We spend a lot of time thinking and writing about the consumer behavior of fans. For example, our fan equity rankings provide a measure of fan loyalty that controls for factors such as team performance. Today we take a look at the other side of the equation, by asking which NFL teams show loyalty to their fans. Specifically, our goal is to understand which teams provide the best value to fans.
Our analysis is built around a statistical model of team prices*. The first step is to model team prices as a function of team winning percentages, stadium capacity, metropolitan area population and metropolitan area median income. The model also includes quadratic terms and interactions between several of the variables. We estimate the model using the last 11 seasons of data. The second step is to compare each teams reported prices with the predicted prices from the model. If teams price above the prediction, the implication is that the team is extracting more revenue from fans than would be expected based solely on team quality and market characteristics. Of course, the alternative explanation is that the teams have additional knowledge of their markets that is not observable to the analyst. But, in the course of previous analyses the point has been raised by several teams that they often price below the market in order to build fan equity. Perhaps, a better way to describe the rankings on the left is that the teams on the top are providing the most value (bang for the buck) to fans.
The Atlanta Falcons are number one on our list. Over the last decade, the Falcons have won 57% of their games while pricing at about 10% less than the league average. This pricing is even more remarkable given that Atlanta is fairly large, and above average in terms of median income. Other good values include Arizona, Carolina, Seattle and Jacksonville.
Perhaps the more interesting part of the list is at the other extreme. This portion of the list identifies the teams that extract every last penny from fans. At the very bottom of the list are the New England Patriots. The Patriots have delivered a great product but they have also charged prices that are about 40% higher than average. Second from the bottom are the Dallas Cowboys. Over the last decade, Dallas fans have had the privilege of paying large price premiums for a very average product. In fourth and fifth positions from the bottom, we have Tampa Bay and St Louis. In both cases, these are relatively small market teams that have struggled on the field while charging fairly steep prices.
*Team Marketing Report’s Fan Cost Index Data
Mike Lewis & Manish Tripathi, Emory University 2013.