Social Media Equity in the NFL: Another Metric for Evaluating Fans

Please click here for our NFL Fan Equity Rankings

Please click here for our NBA Social Media Equity Rankings

Our approach to NFL fan equity begins from the premise that teams try and maximize revenues.  This is an important assumption, and one that one that seems to be justified by teams pursuing practices like dynamic pricing and personal seat licenses.  But, if a team is pricing below what local market conditions would allow, our method can be problematic because NFL stadiums are of finite capacity.

What we would ideally like to have is a fan metric that is not constrained by stadium sizes.  The world of social media can provide this type of metric.  In today’s installment we assess NFL fan base quality using information on teams’ ability to acquire Twitter followers.

The simplest measurement of social media strength is to look at Twitter follower counts across teams.  Using this metric, the top 5 teams are the Patriots, Cowboys, Jets, Steelers, and Packers.  The bottom five includes the Titans, Buccaneers, Rams, Jaguars and Cardinals.  While gathering this data we did come across some interesting results.  The Patriots lead the league with about 650,000 followers while the Cardinals are in 32nd place with 62,000 followers.  Notably the Cardinals had only 31 more followers than the Cowboy Cheerleaders.

But as always, the raw numbers can be deceiving. The Jets play in a market that dwarfs the Steelers, and Twitter success is probably highly correlated to teams’ recent on-field success.  To calculate “Social Media Equity” we start by building a statistical model that predicts Twitter followers based on team winning percentage from 2012, market population and median income.  We then compare this prediction with the actual follower count.  The difference between actual and predicted followers provides a measure of over or under performance in the social media space.  Note: We could also have used Facebook fans for the analysis.

In terms of this measure of “social media equity” the top 5 were the Steelers, Cowboys, Patriots, Packers and Saints (and the Jets in 6th).  In terms of our previous fan equity ranking, the biggest change was for the Steelers and Packers.  The Cowboys, Patriots, Saints and Jets were strong in both rankings.  In terms of the critique that some owners may systematically underprice, the Steelers and Packers seem like two of the most likely candidates.

At the other end of the list in last place are the Arizona Cardinals.  The Cardinals play in a larger market than the Steelers but only have 11% of the Twitter followers.  Another notable bottom dweller is the Redskins.  The Redskins play in a large market but have less than half the Twitter followers as do the Cowboys.

We have noted the advantage of using Twitter followers as a metric.  This measure is not constrained by stadium capacity and fans are able to show there interest without an economic sacrifice.  However, this measure could also be criticized.  For example, if the goal is to assess fan passion or loyalty it is not clear how correlated an unobservable trait such as loyalty will be with Twitter follow rates.  A second issue is that teams may invest different levels of resources into their social media efforts.  If team A emphasizes their Twitter handle in ad copy while team B does not, then a straight comparison can be misleading.  A third issue is that the data available for this type of analysis is very limited.  While attendance rates are observable for decades, social media data is a very recent phenomenon.

Mike Lewis & Manish Tripathi, Emory University 2013.

NFL Fan Equity: Method Limitations and Focus on the Falcons

Our analyses frequently generate criticism.  Our work has been described as “garbage,” “silly” and “annoying” (and this is just from Mike’s wife).  To us, one of the most interesting things about this project is that we are often surprised by whom we offend.  In the case of last week’s analysis, we were humored by the fact that Saints fans seemed equally interested in their 4th place ranking and the Falcons’ 31st place ranking.  Given that we are based in Atlanta, we thought it would be a good idea to discuss why the Falcons finished so low and, more importantly, how these results should be interpreted.

Our starting point in these analyses is that we are evaluating fandom from a marketing perspective.   This means that we are trying to identify which customer base is the most loyal in terms of their willingness to support their team through buying tickets.  This may seem like a crass measure to some, but it is at least an objective and observable metric.  Most critics seem to want us to somehow read the minds of the fans, and make ratings based on “passion.”  This is a fine notion but the implementation is somewhere between difficult and impossible.  Difficult, because a large scale survey would be needed to ask fans questions about how passionate they are, and nearly impossible because the survey would need to be repeated year after year to control for variation in team quality.

Our method, like all methods, has some limitations.  In our case, two limitations are most notable.  First, we rely on publicly available data (FCI pricing data, ESPN attendance estimates, Forbes’ team value estimates, US Census data, Title IX reporting data, etc.).  Publicly available data (and private data) will always contain inaccuracies.  The real question is whether the publicly available data is inherently biased against certain teams or types of teams.  We are happy to listen to debate about this issue.

The second limitation relates to a team’s marketing objectives.  One issue in sports marketing is that we do not get to observe true demand due to the constraints imposed by stadiums with finite capacities.  For this reason, we primarily rely on estimates of revenue.  This is an important distinction because it means that we implicitly make an assumption about how teams price.  The implicit assumption is that teams are attempting to maximize revenues.

You can definitely criticize this assumption.  This assumption comes into play when evaluating teams that regularly sellout (e.g. Green Bay).  How can these fans be any more loyal?  This leads to the question of why don’t teams like the Packers price higher.  I can think of a couple of potential answers.  One, perhaps they don’t have enough information or expertise to maximize revenues.  Demand forecasting for an NFL stadium is a non-trivial task.  Historical data is of limited use because demand for certain types of seats is censored.  The variation in the quality of tickets is also a problem as revenue maximizing teams would also need to understand the cross-elasticities across ticket types.

But the salient question is: if not a revenue maximizing assumption then what?  The best answer, we believe, is that some teams may systematically underprice in order to build or invest in their customer base.  The logic is that because the team lacks an extended tradition of success or that the team competes locally with other sports offerings, it makes sense to charge below market rates to get people into an exciting, sold-out stadium.  Of course, as more astute readers may have noticed, this explanation is also consistent with the story that the team lacks brand equity.  We could also make arguments that some team price too high and may therefore be “harvesting” brand equity.

This brings us back to the case of the Atlanta Falcons.  The explanation for why the Falcons finished low despite recent success on the field and in terms of sellout attendance is because they price lower than would be expected.  According to the Team Market Report’s fan cost index, over the last decade the Falcons have tended to price below the league average.  But it isn’t sufficient to just consider relative prices.  We also need to consider the “quality” of the market.  The Atlanta metro area has population and median income levels that are well above the league averages.

The other issue that was mentioned locally is: what does this mean for the Falcons’ quest for a new stadium?  A case can be made that our findings support the need for a new stadium. If we believe the assumption that professional sports are an important civic asset (because they draw attention, create economic value, enhance the culture, etc.) then it makes sense for the city to invest in the team.  The Falcons’ have a relatively short history, and play in a city full of transplants.  Just as the Falcons may be underpricing in order to develop their fan equity, it may make sense for the local community to also invest back into the team.

Click here for an alternative methodology for ranking fan bases that relies on social media data.

Mike Lewis & Manish Tripathi, Emory University 2013.

Why Sports Fans Hate Dynamic Pricing

The dynamic pricing trend keeps accelerating with the recent announcement that the Toronto Maple Leafs will be pursuing a form of dynamic pricing.  The Leafs’ policy seems to involve more of quality based pricing than any true dynamics in that the plan involves charging different prices for different tiers of games (based on opponent and game time).  Some might quibble that this should be termed variable rather than dynamic pricing, but ultimately this is a form of price discrimination that can adversely affect how fans think about teams.

In our first two entries on dynamic pricing, we have discussed some basic principles of dynamic pricing (revenue management).  In this entry, we begin to consider the specific challenges of implementing these practices in sports contexts.  Industries that employ dynamic pricing will often make impassioned defenses of the practice.  Typically, the industry defense emphasizes that dynamic pricing is “fair” because market forces are dictating prices.  What could be more “fair”?

Obviously, many consumers don’t view dynamic pricing as a positive development.  Dynamic pricing is something that at best makes consumers nervous, and at worst angry.  This is not a surprising reaction, since dynamic pricing is at heart a system of price discrimination and inventory rationing.  If we think about the connection that exists between a consumer and a firm as a relationship then these practices are obviously not going to improve the “relationship.”  In the previous paragraph, we placed fair in quotes for a specific reason.  Fairness is subjective and teams do not get to decide how fans feel.

If consumers accept dynamic pricing in travel industries, why should these techniques be a problem in sports?  Let’s consider a couple of key differences between air travel and sporting events.  First, in the airline industry, the consumers who typically pay the highest rates do not pay for their own tickets.  In the airline industry, the business customer often chooses the travel options while the firm pays the price of the travel.  And as a bonus, the employee collects loyalty points.  A second, key difference is that air travel is purchased in order to achieve some other goal, whether it is a business meeting or a visit to a resort.  In other words, air travel is a product that is purchased so that the buyer can do something else.  In contrast, dynamic pricing of tickets affects the focal experience rather than an intermediary transaction cost.

A third issue is that the relationship between a fan and a team is fundamentally different than the relationship between an airline and a traveler.  There is a reason why we call consumers of sports “fans” rather than “customers.”  In what other categories, do consumers proudly wear the brands they consume on their clothing?  For example, Manish’s wardrobe seems to consist of mainly t-shirts emblazoned with team logos and cargo shorts.  In the last week I have seen Cubs, Maple Leafs and Redskins t-shirts.  I raise the issue of clothing because it highlights that consumers want to have a strong relationship that includes being publically associated with the team.  In marketing, we might refer to this as a desire for a “communal” relationship.  In contrast, a reliance on strict demand based pricing will tend to reduce the fan-team relationship to a series of cold economic exchanges.

Mike Lewis & Manish Tripathi. Emory University 2013

More on NFL Fan Equity: Dynamics & Mascots

Last week we presented our ranking of NFL fan bases.  The Cowboys, Patriots, Jets and Saints headed this list, and every other city in America let us know that our study was garbage.  As in any study of this nature, there will always be limitations that leave room for debate.

One such source of debate is in how much data we use for assessing fan equity.  We use 11 years of data to develop a model for forecasting expected consumer demand (the forecast is based on winning percentage, pricing, stadium capacity, metro area population, metro area median income and other factors).  We then determined fan equity (fan loyalty and support) by comparing the model forecasts to each team’s last three years of results.

One important question is whether three years is sufficient.  In our minds three years is a compromise.  An argument in favor of a lengthier time horizon is that fan loyalty is a persistent trait that moves slowly.  If this is the case, it might make sense to look at relative performance for the last five or ten years of data.  On the other hand, the world is constantly changing and evolving so it also makes sense to focus on recent history.  In the case of sports, if championships and post season success are the sources of long-term fan equity then using a shorter horizon that is sensitive to near term changes makes sense.

The top five for the last the last decade would be New England, Washington, Kansas City, Denver and Pittsburgh.  This list will likely make other fans happy but it will still result in significant unhappiness in Green Bay.  Later this week we will discuss in more depth why some of the teams that conventional wisdom would suggest to be at the top of our list fell short.

We can also look at who is rising and who is falling.  For this analysis we compare the fan equity rankings using the first 3 years of the data (2002 to 2005) with the last three years (2010 to 2012).  The analysis finds that the biggest risers were the Cowboys, Jets and Colts.  The four biggest drops were the Chiefs, Buccaneers, Rams and Redskins.  This list shows both the pros and cons of using short versus long horizons.  The short horizon allows us to capture the long-term impact of what Peyton Manning delivered the Colts and the importance of the Cowboys’ new stadium.  On the negative side, the early success of the Rams and the Bucs seems to have turned out to be short lived.

There is one other element of the preceding list of teams that have suffered a decline in fan equity that may raise some eyebrows.  Two of the teams that suffered dramatic drops have Native American oriented team names: The Chiefs and the Redskins.  Over the last decade we have witnessed an increase in efforts to eliminate Native American team names and mascots.  Lewis is an Illinois grad and Tripathi is a Redskins fan so they know firsthand how a mascot controversy can split a fan base.  There are, of course, alternative explanations for why these two teams’ fan equity has decreased (but keep in mind that we do control for team performance) but it is at least noteworthy that two of the four teams with the biggest drops have controversial team names.

Mike Lewis & Manish Tripathi, Emory University 2013.

NFL Fan Equity: Maybe the Cowboys are America’s Team?

Note: We have been getting a lot of questions about our study.  Here are the first and second follow-ups to our study.  For an alternative fan ranking using “Social Media Equity,” click here.

The NFL is America’s favorite professional sports league, but which of its teams has the most loyal and supportive fan base?  This is not a straightforward question.  A ranking based on attendance would be skewed toward teams that play in more populated metropolitan areas, and a ranking based on profitability or revenues would be biased in favor of teams that are currently enjoying more on-field success.

In our series of fan base analyses across leagues, we adjust for these complicating factors using a revenue premium model of fan equity.  The key idea is that we look at team box office revenues relative to team on-field success, market population, stadium capacity, median income and other factors.  The first step in our procedure involves the creation of a statistical model that predicts box office revenue as a function of the aforementioned variables.  We then compare actual revenues to the revenues predicted by the model.  Teams with relatively stronger fan support will have revenues that exceed the predicted values, and teams that under perform have relatively less supportive fan bases. We provide more details on the method here and here.

The top fan base was the Dallas Cowboys.  Professor Lewis grew up a Steelers fan in the 1970s so this was a bit of a painful result.  Professor Tripathi grew up as a Redskins fan, and is terribly disturbed by the results of the study.  What are keys to the Cowboys’ ability to create a passionate and supportive fan base?  We think it’s a long legacy of success, a football mad Texas culture and a state of the art stadium.  Over the last three seasons (the time period used to calculate fan equity) the Cowboys have played sub .500 football but generated above capacity attendance (at least according to ESPN).

In positions two and three we have the New England Patriots and the New York Jets.  New England has an all-around strong fan base, while the Jets are somewhat similar to the Cowboys in that they draw consistently well, regardless of the on-field product.  In fourth and fifth place we have the New Orleans Saints and the New York Giants.  The Saints are a more recent success story, but the team’s new success combined with limited professional sports options in New Orleans has created a very strong fan base.  Two New York teams in the top five is an interesting result when viewed in relation to our college football fan base analyses.  New York is (no surprise here) a pro sports town.  As an aside, we will be interested to see how much value the Big Ten gains from acquiring a foothold in the NYC market starting in 2014.

At the more unfortunate end of the scale we have a bottom five of Detroit, Tampa Bay, Arizona, Atlanta and Oakland.  Detroit, of course, suffers from a relative lack of on-field success and a struggling local economy.  But we should note that our method does explicitly control for these factors.  It may well be a matter of the Wolverines & Spartans winning the battle for fans against the Lions.  Similarly, teams like Atlanta and Tampa Bay may suffer from being located in SEC territory.

We will continue this discussion next week so please check back.

Mike Lewis & Manish Tripathi, Emory University 2013.

College Football Brand Equity Rankings: The Overall List

Over the last two weeks, we have been reporting our football fan base rankings conference by conference.  Today, we turn to our overall ranking.  We started the list with an analysis of the brand/customer equity of the major conferences.  The Big Ten and the SEC are the leading conferences largely because they have strong TV deals.  That being said, the number one team on our list is not a member of either the Big Ten or the SEC.

Number one on the list is the University of Texas.  The Longhorns have some built in advantages that make it such a powerhouse.  Texas is the flagship school in a highly populated state with an incredible football culture.  Texas is also interesting because it is such a frequent target in realignment discussions.   Texas would bring the most valuable fan base to any conference.   In fact, Texas football is such a valuable property that we doubt that they will move anytime soon.  Texas is a strong enough brand to keep the Big Twelve a viable conference.  This means that Texas has an immense amount of bargaining power within the Big Twelve; which would be lost in a move to the Big Ten or the SEC.

Number 2 on the list is a bit of a surprise.  Based on the numbers, we found Georgia to have the second highest customer equity.  We go into more detail about Georgia football in our SEC writeup.

Number three on the list is the Big Ten’s Ohio State Buckeyes.  Ohio State has many of the same advantages as Texas, as they are the flagship school in a highly populated and football crazy state.

Numbers 4 and 5 on the list also hail from the Big Ten.  We have Penn State in 4th place and Michigan in 5th.  These are two interesting cases, since PSU is obviously in a transitional stage, and may fade a bit over the next couple of years, while Michigan is making moves to become even more profitable.  In positions 6 through 8, we have Alabama, Auburn and Florida.  Our rankings seem to confirm that the SEC and Big Ten are college football’s top conferences.

The 9th place team is one that we haven’t talked about in any of our previous rankings, Notre Dame.  Our guess is that Notre Dame fans will feel slighted by their 9th place ranking.  But, at the end of the day, our approach is driven by a combination of revenue and team quality data.  What we find is that Notre Dame is a great college football brand, but far from the dominant brand their fans believe it to be.

In tenth place we have the lone West Coast team in the rankings.  The Washington Huskies were the surprise leader in the Pac 12, beating out teams like USC and Oregon.

Mike Lewis & Manish Tripathi, Emory University 2013.

PREVIOUS: RANKING THE SEC

Ranking SEC Football Fans: Georgia beats out Alabama

We are presenting a series ranking the “best” fan bases in college football.  The study uses data from the past ten years and the rankings are based on Revenue Premium Brand Equity.  For more information on the analysis/methodology, please click here.

As a rule, when we begin any analysis we start with no prior expectations about the results.  We let theory and numbers guide our findings.  However, living in the South, it is hard not to witness the extreme passion and loyalty of SEC fans on a daily basis.  The SEC football season is year-round (season, recruiting, spring football).  Therefore, we were not surprised when the SEC was the top rated conference in our college football Revenue Premium Brand Equity rankings.   Given the passion of SEC fans, we expect that our SEC conference rankings will engender a lot of “constructive discussion”.

The University of Georgia has the number one ranked football fan base in the SEC according to our study.  It should be pointed out that this study covers a ten year period, and that the top four ranked schools in the SEC are also among the top ranked football fan bases in the country.  So, what separates Georgia from Alabama?   Over the period of our study, both Georgia and Alabama averaged between 9 and 10 wins a season.  However, Georgia averaged 12% more in revenues per year than Alabama.  Alabama also had a couple of years in the beginning of our sample (2002 & 2004) where the home games were not all filled to capacity.  Thus, over the period of our study, when we control for team performance and other institutional factors, the Georgia fan base is just a bit more loyal and devoted.

Auburn University finished in third place, being just edged out by its friendly neighbor, Alabama.  The Crimson Tide generated slightly more revenue per year on average than the Tigers, despite averaging almost the identical number of wins.  Also, while Alabama’s revenues are growing, Auburn has been facing a decline.   The University of Florida finished fourth in our study.   The Gators actually average 6.9% more revenue per year than Auburn, however they also averaged 0.5 more wins per season during the period of our study.  Remember, our conjecture is that it is easier for a fan to shell out for a team when the team is winning games, thus we control for team performance.

Vanderbilt is ranked 11th in our study.  We would like to point out that the last couple of years have been positive for the Commodores, and although lagged, the revenues for the football program seem to be improving.  Ole Miss and Mississippi State are at the bottom of the study of SEC fan bases.  During the period of our study, Ole Miss and Mississippi State actually averaged more wins per season than Vanderbilt.  However, Ole Miss generated roughly the same amount of revenue as Vandy, and Mississippi State generated 20% less.

Mike Lewis & Manish Tripathi, Emory University 2013.

PREVIOUS: RANKING THE PAC-12

NEXT: OVERALL RANKINGS

Ranking PAC 12 Football Fan Bases

We are presenting a series ranking the “best” fan bases in college football.  The study uses data from the past ten years and the rankings are based on Revenue Premium Brand Equity.  For more information on the analysis/methodology, please click here.

For those of you following along with our conference by conference rankings of fan support, you may have noticed an omission.  We skipped over the PAC 12 in our countdown to the top conference.  But, before we talk about the SEC and the Overall Rankings next week, we did want to make some comments about the PAC 12.

Or maybe it is just one comment: We have trouble understanding this conference.

The method we use to rank fan base support uses something called a “revenue premium” model of brand equity.  The big idea is that we look at fan support while controlling for team quality and market potential.  Like any method, there is room to critique our approach.  As an aside, we do enjoy the helpful comments provided to us via Twitter about our combined intelligence and lack of sports knowledge.  As a second aside you should be aware that our sports pedigree includes Manish’s time playing Tecmo Super Bowl (Wayne Haddix rules!) back in Maryland, and Mike’s experience playing a great deal of Madden on the Sega back in the early 90s.

The trouble with the PAC 12 is that its premier teams tend to have revenues that are far lower than teams of similar quality in other BCS conferences.  Oregon is the poster child for this issue.  This article from Rachel Bachmann highlights the difficulty in evaluating Oregon relative to its peer schools.  Over the last decade, the Ducks have been remarkably productive on the field, but the revenues are nowhere near that of the teams Oregon has been playing in BCS games.   As Bachman points out, Oregon’s revenues would place it near the bottom of the Big Ten or the SEC.

The second issue with Oregon is its stadium, and perhaps it’s pricing.  Oregon sells out (above capacity) regularly, but it plays in a ~50,000 seat stadium rather than a 90,000 or 100,000 seat stadium.  The strong demand data suggests that Oregon could easily improve revenues through a price hike (as a third aside, there is a lot of chatter this summer about efforts to grow revenues through dynamic pricing).  There are, of course, reasons not to raise prices.  Oregon may feel like it is in the process of still growing a loyal following.  They may be intentionally underpricing in order to invest in their future fan base.  Or maybe Oregon is the rare school that does not view the football program as a pure revenue generator (they seem to have other sources of revenue ).

So rather than provide an explicit ranking of the PAC 12 schools’ fan bases we decided to list the schools in different tiers.  As a fourth aside, we do realize this is a copout.

Tier 1: In tier one, we have the University of Washington, Arizona State University, Colorado and Utah*.  These schools make the list for different reasons.  Washington is the clear winner in terms of fan support relative to team performance, while Colorado and ASU have solid revenues given their on-field performance.  We have an asterisk next to Utah because it is hard to predict how its fan support will translate to the BCS.

Tier 2: In the second tier, we have USC, Oregon, UCLA, Oregon State and Arizona.  The USC story has some similarity to the Oregon story.  It’s a great program, but a program that often doesn’t sell out.  As a fun fact, the West Coast USC actually generates slightly lower revenues than the East Coast USC.

Tier 3: In third tier we have Cal, Stanford and Washington State.  Here, the biggest surprise to some may be Stanford, given its string of BCS bowl games, and fourth place ranking in the pre-season USA TODAY coaches poll.  However, it is important to note two things: 1) Before Coach Harbaugh, Stanford was terrible, and the fan support was negligible, and 2) Although Stanford has been to three straight BCS bowls, the fan support has been trailing the rate of success.  This is the first year where they have sold out their season tickets.

Mike Lewis & Manish Tripathi, Emory University 2013.

PREVIOUS: RANKING THE BIG 10

NEXT: RANKING THE SEC

 

Dynamic Pricing Part 2: Price Discrimination and Revenue Management

As we noted in our first dynamic pricing entry, the basic tools for implementing revenue management originated in the airline industry.  In today’s installment, the goal is to provide some insights into how revenue management works in the airline industry and to begin to consider how these tools apply (or don’t apply) to ticket pricing.

As a starting point, it is necessary to specify the revenue management goal.  In the airline industry the most basic goal is to maximize the revenue collected from a given flight (the network structure of airlines can often motivate more complicated goals).  In the case of sports, or performing arts, the corresponding goal is to maximize the revenue produced by a given event.  More generally, we can think of the goal of revenue management is to maximize the value of a firm’s inventory.  Often a distinction is made that revenue management is especially useful when inventory is perishable.  The key point is that if an airliner takes off with an open seat or a stadium has empty seats at game time, that the firm has forever lost that unit of inventory.

The two key ingredients needed to implement revenue management are a system for segmenting customers and forecasts of segment level demand.  In the airline industry, a very basic system of segmentation might be to group customers into a business and leisure segments.  These segments are thought to differ in terms of traits such as price sensitivity and flexibility.  Specifically, business travelers are thought to be willing to pay higher prices and to have more restrictive schedules.  The second necessary input is segment level demand forecasts.  There are many ways of forecasting demand ranging from complex statistical models to simple heuristics but the salient point is that the revenue manager needs to be able to accurately forecast how many customers from each segment will want to travel on a given flight or attend a specific game.

A core concept for implementing revenue management is the idea of “expected marginal revenue.”  For example, let us assume that we are trying to manage the revenue produced by a flight with 100 seats. Also we have a business segment willing to pay a high price that tends to book close to the departure time, and a price sensitive leisure segment that books long in advance.  The revenue manager’s job is to decide how many low priced seats to sell to the leisure segment or, differently stated, to decide how many seats should be reserved for the late arriving business segment.  One way to do this is to reserve just enough seats such that the expected marginal revenue from saving a seat for a business customer is equal to the expected marginal revenue from allowing the seat to be purchased by a leisure customer.

Let us further assume that the business customer pays $1,000 per ticket while the leisure traveler pays $100.  The revenue manager’s decision rule would be to reserve sufficient tickets for the business segment such that the expected marginal revenue produced by the last seat allocated to the business customers is the same as if the seat were sold to the leisure customers.  Returning to our example, if we can sell unlimited $100 seats the revenue manager would reserve enough seats so that there is at least a 10% chance to sell a $1,000 business ticket.

In many ways we could make the preceding discussion sports specific simply by changing “flight” to “game” and by using a segmentation system that is more sports specific (casual versus hardcore fans?).  But as you might expect, when we get to actual implementation it often becomes difficult to directly transfer travel industry yield management techniques to a sports context.  In our next entry we will discuss several of these challenges.

Mike Lewis and Manish Tripathi, Emory University 2013.