NBA Brand Report 2019

With the 2019-2020 NBA season on the horizon, it’s time to take a look at NBA fandom through an analysis of the team fandom and brands. I do these for the various pro leagues on a near annual basis though the last NBA ranking was 3 years ago.

When thinking about NBA fandom, we need to acknowledge that the NBA goes to market a little bit differently than the other major leagues. In the current era, the NBA has been a star driven league. Over the last 40 years, the NBA’s story has been the tale of Julius Erving, Larry Bird, Magic Johnson, Michael Jordan, Kobe Bryant, LeBron James and Stephen Curry. And maybe Charles Barkley Tim Duncan, Shaquille O’Neal, Kevin Durant and a few others.

Those last two sentences are important, debatable, and maybe enraging. Does Kevin Durant belong in the first group or the second? What about Kareem? How about Karl Malone and John Stockton? My list is off the cuff and subjective but what’s important about those two sentences is that those players (plus or minus a few) represent the story of the NBA going back two generations. In most sports, fan loyalty is about teams first and players second. In the NBA it is often the reverse.

LeBron James is probably the best example. When LeBron was in Cleveland the Cavs were a top brand. A TV ratings draw and an arena filler when the team was on the road. As he moves on the Cavs quickly reverted to being a second tier NBA brand.

The upside of this approach is NBA players can become true cultural icons. This means that the NBA generates a lot of “Free” media. I suspect that the daytime ESPN talk shows pay as much or more attention to the top 5 NBA players as they do to all of MLB. The downside is that the players have more control over the fortunes of the league than in the NFL or MLB.

I should probably be more specific – a small group of NBA players has enormous power over the league. This can create challenges for individual teams and can create issues for the entire league. What happens when a team (Toronto?) loses a star player? How do they recover? Try to talk a free agent into coming to a small market (OKC?)? Good luck. At the league level, is there “face of the league” succession planning? When do you stop emphasizing Michael Jordan? Or even better – how do you decide who to market next? Why is LeBron a bigger star than Kevin Durant?

As we go into this next season the big on-court topic (written before the NBA-China relationship blew up) is the same as the big marketing topic. How does the shift towards player empowerment (or player collusion to circumvent the CBA if you prefer) impact the league?

This is relevant to today’s article because the focus is on analyzing the loyalty and engagement of fans across the NBA. Specifically, I am taking a look at and ranking the NBA teams in terms of fan engagement and loyalty. Player movement is a major part of the story. In the NBA, it is tough to disentangle the loyalty to teams versus loyalty to stars. This past off-season, saw significant player movement towards teams that have not historically been iconic NBA brands.

The Metrics

I’m going to skip the details (no one reads them) but I will say my analysis of team brands is different because it’s based on the statistical analysis of 20 plus years of data on winning, attendance, pricing, population and just about any other factors for which I can collect data. The basic idea is that I look at how teams perform in terms of several marketing performance metrics after controlling for factors such as winning rates and market population.

I evaluate NBA team fandom using three metrics. Fan Equity is based on how teams perform in terms of home revenues. This captures pricing power and attendance. Social Equity is based on team’s reach via Twitter. Road Equity is based on how teams draw on the road.

Each metric has advantages and limits. Fan equity is based on consumer’s willingness to attend and spend. This is the gold standard for measuring consumer engagement as it is based on opening the wallet and taking the time to sit in traffic and make it to the arena. On the downside, this metric does not consider a team’s national following and may be constrained by arena capacity. The Social Media metric has advantages as it can capture out of market fandom and fans who are priced out of an arena. I also think social media following skews younger so it is more of a forward-looking metric. A problem with social media is that social followings are “sticky” in the downward direction. When LeBron moves to a new team, we see a huge jump in the team’s social following. But when he moves again, relatively few fans make the effort to stop following the previous club. Road Equity is based on a combination of national following and willingness to travel. In the NBA this is probably almost all about national following. The weakness of the Road equity metric is that national following may be much more about a star player than the team itself.

To get an overall ranking I combine the three metrics using a weighting scheme that treats the Fan equity measure as twice as important as the other two. Debatable but simple.

The Winners

It has been a few years since I did the NBA rankings and there are some significant changes. The overall winner going into the 2019-2020 season is the Los Angeles Lakers. The Lakers score consistently high across the three metrics. Number 1 in Road Equity and Social Equity and number 2 in Fan Equity. The Lakers are followed by the Warriors, Bulls, Celtics and the Cavs.

The significant changes from the previous ranking are the elevation of the Warriors and the fact that the Knicks are absent from the top 5. The Bulls and Celtics have long been iconic NBA brands. Different histories but similar results. The Bulls are the house that Michael built while the Celtics were built by many.

The Warriors are a great example of how powerful brands are created. Golden State was long a second tier team. Now, after years of Stephen Curry and Kevin Durant winning championships, the Warriors have become a premier brand with a national following of engaged fans. The lesson is that it is not enough to win once. Like the Bulls, brands are built through repeated championships.

The Knicks are ranked 7th on the overall list. The Knicks win the Fan Equity measure but fall short in terms of the Social and Road metrics. I suspect that the control variables do not adequately capture the unique advantages that the Knicks enjoy based on location.

What about the Cavs being ranked 5th? Two quick thoughts. First, I use three years of data to measure current brand equity. This is done because brand equity usually shifts slowly and to average out noise in the data. The problem is that using three years means that the Cavs still benefit from seasons that include a now departed player. The downward stickiness of social media is also an issue in the Cavs results.

The Losers

At the bottom of the list, we have the Washington Wizards, Memphis Grizzlies, Charlotte Hornets, Brooklyn Nets and Detroit Pistons. For this group, it has been different paths to the bottom. Did the Wizards ever recover form the name change from the Bullets? Memphis and Charlotte have never had a history of success. The Pistons are interesting because they also had a period of success at about the same time as the Bulls. Why is the legacy of Isiah Thomas so much less than that of Michael Jordan? Its likely about the scale of winning and maybe something related to the dynamics of Detroit versus Chicago.

 

The Brooklyn Nets are also a curious case. The move from New Jersey to Brooklyn came with a lot of hype. So what happened? First, there was no period of great success to take advantage of the hype. Second, the Nets fall short in comparison to the Knicks (and other major market teams like the Bulls and Lakers). While they play in the same market, the Nets results do not compare to the Knicks on any of the fan metrics.

What is really necessary for a team to move up the rankings is consistent winning. And not just winning in terms of making the playoffs – brand equity seems to be built by winning and contending for championships.

The List

Finally, the overall list. Please enjoy and tell me what you think in the comments. I expect 80% hostility.

 

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Fanalytics Podcast: Sales Force Analytics

In this podcast episode, I sit down with Jon Adler, Director of New Membership and Ticket Sales for the Atlanta Hawks. In the first half of the episode, Jon and I talk about the mechanics of selecting and managing a team of entry-level sales professionals. The conversation focuses of using incentives to both motivate employees and to teach effective sales tactics. We also talk a little about applying “Money Ball” techniques to sales force management. This is an important point because the same basic techniques that can be used to predict the performance of a point guard can be used to select a salesperson.

In the second half of the episode, I take a deeper dive into how different techniques and theories can help sales managers. Salesforce management has some real challenges related to forecasting performance and using dynamic incentive schemes to motivate performance. Recognizing some of the underlying complexity can be helpful because it provides a guide to decomposing managerial problems and identifying the best analytic approaches.

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You can find the episode on iTunes, Spotify, SoundCloud, TuneIn, Stitcher, and Google Play Music. Please rate, review, and subscribe!

Fanalytics Podcast: XFL Team Names

 

Recently, the XFL announced team names and logos for the upcoming 2020 season. I’ve been interested in team names, logos and mascots for some time. I’m an Illinois graduate so I’ve witnessed the controversy and passions that surround a mascot change.  In addition, one of my academic specialties is the study of brand-consumer relationships. There may be no more intense brand-consumer relationship than the connection between teams and fans.

However, while most of my work uses data and statistical models to study sports topics, the analysis of team names usually requires a less quantitative approach. With some notable exceptions the analysis of team names and mascots needs to be based more on theory and logic than on data. The approach I use in the classroom is to consider team names from a variety of angles.

First, does the name have a local logic?  Many of the great team names have a direct tie-in to the local area or culture.  The Steelers’ name comes from a time when the city was dominated by the steel industry.  The Gators’ name highlights the wildlife that surrounds the University of Florida. The key question is whether the name provides a connection to the local environment.

Second, is the name innovative or interesting? Being distinctive is usually helpful in creating brand-consumer relationships.  The last thing that a team wants is to be thought of as generic or boring.

Third, is the brand or name well executed?  Does the branding make sense? Is the logo cool?  Is the messaging consistent? This criteria is a little bit more of a judgment call that the others, especially when the team names are newly introduced.

The image below provides summary grades for the 8 new XFL brands. My winner is the Dallas Renegades and my losers are the LA Wildcats and NY Guardians. The Renegades have some nice local tie-ins and are set up to contrast with the Cowboys. This is just about the name. Taking on the Cowboys in Dallas is daunting to say the least. The Wildcats suffer from being generically generic (if that’s grammatically possible).  The Guardians have the most confused branding. Is it about surveillance gargoyles?

The podcast episode provides a more in depth discussion.

 

 

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Fanalytics Podcast: Ezekiel Who? Analytics & the Collective Bargaining Agreement

 

In this episode, Professor Lewis discusses why the Ezekiel Elliott holdout is the most important off-season NFL story. It’s a story about how the collective bargaining agreement’s rules for rookie contracts comes into conflicts with analytics. The conflict occurs because for some positions, like running back, NFL rookie contract rules allow teams to avoid paying market rates for the majority or entirety of players’ careers. The episode talks about how last year’s Todd Gurley and Le’veon Bell deals have gotten us to the point where players may be increasingly willing to hold-out and teams may be less likely to invest in running backs.  

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NFL Fandom Report 2019

 

Time for our yearly look at NFL fandom.

Each year, I do a quantitative analysis of NFL fandom.  The analysis is grounded in economic and marketing theory, and uses statistical tools to shed light on the question of which teams have the most loyal or “best” fans.

The fundamental question that guides the analysis is simple – Who has the best fans in the NFL?  For the business folks, maybe we phrase this as – What are the best brands in the NFL? It’s a simple question that requires some complicated analyses.  First, we have to decide what we mean by “best”.  What makes for a great fan or brand?  Fans that show up even when the team is losing?  Fans that are willing to pay the highest prices?  Fans that are willing to follow a team on social media? Fans that show up to see the team play in other markets? All good options.

Even after we agree on the question, answering it is also a challenge.  How do we adjust for the fact that one team might have gone on a miraculous run that filled the stadium?  Or perhaps another team suffered a slew of injuries?  How do we compare fan behavior in a market like New York with fans in a place like Green Bay?

My approach to evaluating fan bases uses data on attendance, revenues, social media following and road attendance to develop statistical models of fan interest (more details here).  The key is that the models are used to determine which city’s fans are more willing to spend or follow their teams after controlling for factors like market size and short-term changes in winning and losing.

Similar to past years, I use three measures of fan engagement: Fan Equity, Social Equity and Road Equity.  Fan Equity focuses on home box office revenues (support via opening the wallet). Social Media Equity focuses on fan willingness to engage as part of a team’s community (support exhibited by joining social media communities).  Road Equity focuses on how teams draw on the road after adjusting for team performance. These metrics provide a balanced analyses of fandom – a measure of willingness to spend, a measure unconstrained by stadium size and a measure of national appeal.

To get at an overall ranking, I use a statistical tool that looks at the correlation across the three metrics to create a “Brand Equity Factor”.  Similar analyses are available for the NBA and MLB.

The Winners

 

The top five fan bases (team brands if you prefer) are the Cowboys, Patriots, Eagles, Giants and Steelers.  This is unchanged from the last two years – leaving me with little to say. The Cowboys have long been NFL royalty and the Patriots are now firmly established at the top of the league. It remains to be seen if the Patriots will remain near the top when Brady and Belichick move on.

In past years I have noted that the Eagles are a bit of a surprise.  But the strong social and road scores keep the Eagles near the top. The Steelers could probably be a bit higher on the list. The Steelers tend to price near the middle of the league and this limits their Fan Equity score.

The Giants are an interesting case. They do well on Fan Equity (especially compared to the Jets) and the Road Equity score is impressive.  The Social Equity score suggests that the Giants are more of a regional brand but when your region is NYC it’s not a major problem. The Road Equity score is an interesting one to debate. The teams in the NFC East all do well on this measure. I could adjust for divisional affiliation but the NFC East is, for whatever reason, the glamour division of the NFL. My feeling (like I said it’s debatable) is that the teams in that division should be given credit for the divisions appeal.

The next group of five includes the Packers, Broncos, Bears, 49ers and Saints.  A lot of face validity to these results. The 49ers might raise some eyebrows, but it is a team that does very well in terms of attendance and pricing power. The Bears, Packers and Broncos are all strong brands with impressive histories. The Saints are the relative newcomer in the top ten. Like the Patriots, it will be interesting to see how Saints fandom responds when Drew Brees retires.

 

The Losers

At the bottom of the rankings, we have the Bengals, Jaguars, Titans, Chiefs and Rams. Only minor changes from last year. The Browns have edged out of the bottom 5. These teams all suffer from the same issues – relatively weak pricing power and limited social followings.

The Chiefs are the team that will generate push back. The Chiefs have had some success and they have significant star power. The problem is that the Chiefs lack pricing power and do not have much of a social following (I use Twitter). However, the Chiefs and Browns are probably the best positioned teams to make moves up the charts the next few years.

For the Rams (and the Chargers), we should probably include an asterisk. Moving markets and playing in temporary stadiums can lead to questionable data. The Rams – like the Chiefs and Browns – are well positioned for on-field success over the next few years.  The good news for these teams is that on-field success is the best way to create brand equity and fan loyalty.  The bad news is that it takes a good amount of success to move the needle long-term.

 

The Business Implications: Why does this Matter?

This study is about measuring fandom intensity or engagement. The logical foundation is that we attribute over or under performance in revenues or social following to fan engagement. To do this, we have to control for factors like market size and winning. This is the key point. Fan engagement is a little different from brand equity (the value of a brand) because we are controlling for market differences. The preceding results are more about intensity or passion of a fan base rather than the value of the fan base.

Fandom intensity is an important and often overlooked part of brand equity. In a full brand equity analysis, I would want to combine structural elements of a market (population, income, arena, etc…) with a fan engagement factor to assess a team’s brand equity. The value of the fan base is probably best thought of as a product of the passion (or intensity or engagement) and the size of the fan base.

Why do we care about fan intensity?

A standard approach to value sports assets (teams, players and sponsorship deals) is to use comparables. The idea is that you evaluate a future deal based on the characteristics of similar past deals. It’s the same concept used in real estate where housing prices are usually dictated by factors such as square footage, number of bathrooms and the previous sales in the neighborhood.

In the world of sports, there are many deals that are valued based on the fans. Stadium naming rights and sponsorships are two prime examples.

But in the case of sports deals, it’s important to consider the passion of the fan base. Let’s consider a non-NFL example to illustrate the point. How might an analyst value similar deals (naming rights, sponsorships, etc…) related to the Clippers and Lakers. Both teams play in the same city so there is little difference in market related factors. If we tried to rely on current winning rates then the Clippers would appear to be the more valuable deal. The missing factor is that the Lakers have a fan base (created through a history of All Star Players and Championships) that is incredibly engaged with and attached to the Lakers brand. If we were valuing competing deals across the two clubs, it is critical that we also consider the passion (and staying power) of each team.

While I present my results as rankings, behind the scenes there are a set of numerical scores for each metric. These numerical scores provide a tool for valuing promotions and sponsorships. The numerical scores provide a basis for valuing the passion of fans across teams. The use of multiple metrics is again useful because each metric has a different behavioral interpretation.

Two quick examples.

The Fan Equity metric is a measure of willingness to spend. Critically, it is a measure of willingness to spend that controls for differences in market characteristics (population, income levels, etc…) and current team performance. In this year’s results, the Cowboys rank number 1 in Fan Equity and the Texans finish number 21. The (behind the scenes) analyses suggest that Dallas’ spend premium relative to the league average is positive 7.79% while Houston’s premium is .39%. This suggests that in a sponsorship deal where all things are equal (number of impressions, median income, etc…) that the sponsorship of the Cowboys would merit a 7.4% premium versus an identical partnership with the Texans. In some ways, this seems like a conservative estimate given the prominence of the Cowboys. But, NFL fandom is intense everywhere and the Fan Equity metric is geared towards local markets.

The Social Equity metric is a measure of transmission or amplification. In terms of Social Equity, the Cowboys rank 3rd and the Texans rank 12th. For this metric, the differences across teams are much more substantial. Relative to the league average the Cowboys have a social media equity index score of 87% (the Cowboys social amplification factor is 87% greater than the average team). The Texan’s index is 1% above the league average. The results suggest that the Cowboys would merit an 86% premium for a nationwide or social media oriented promotion versus the Texans. Again, these results are based on models that adjust or control for differences in team performance and market characteristics.

The Complete List

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Major League Baseball Fandom Report 2019: The “Best” Fans in Baseball

Major League Baseball seems to be perennially in crisis in terms of its relationship with its fan base.  Free agency, strikes, steroids, competitive imbalances, short attention spans of millennials, a lack of stars, an aging fan base, and other factors have been cited to explain why baseball has either lost or is in danger of losing its position as the national pastime.

On the other hand, the league keeps setting revenue records. This article from Forbes reports that baseball has set revenue records for 16 straight years.

When thinking about baseball and its fans, it is safest to say it is a mixed bag of positives and warning signs.  Record revenues show that baseball has been able to develop innovative revenue streams and attract high value sponsors. But there does seem to be trouble on the horizon in terms of the next generation of fans.

In terms of demographics, MLB has one of the oldest fan bases (up there with golf). It is also largely viewed as the most family oriented sport. This is an interesting pattern. An aging fan base is a concern for the future if fans are aging out of attending games.  Of course, an aging fan base is also potentially an increasingly wealthy fan base.  The family orientation is an enormous positive. Sports fandom is largely transmitted through the family and the nature of the game helps bring the next generation into the fold (summer schedule, 81 home games, relatively cheap tickets, etc…).

There is also the issue of “tanking.” Tanking has been most frequently mentioned in the context of the NBA but it’s also a concern for baseball. Losing 100 games has long been considered epic futility. In 2018, the Orioles lost 115 games, the Royals lost 104, and the White Sox lost 100. The Marlins and Tigers lost 98.  Tanking is a fan issue because it speaks to the quality of the product that fans (in certain markets) are asked to buy.

Tanking brings us to the issue of the Collective Bargaining Agreement. While the Collective Bargaining Agreement is usually discussed in terms of the labor relationship between owners and players, the CBA is a critical issue for fandom because this agreement essentially defines how the league operates. For example, the CBA largely defines the rules related to revenue sharing, luxury taxes, and salary caps. These rules directly impact fans by creating the structures that influence player movements and competitive balance.

Baseball is notable for having relatively little revenue sharing and no salary cap. Controlling the distribution of spending by teams matters because there is a significant correlation between spending and winning in baseball.   The Red Sox won the World Series and also led the league with a payroll of about $240 million. At the bottom, The White Sox had a payroll of around $80 million. Remember, the White Sox lost 100 games.

The CBA matters because teams will find strategies that work for their circumstances.  There is some speculation that small market teams like the Royals are using business models that involve developing low cost homegrown talent, trying to win for a few years and then dumping payroll to pursue draft picks. The Royals reduced payroll from $185 million in 2017 to $135 million in 2018. The Royals lost 104 games in 2018 after making the playoffs in 2014 and 2015. In 2018 the Dodgers had the 4th highest payroll at about $195 million.  But that payroll was $59 million less than the previous season’s amount.  This decline allowed the team to drop below the luxury tax threshold. Are these strategies designed to maximize fan enjoyment?

The run-up to the 2019 MLB season has also included a “glacially” slow free agent market.  Eventually, the big name stars signed with teams outside of the major markets. Manny Machado signed with the Padres for $300 million for ten years and Bryce Harper signed with the Phillies for $330 million over 13 years. “Stars” matter to fans. Fans like winners but they also like stars.  While the NBA is and has been for a long time all about stars – Larry, Magic, Michael, Kobe, LeBron, Steph…. – MLB doesn’t seem to produce household names anymore. This article states that ESPN’s annual ranking of the most famous athletes includes 13 basketball players, 2 table tennis stars and no baseball players.  This lack of “media” stars matters.  Maybe not in the short-term where winning mostly drives attendance but likely in the long-term. When I have looked at the factors that build brand equity in sports, two items really jump out. Winning championships and having a history of Hall of Famers and All Stars.

 

The Best Baseball Brands

My last statement about how brands are built is based on logic and by running numbers on fandom in MLB and other sports leagues. As we enter the 2019 season, it’s time for my annual data based look at MLB fandom across the MLB brands. This analysis starts from questions like “Who has the best fans in Major League Baseball?” and “What are the best brands in MLB?”

These are simple questions without simple answers.  What makes for a great fan or brand?  Fans that show up even when the team is losing?  Fans that are willing to pay the most?  Fans that are willing to follow a team on the road or social media?  Even after we agree on the question(s), answering it is also a challenge.  How do we adjust for the fact that one team might have gone on a miraculous run that filled the stadium?  Or perhaps another team suffered a slew of injuries?  How do we compare fan behavior in a market like New York with fans in a place like Milwaukee?  What if a team just opened a new stadium?  Did the fans stream in to see the building or to see the team?

For the past few years, I have been studying fandom across professional and college sports.  My approach to evaluating fan bases is to use data to develop statistical models of fan interest (more details here).  The key is that these models are used to determine which cities fans are more willing to spend or follow their teams after controlling for factors like market size and short-term variations in performance.

The “Overall” rankings are based on three sub-rankings – Fan Equity, Social Equity and Road Equity.  Fan Equity is a revenue premium based metric that compares the team’s box office results with league standards.  In other words, Fan Equity assesses how much fans are willing to “attend and spend” relative to fans across the league.  The KEY idea is that we measure this while controlling for team success and market characteristics like incomes and populations.

  • Fan Equity is a great metric for assessing the CURRENT level of passion or engagement in a local fan base.

Social Equity is focused on the team’s social media followings (Facebook and Twitter).  Again, the rankings are based on how a team’s social media results compare across the league after controlling for team success.

  • The Social Equity metric provides insight into the team’s POTENTIAL fan passion.

The third metric is Road Equity.  This metric is based on a statistical model that looks at how teams draw incremental fans when on the road.  The KEY idea is that draw outside of the home market reveals something about a club’s national appeal.

  • Road Equity provides a metric of passion beyond the local market. This passion can be positive (love the Cubs) or negative (hate the Yankees).

I could go on.  In the past I have developed additional metrics related to win sensitivity or price sensitivity.  Willingness to attend even when the team loses probably says something about loyalty.  Fans that don’t watch a loser might be termed bandwagon fans.  Willingness to pay is a great marketing metric.  Willingness to pay to see a team that isn’t winning is another great indication of loyalty.  These metrics are available upon request (mike [dot] lewis [at] emory [dot] edu – FYI, I don’t look at the comments) but I want to keep this article brief.

So, we have three metrics with different pluses and minuses.  In the quest to find an overall winner, I use a weighted average of the three metrics (more weight on the Fan Equity metric).  This may not be the right weighting but it’s usually a good idea to emphasize how customers actually spend.

 

The Winners

Overall, the group of clubs that comprise the Top 6 contains little in the way of surprises.  The Red Sox rank number one and are followed by the Yankees, Giants, Dodgers, Cubs and Cardinals.  The Red Sox are perennially strong and finished first last year.  They also won the world series.  Boston is probably the best sports town in America.

In general, the clubs at the top of the list share these same traits.  They are all able to motivate fans to attend and spend as they all possess great attendance numbers and relatively high prices.  More to the point, these teams are even able to draw well and command price premiums when they are not winning.  Historically, the Cubs are the best example of this.

The list of winners probably raises an issue of “large” market bias.  However, keep in mind that the methodology is designed to control for home market effects.  The method is explicitly designed to control for differences in market demographics (and team performance).  While the “winners” tend to come from the bigger and more lucrative markets, other major market teams do not fair particularly well (White Sox, A’s).  There is also a more subtle point.  The large market teams likely have the best fan bases because they often have significant histories of success and are often featured in the media.

The topic of how these brands are built over time is another one of my favorite things to talk about.  I think it’s mostly two (highly correlated) things – championships and stars. Building brand equity is a fascinating sports topic and I think it’s a difficult one for teams (in small markets) to manage.  Will the current popular strategy of cycles of tanking and competing yield enough winning and “temporary” star to build brands?

 

The Bottom

The bottom of the list features the Marlins, White Sox, Indians, Athletics and Rays.  It is interesting that the bottom also includes teams from major markets such as the Bay Area, Chicago and Miami. The markets with two teams seem to yield dramatically different results within each market. I think this reveals something fundamental about fandom.  Fan bases are communities and many fans want to be a part of the most popular group. It is a simple theory but the end result is that the second team in a market will struggle to compete. Many fans are drawn to the bigger and more dominant community – Yankees, Cubs, Giants or Dodgers rather than the Mets, White Sox, A’s or Angels.

The case of the Marlins reveals another common problem for franchises. The Marlins finish is a reflection of how the team struggles on multiple dimensions. Attendance is often in the bottom 5 of the league despite being located in a major metro area.  Pricing is also below average for MLB.  Why do the Marlins struggle?  Lots of reasons.  Florida weather, a short history (fandom is often generational), a history of small payrolls and bad teams, and Miami being a transient city.

The Indians is an interesting case as well.  Cleveland is a passionate sports town.  But when you look at the numbers there is not a lot of support. An open question is how much of the problem is the Indian’s branding? The Indians have made moves to shift from the Native American imagery but have retained the team name.  I suspect that half measures might be the worst approach.

 

The Movers

In terms of year over year comparisons, there is a good amount of stability on the list.  This is a good sign since sports brands should evolve slowly.  Some notable movers on the list were the Blue Jays and Phillies moving up and the Diamondbacks and Indians dropping down. The Blue Jays illustrate an important feature of the model. When I calculate the brand “premiums” I use the most recent three seasons. This is intended to provide stable but evolving measures of brand equity. In the case of the Blue Jays, the improvement in ranking was mostly driven by attendance growth in 2016 and 2017. In the case of the Phillies the improvement was about growing attendance coupled with relatively high prices.

 

The 2019 Complete List

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Esports Viewership and Customer Engagement

We have some exciting and important stuff happening on the sports research front. We recently announced a research partnership with the Skillshot Division of HI-REZ Studios, focused on how esports influences customer engagement. HI-REZ is the creator of video games like SMITE and PALADINS and Skillshot Media is HI-REZ’s esports production company. We are partnering with Skillshot on multiple research projects that investigate fandom and customer economics in the world of esports.

Esports might just be the most exciting category in the sports and entertainment industry. It’s already big and it is growing fast. As a quick reference point, the global video game market is estimated at about $140 billion dollars. In terms of comparisons, the movie industry does about $40 billion in box office and the NFL generates revenues of about $14 billion. This is not exactly an “apples to apples” comparison but it makes the point.  Something big is happening.

Today we are publishing the first version of a White Paper that looks at the impact of esports viewing on consumer engagement with a game. This is a great topic that has implications well beyond the world of esports and video games.  Fundamentally, the question is what happens when consumers engage with content and the community that surrounds a brand or product. Esports is a great setting for this research because the digital technologies that support online gaming make it possible to “begin” to understand the relationship between viewing esports and consumer engagement.

From a technical standpoint, the tricky thing about attributing increased customer engagement to esports viewing is that players that choose to watch might be “different” from those that do not watch. In the paper, we use player data to create very similar groups (based on extensive data on playing histories) of esports watchers and non-watchers. We have tried to keep the paper simple but we do discuss propensity score matching and logistic regression.  I hope that we have hit the right balance of technical rigor and readability. For the more technical audience, we are also working towards a standard academic paper that will feature more analyses and some additional techniques.

In terms of the findings, the bottom line is that there is a strong link between esports viewership and increased consumer engagement. Specifically, we find that viewing esports increases customer engagement in terms of playing more, playing better and spending more. What drives this result? Our conjecture is that esports provides an opportunity for community building. Players can connect with other fans over context that is often exciting and inspirational.

Much more to come…

Check out the White Paper: The SMITE Case Study

 

Links

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ACC College Football Fandom Report: The Importance of Culture

Culture and fandom are connected.  The culture of a city or a university often includes a significant sports fandom sub-culture.  Because culture itself is largely driven by the shared knowledge and interests of a population.  The Cubs and the Bears are a big part of the city of Chicago.  The Cardinals might be the most universal shared passion in the city of Saint Louis.

At the college level, many universities with big time sports refer to themselves as the “blank” nation.  I worked at the University of Florida for a few years and this place was clearly the Gator nation.  In other words, the mascot or team name essentially became the focal point for the university community.  It makes sense.  The football team provides a good chunk of the common experiences and knowledge that creates a common University of Florida culture.

Why am I talking about the SEC in an article about the ACC?  “Fandom” is interesting because it goes beyond “consumer loyalty” and becomes a cultural force.  I think the SEC is probably the best example of where football fandom drives university culture.  Maybe this doesn’t happen as much in the ACC.  In other words, maybe the ACC institutions just don’t have the same football culture as the other Power 5 leagues.  The ACC might be the inverse of the Big 12.  The Big 12 has a strong football culture but a lousy media foot print.  The ACC has great media markets but far less football culture.

The economic analysis of college football brands highlights the relative weakness of the ACC (versus other leagues).  The rankings are based on relative economic performance relative to winning rates and investment.  The analysis gets beyond fair-weather fandom and schools buying their way into winning on field.

The ACC results are “interesting” and I think revealing.  The best football brands in the ACC are Georgia Tech, NC State, Syracuse, and Florida State.  Let me say that again – the best brands.  Not the best teams.

The ACC might be best viewed in terms of where the league has potential.  Georgia Tech is a clear number 2 in Atlanta, but Tech may have more potential as a brand than the rest of the ACC.  It’s in a football mad major metro area in a football mad state.  NC State is interesting because its local competitors are elite basketball schools.  NC State could be the premier football brand in North Carolina.  Syracuse is also all about potential.  New York is a pro market.  But if there is room for a college brand then Syracuse has a lot going for it.  Florida State is, historically, probably the class of the league.  They do well in terms of revenues but they invest heavily in their program.  FSU’s investment dwarfs what Georgia Tech or NC State invests.

The next group features Virginia Tech, Louisville, UNC, Duke and Pitt.  Louisville is one of the most interesting college sports brands.  Louisville is innovative and almost seems to operate with more of a pro model (in terms of marketing).  It’s also located in an almost pro like market.  But Louisville, also lacks some of the tradition that the best football brands possess.  It will be interesting to see how the Louisville brand develops over time.

The lower part of the league includes Wake Forest, Boston College, Clemson, Miami and Virginia.  I’ll admit that I’m mystified by Clemson.  Brand equity moves slowly and there is a bit of a lag in the department of education data.  The key to building brand equity is high level success.  Clemson might be the ACC’s best hope for a premium football brand.  Or maybe Clemson is just an outlier and doesn’t charge high enough prices.  Clemson might be the one school on the list that deserves a deeper dive (but I’m not getting paid for this so…). Then there is Miami.  Over the years, I have done rankings across all the pro leagues and the college ranks. Florida teams often lag the field.  Maybe it’s the weather.  Maybe it’s the demographics.  Whatever it is, Miami just doesn’t generate the economic returns of a premier college football brand.

While I expect to take some heat for these rankings (GaTech over Clemson), the ACC illustrates how the model works.  We are evaluating brands while controlling for on-field success and investment.  This means that schools can rank high if the support they enjoy exceeds the support they might reasonably expect based on performance.

Ranking the SEC Football Fan Bases

The SEC is the dominate college football league at the moment.  Okay for the last 20-25 years.

The rankings prove the point with 5 of the top 10 teams coming from the SEC.  If we go farther down the list, the SEC has 7 of the top 12 or 9 of the top 18.  In terms of the league itself, Tennessee is the winner followed by LSU, Georgia, Auburn, Florida, Arkansas and Alabama.

The middle group of the league includes Texas AM, Ole Miss, and South Carolina.  The bottom group features Kentucky, Mississippi State, Missouri and Vanderbilt.

The best way to look at the SEC is in terms of these groupings.  Seven truly elite college football brands and a second tier that includes a very solid group of brands.

That’s all fine.  But after all these years I know what readers are thinking…  Especially readers in Alabama.

These rankings are crap!  The methodology is flawed!  You are looking at the wrong metrics.  What about applications and alumni engagement?! Professors don’t know anything about sports!  Emory should be embarrassed to have this guy on faculty!

Fair enough.

I will happily accept the statement that Alabama currently has the best college football program in the nation.  So why doesn’t Alabama lead these rankings?  One way to look at this is through a thought experiment.  What if we could transfer Alabama’s recent success to another team – What would happen?  What if Notre Dame or Texas or Tennessee had Alabama’s level of success?  How about Ole Miss or Oklahoma State?  It’s tough to say but that’s what I’m trying to get at by throwing a bunch of theory, data and statistical analysis at this topic.

I’d also like to add that there is no criticism of Alabama.  The “football” strategy might be optimal given Alabama’s position in the educational marketplace.  The football team is a great marketing asset and brings a lot of attention to the school.  Much is made of Nick Saban’s salary but if the investment was redirected away from the football program, where would it go?  Alabama has a great asset in its football brand.  It has the brand equity that comes from having a winning tradition.  And it makes sense for Alabama to use this asset.

At its core is this equity any greater than a lot of schools?  If the next coach at Alabama starts to have 7 or 6 win seasons is the passion still there?

The PAC 12 CFB Fan Rankings & Fair Weather Fandom

Sports and Weather?

Why is fandom a regional phenomenon?  I spend a lot of time analyzing fandom across leagues and cities.  I can’t help but to observe patterns (discovering patterns is actually kind of the point).  For example, if you ask me to compare the fan bases in Boston versus Tampa or Chicago versus Atlanta, I can tell you the better team brand without even knowing the sport.

Why some regions have better fan support than others, is a question for another day. Is it about team histories?  I’m sympathetic to this idea as I do believe that sports brands are built on a generational time frame?  Is it the demographics?  Maybe. I don’t want to touch the racial angle but we know that a city full of transplants is likely to have less intense fandom.  How about the weather?   Does Florida or Southern California weather deter fandom?  It probably doesn’t help. It’s the why go to the game when you can go to the beach explanation.  Fair weather fandom is more prevalent when the weather is, well, fair.

It is a tough problem because all of these factors matter.  And these factors probably interact (having a short history and nice weather is probably a double whammy).

The PAC 12 is the league that makes sense if it’s about the weather.  We have Oregon at the top followed by Washington, Utah, Washington State and Oregon State.  This seems to be the colder half of the league.  It might not be the best known of the football programs but it seems to be the best customer bases.

Oregon is interesting because it’s mostly known for innovative uniforms and Phil Knight.  Sort of classic branding.  Also some (relatively) recent success despite a few tough recent years.  It’s interesting because sports brands are usually built based on long-term success.  Washington is a solid program across the board.  The next three teams’ programs suggest that the league is a bit skewed.  It appears that the programs with the most potential tend to be the least prominent.

At the other end of the scale we have Colorado, Arizona, Arizona State, USC and UCLA as the bottom 5.  These schools are also located in the most appealing tourist destinations in the conference.

USC is the head turner.  An amazing tradition.  Championships and Heisman trophies.  But when you crunch the numbers the fans don’t show up like they do at places like Ohio State, Alabama and Texas.