – Valuing Exceptional College Athletic Performances

Debunking a Debunking: Our Response to the NetsDaily

If the true purpose of the Emory Sports Marketing Analytics blog is to generate conversation, then our NBA brand equity study has been a success.  The reality is that we are a couple of sports fans that happen to be university professors.  I (Mike) spend most of my time developing dynamic models that predict customer behavior over time.  This blog is an effort to combine our jobs and hobbies.  An example of this is a paper on competitive balance in MLB.

Our blog is intended to present more quick hitting analyses of current issues in the world of sports.  With these studies we rely on publicly available data, and we tend to use relatively straight-forward statistical methods.  We really don’t begin with any agenda; we just let the numbers speak.

In the case of the NBA fan study, the numbers spoke and then the NetsDaily answered.  Given our love of debate, we can’t help but answer back.  Though all kidding aside, to the Nets/NetsDaily guys: we really do like what you guys have done.  You are obviously an exciting franchise with a lot of great marketing.

In what follows we reprint the NetsDaily notes in blue and then give our comments in bold:

Final Note: That Emory University study

We’re not going to devote a whole lot of effort to debunking the silly Emory College attempt at defining passionate fans by analytic means.  It found that the Nets were the worst home fans in the NBA and the Knicks the best.

Okay, we get the idea, the NetsDaily is not happy with the results.  A couple of things come to mind.  One, Emory is a University.  Second, debunking is probably the wrong way to start a discussion.  With almost any study like ours, there will need to be assumptions made.  As we noted in our original post,we are using a revenue premium brand equity model.  One could definitely argue that passion and revenue are different concepts.  It is probably more useful to understand what the study is saying than to claim it is wrong.

We would just like to point out some serious flaws in the study. The original study was so devoid of data that the authors were asked to provide some, which they did in a self-congratulatory addendum.

We are trying to strike a balance in the blog.  We could report all statistical models, but we are trying to keep things interesting so we emphasize intuition and report the interesting findings.  We are more than happy to share additional details.  And as academics, self-congratulation is probably our best hope for some positive feedback.

The authors note that key data they used to derive their conclusions is something called “home revenue.” They attempt to estimate “home revenue,” which is a finite, known but proprietary figure not available to them. Shouldn’t they note that, explain its relevance?

“The analysis begins with a model of box office revenue based on variables that correspond to market potential (capacity and market population), team quality (winning percentage) and entertainment value (number of all stars, payroll). The insight or theory that drives the analysis is that this model can be used to predict the revenue that is due to quality and market potential. Any difference between this predicted value and actual value is due to ‘fan loyalty’.”

So the reality is that they don’t have the finite, known but proprietary information that is the core of the theory so project it based on other data, including things as spurious as number of all-Stars, but ignore other data that might be important, like say MERCHANDISE SALES. Need we go there? The Nets now rank fourth in NBA merchandise sales. In the first several months after the merchandise was introduced, they ranked first.

The NetsDaily does not seem to properly understand the analysis.  We use a really simple estimate of home box office revenue using the popular Fan Cost Index and attendance reported by ESPN.  Is this the ideal way to determine home revenue?  Of course not!  Is it a reasonable way given that teams are private and do not report detailed financials?  Reasonable might even be too strong.  In fact, let’s say that it is a crude way to compute box office revenues. (Point for the Nets)

We then use this revenue measure as a dependent variable in a regression model that uses the previously mentioned factors.  We are not estimating revenue in terms of things like number of all-stars, we are developing a model that explains revenues by these factors that indicate team quality, market size and entertainment value (fans come out to see all-stars).  We then compare the difference between the predicted and the (crude) estimate of actual revenue.

The idea is to look at attendance AFTER controlling for how well the team did.  Does Miami selling out mean much given the quality of the team on the court?  Our goal is to really get at the true core support for a team.

On comparing the attendance between the Knicks and Nets, they use gross numbers of attendance.

“The teams share the largest population metropolitan areas but the Knicks achieve a 10.7% advantage in terms of attendance DESPITE charging much greater prices. It is this greater pricing power that pushes the two teams to opposite ends of the ranking.”

Suppose instead of gross numbers, they used capacity percentage. The original analysis appears to rely on ESPN attendance percentages, that is, the percentage of arena capacity sold out on average each game. We say “appears” because the original article notes, ” A quick look at attendance data from ESPN shows that the Trail Blazers regularly exceed capacity for entire seasons.” Two points: the Trail Blazers attendance last season was 95.4 percent, which did not exceed capacity (or it would have been in excess of 100 percent.)

This is an example of why it’s probably better to ask questions and have a discussion than to go on the attack.  We control for stadium capacity in the revenue prediction model to account for differences in stadium capacity.

But they do make a good point here.  When we talk about “best” fans there really is no obvious metric.  We choose revenue, the Nets suggest capacity utilization.  Also, the Trail Blazers attendance percentage was 102.6 percent of capacity in 2012, 102.7 percent in 2011, and 102.6 percent in 2010.  We believe that this is very consistent with our wording.

However, using ESPN data presents problems. It is inaccurate regarding the Nets. ESPN uses an NBA capacity of 18,000 for Barclays Center. That was the original number for NBA games. As the arena was completed, capacity was reduced to 17,732 (apparently to accommodate loge seating added late in construction.) The number can be found on the Nets website. So the actual percentage of seats sold this season is 96.9 percent, not 94.9. That would put the Nets at tenth (not 16th) in the NBA, just ahead of … drum roll … the Knicks at 96.3 percent and the Blazers.

Again, some good points are raised here by the NetsDaily.  As statisticians, we love to have very accurate data.  In reality, data almost always contains some noise or error.  The Nets would have a valid complaint if the publicly available data was somehow consistently biased against the Nets.  Does Team Marketing Report systematically underestimate the Nets’ prices, and does ESPN systematically underestimate the Nets’ attendance?  We don’t know.  If so, we apologize.

We leave it to the readers to decide whether our measure which includes quantity and prices is preferred to straight capacity utilization.

But let’s put aside the methodology and data and look at the final product, which suggests below average work.  Is there ANYONE in the NBA who believes that fan loyalty to the Dallas Mavericks, Phoenix Suns, and Orlando Magic is on the rise … or that their fans had greater loyalty than the teams that follow them in the Emory rankings: the Miami Heat and San Antonio Spurs??? You want an example of analytics gone wild???

The comment above seems to be a common misinterpretation.  The example of the Orlando Magic is really what is at the core of our study.  We are not saying that the Orlando Magic has more fan support than the Miami Heat this season.  We are saying that after you control for the difference in the quality of the teams it appears that the Orlando Magic have a more devoted fan base.  Over the past season, the Magic had an average home attendance of 17,595, while only winning 24% of their games.  The key question (and what we use the statistical models to get at) is what would Miami have drawn if they didn’t win 80% of their games and have 3 all-stars in the lineup?

If we were petty people we would also point out that the ESPN attendance figures for last season report that the Magic drew 721,414 fans while the Nets operating in the largest metropolitan area and winning about 60% of their games drew 704,702.  We usually aren’t petty, but they did call our study “silly”, and called us “C students” (Manish says thanks for the passing grade) on Twitter.

The study is also a rare, rare instance where Barry Baum, chief communications officer of the Nets, and Norman Oder, the leading critic and chronicler of Atlantic Yards find common ground.

Says Baum, after reading the original article, “With all due respect to Emory University, that is a seriously flawed study.”

Thank you Mr. Baum for getting the school name correct.

Says Oder, after reviewing the article and supporting data, “The Knicks’ attendance edge is magnified by an arena with greater capacity, and the willingness of Knicks fans to pay more. [It] has less to do with passion than a longstanding monopoly position in a large market.”

This is also a good point, and one that we acknowledged.  It seems likely that the Knicks may benefit from locational advantages that translate into greater pricing power.

If there is a continuing dispute on this, we suggest a review by Nate Silver, the New York Times stats guru … and Nets fan. We are sure he will get to the bottom of it.

We would of course very happy to extend the discussion.  We were in fact surprised when we ran the numbers, and found the Nets on the bottom.  And remember we did point out that the Nets were rapidly improving.

Mike Lewis and Manish Tripathi, Emory University 2013.

Follow Up to the NBA Fan Equity Study & Why We Do This

Our post about which NBA teams have the best fan bases has generated a good deal of response.  This response has included insightful questions about the models and variables.  We wanted to use this post to provide some more detail and examples.

Before we get into the NBA study, it is probably useful to give folks a bit more background on what we are trying to accomplish.  Our unofficial mission is to use marketing concepts and statistical methods to understand the behavior of players, teams, and leagues.  We are both sports fans and academics, so our goal is to go beyond opinion, and use data to generate new insights into the world of sports.

When we start an analysis like the NBA fan equity study we really don’t start with an agenda (though Professor Lewis does acknowledge a personal bias against Duke Basketball).  We start with a bunch of data and some concepts (theory) that guide the way we approach the analysis.  In the case of the fan equity study, our guiding theory is that team revenue is based on the loyalty of fans, the size of the team’s market, the quality of the product and the entertainment value of the team.

The analysis begins with a model of box office revenue based on variables that correspond to market potential (capacity and market population), team quality (winning percentage) and entertainment value (number of all stars, payroll).  The insight or theory that drives the analysis is that this model can be used to predict the revenue that is due to quality and market potential.  Any difference between this predicted value and actual value is due to “fan loyalty.”

In their responses to us, readers tended to ask about a few specific teams.  For instance, there was a great deal of interest in comparisons between the Knicks and the Nets.  The table below shows several differences between the two teams that are drivers of the differential fan equity.  The teams share the largest population metropolitan areas but the Knicks achieve a 10.7% advantage in terms of attendance DESPITE charging much greater prices.  It is this greater pricing power that pushes the two teams to opposite ends of the ranking.

Another illuminating comparison could be made between Orlando and Golden State.  Given the excitement surrounding the Warriors the casual fan would likely assume that Golden State enjoyed a stronger fan base.  However, when we look at the numbers we see that Orlando generates almost the same attendance (and charges slightly higher prices) while operating in a market that is half the size and winning fewer than half as many games.  Our analytics driven approach accounts for these differences.  It also makes sense when you consider that Orlando fans provide about the same amount of box office revenue as GSW fans, while the team draws from a smaller market and wins only 24% of their games.

This last point is really the key to our analysis.  As a further example, while Miami is currently a great revenue driving team, we need to realize that their fans are attracted to a team that won 80% of their regular season games and has three all- stars and the likely MVP in the lineup.  The true test of fan loyalty is what happens when a team slumps.  This is why teams like Orlando and Dallas do so well in our rankings.

Mike Lewis & Manish Tripathi, Emory 2013.

Does Seattle deserve an NBA franchise? Yes!

Yesterday, the NBA owners voted to keep the Sacramento Kings from being sold to a group that would have brought the franchise to Seattle.  Yesterday, we also posted an analysis of fan base quality for the NBA.  We reported results for each Team’s “Fan equity” for the past season (and the change from 2012).  We found that the franchises with the best fan bases included the Knicks, Bulls, Celtics and Trail Blazers.  We also found that the worst fan bases were those of the Nets, Hawks and Pistons.

While we focused on this most recent season, our methodology can also be applied to previous seasons.  This morning we have run the numbers for seasons from 2002 to 2006 to see how the Sonics fan base compared to other cities (we excluded the last two years to avoid having the numbers biased by a negative fan reaction due to the planned move to Oklahoma City).

We found that the Seattle market ranked 20th over this time period.  While this is not a great performance it does place the Sonics far from the bottom.  The Sonics fan base was more supportive than fan bases in Denver, Minnesota, Milwaukee, Atlanta, Detroit, Philadelphia and the Clipper side of LA.

The conclusion seems to be that while Seattle isn’t a truly great NBA market it is at least a decent one.  And one that does have something of a history.  Now that the opportunity to grab the Kings is gone, the next question should be what about expansion.  This recent article in Forbes describes an analysis of markets such as Louisville and Seattle as candidates for expansion.  While we don’t have access to the underlying data, we would like to point out that Louisville already has a very strong basketball market.

Mike Lewis & Manish Tripathi, Emory University 2013

 

Which NBA Team has the Best Home Fans? And Who has the Worst? Hint: It’s New York!

Note: We have received a lot of responses to this study.  For more about the specifics of the study and answers to common questions, click here.

One of the core concepts we work with at Emory Sports Marketing Analytics is brand equity.  Brand equity is basically the advantage that a firm has over its competitors due to their brand being better known and having more loyal followers.  In the realm of sports, brand equity can be thought of as capturing the size and intensity of a team’s fan base.  As the NBA playoffs proceed to their climax this year, we decided to examine the brand equity of all 30 NBA franchises (for a similar analysis of NCAA basketball click here).

A quick Google search shows several other rankings of fan base quality (links below).  These rankings are largely based on consumer surveys or opinion.  In contrast, our method uses statistical models of team revenue results to measure which fan base best votes with their wallets.  Basically, what we do is estimate a statistical model of team box office revenues as a function of the team’s winning percentage, team payroll, market population, arena capacity, number of all-stars, and other factors that capture the quality of the team’s product and revenue potential in a given year.

Home Revenue = f(win%, Payroll, Market Population, etc…)

We then compare team’s actual home revenue with predictions from our model to discern teams that out- or under-perform.*  We call this quantity “Fan Equity.”

Fan Equity = Reported Home Revenue – Predicted Home Revenue

For the 2013 regular season, we find that the New York Knicks have the top ranked fan base.  The Knicks are followed by Chicago, Boston, Portland and Dallas.  Of these, Portland is probably the most interesting case.  A quick look at attendance data from ESPN shows that the Trail Blazers regularly exceed capacity for entire seasons.  Portland is a small market, but a market with passionate and supportive fans.  Portland also likely does well because they are the only “pro” game in town.

At the other extreme, we find that the Brooklyn Nets, the Atlanta Hawks and the Detroit Pistons are the greatest underperformers.  To reiterate, our method basically suggests that these teams should be making more revenues based on their markets and on-court performance.  The Brooklyn Nets are a fascinating example, given the hype that surrounded the move to Brooklyn, and Jay-Zs “ownership.”  While the Nets finished dead last in our rankings, if we look at year over year changes we do see signs of life.  In terms of year-to-year changes, the Nets had the 5th greatest improvement from 2012 to 2013 (even though their overall ranking did not change).

On a local level, we find that the Atlanta Hawks have very little fan support.  This comes as little surprise to folks from the South (aka SEC territory).  Atlanta as a city has the reputation of a place where everyone is from somewhere else.  This is probably a critical factor as a great deal of fan loyalty is built as fans grow up watching the home team.

*As with any analysis of this type, it is possible to quibble with assumptions.  For example, our method does not consider television revenues or that some cities have a greater corporate presence.

Links to other rankings of fan base quality:

Ranker.com on Teams with the Best Crowds (Golden State #1)

Forbes Study of Loyal Fans (Miami #1)

Bleacher Report on Best Fan Bases (Chicago #1)

Mike Lewis & Manish Tripathi, Emory University 2013.