ESPN.com – B1G numbers: Building the brand

ESPN.com – B1G numbers: Building the brand

“Locally, the support is still there; people are still paying to go watch the team,” Tripathi said, “but on a national level, there has been a bit of a hit on the brand. That’s manifesting in the decline in sales of merchandise.”

Note: Professor Lewis’ wishes that this Kris Kross endorsement from the 90s would have had a bigger impact on the Illini brand:Flying Illini

Twitter Analysis: Who Really Talks About Their Rivals?

It’s rivalry week, and while there is much debate about the best rivalry in college football, it is generally agreed that the Iron Bowl (Auburn versus Alabama) and Ohio State versus Michigan are two of the top rivalry games in college football.  While both sides in these rivalries seem to hate each other, we were curious to determine if the level of vitriol was even or more one-sided in these two storied matchups.  What we found was interesting:  1) discussion around Michigan football seems to encompass A LOT more of the general conversation in Columbus than discussion of Buckeye football in Ann Arbor and 2) after accounting for where the game is being played, the relative level of discussion about the rival school is fairly even in Auburn and Tuscaloosa.

Similar to previous studies, we used geo-coded data from Twitter to serve as a proxy for fan conversation.  We collected all Twitter conversation in Ann Arbor, Columbus, Auburn, and Tuscaloosa for the Monday before the rivalry game in 2010, 2011, 2012, and 2013.  We then calculated the percentage of tweets in that city that were about the opposing school’s football team (“Rival Team Share of Twitter Voice”).   Thus, we had a metric for how much of the conversation in a city was about the rival team.  It is interesting to note that we also determined the average sentiment for tweets in a city that were about the rival football team.  The average sentiment was very negative, but similar across years and cities (translation:  the toxicity of the comments about rivals is the same whether you are in Columbus, Ann Arbor, Auburn, or Tuscaloosa).

We would expect that a rivalry where both local fan bases hated (or were obsessed with) each other at a similar level would have relatively similar “Rival Team Share of Twitter Voice”.  However, we found that in the past four years, regardless of where the game is played, or who won the previous year, the percentage of conversation in Columbus regarding Michigan Football is at least twice the percentage of conversation in Ann Arbor regarding Ohio State football.  Thus, there seems to be a bit of an asymmetric rivalry here with respect to how much one of local fan bases spends its time talking about their rival.  It should be noted that 7% of the population of Columbus are Ohio State students (57,466 out of  809,798) while 37% of the population of Ann Arbor are Michigan students (43,426 out of 116,121).

The Auburn-Alabama rivalry seems to be more even with respect to the level of conversation regarding one’s rivals.  We found that the site of the game seems to change the direction of the ratio of the “Rival Team Share of Twitter Voice”.  If the game is in Tuscaloosa, then local Alabama fans spend more of their time talking about Auburn football than local Auburn fans spend discussing Alabama football.  If the game is in Auburn, then that trend is reversed.  Perhaps the Iron Bowl being played in their hometown adds some more desire to trash talk for the local fans.  It should be noted that 45% of the population of Auburn are Auburn students (25,469 out of 56,908) while 37% of the population of Tuscaloosa are Alabama students (34,852 out of 93,357).

Mike Lewis & Manish Tripathi, Emory University 2013.

Ranking the “Best” Football Fans in the Big 10: Buckeyes are on Top!

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 conference, the Big 10 finished second only to the SEC in overall football brand equity.  The conference added Nebraska in 2011, and will add Maryland and Rutgers in 2014.  The Big Ten has been very successful at creating a network that capitalizes on the appeal of its members.  This fan appeal is also manifested in the top three schools in our rankings; all three schools have football stadiums with capacities over 100,000, and are regularly sold out.

The Ohio State University finished in first place in our ranking of Big 10 fan bases.  In the ten year period of our study, the Buckeyes averaged 2.5 more wins per season than Penn State and Michigan, but also generated 20% more revenue.  Remarkably, Ohio State made this revenue with fewer fans in attendance, on average, than Penn State or Michigan.

Penn State very narrowly edged out Michigan for second place in our study.  Over the course of the study, Penn State and Michigan averaged almost the same number of wins (Michigan had more) and football revenue per year.  However, Penn State’s second place ranking may be short-lived.  The last couple of years have seen a decline in attendance.  This may, of course, in part be due to the recent scandal and sanctions at Penn State.

Indiana and Northwestern are at the bottom of the Big 10 fan base rankings.  Indiana seems to suffer from the same issue faced by Kansas or Duke.  That is, how do you build football brand equity in a “basketball school”?  Northwestern is an interesting case.  A comparison with in-state “rival” Illinois (ranked 8th) is quite revealing.  In the period our study, Northwestern averaged 1-2 more wins per season than Illinois.  However, Illinois average 88% of capacity attendance, while Northwestern averaged 62%.  Illinois also produced 30% more football revenue than the Wildcats.

Michael Lewis & Manish Tripathi, Emory University 2013.

PREVIOUS: RANKING THE BIG 12

NEXT: RANKING THE PAC 12

 

Ranking the “Best” Fan Bases in College Football

Over the next week or so, we will be publishing analyses of the “best” fan bases in college football.  Our plan is to go conference by conference, and talk about which teams have the most loyal fans.  Our approach is data and statistically driven, as we will be looking at how fans support their teams after controlling for how well the team performs.  The series will conclude with an overall ranking of teams.

Before we get to the team rankings we wanted to start with an analysis of conferences.  Beyond regional pride, our conference rankings are related to the topic of conference realignment.  Conferences are the sum of their parts with some added bonus due to the synergies the overall group creates.  Our fan equity analyses therefore provide a means for anticipating how new or changed conferences will compare with each other.

For those that have previously seen our other brand equity analyses, we should note that our conference-level analysis takes a slightly different approach.  For the fan analyses, we build a statistical model that predicts team revenues as a function of metrics related to team performance such as winning percentage and bowl participation.  We then compare actual revenues to what is predicted based purely on team performance (and other factors such as number of students, capacity, etc…).  Click here for an explanation of why we use this “revenue premium” approach to brand equity measurement.

For the conference analysis, we take a similar, but more financially oriented approach.  This analysis also begins with a statistical model of team revenues, but now the explanatory variables primarily involve team expenditures.  Team-level brand equity is then taken as the difference between actual revenues and revenues predicted based on expenditures.  The logic of this approach is that teams with more powerful brands should be able to more efficiently increase revenues.  As an example, imagine a comparison between the University of Notre Dame and perhaps Rutgers.  If these teams spent the same amount in a given year, we would still expect Notre Dame to have significantly greater revenues simply because ND has such a large and loyal following.

We rely on this ROI (Return on Investment) oriented measure for the conference ranking because we have a significant interest in conference realignment.  In this era of realignment, it seems obvious that conference membership decisions are almost entirely driven by financial considerations. In other words, while we feel that fan support should be measured relative to team performance, when it comes to conferences we believe that schools should be evaluated based on ROI.

Finally on to the rankings…

In an altogether unsurprising result, the SEC is ranked number one, followed by the Big Ten in the second position.  The SEC ranking is notable in that while we all know that the SEC has dominated on the field; our results also suggest that the conference schools are extremely efficient in translating the intensity of fans into dollars.  On the realignment front, it seems certain that Missouri and Texas A&M were largely driven by the financial attractiveness of the conference.  It remains to be seen if these schools have traded cash for also-ran status.

In second place, we have the Big Ten Conference.  The Big Ten is in many ways a leader in the space, as they have been successful in creating a network that leverages the appeal of its members.  The Big Ten has also been notable in its efforts to attract teams that expand the conference’s access to media markets.

In a distant third place we have the Big 12.  The Big 12 is interesting in that it has, and had, several very well-known brands such as Texas, Oklahoma and Nebraska.  Of course, the Big 12 has also been the major conference that has seen the most attrition as Missouri, Nebraska, Colorado, and Texas A&M have all moved to seemingly greener pastures.  Despite this attrition, the conference does well in our rankings, and out-performs two of the other Big 5 conferences.  The big question for the Big 12 is whether it will be sustainable in the long-term.  The Big 12 has two key weaknesses.  First, it’s unclear if it covers enough major markets to successfully develop a media strategy that will allow the conference schools to be competitive with other better-located conferences.  The second issue is that the Big 12 is very top heavy.  Texas is the obvious (financial) jewel of the league.  Will Texas share or will the Longhorns go their own way?

In fourth place, we have the PAC 12.  The PAC 12 is promising case in that it seems to be well positioned for the future.  In terms of teams, it contains both historical powers like USC and up and coming teams like Oregon.  The conference also covers major media markets, but its west coast time zone may be a limitation.

Perhaps the biggest surprise in our analysis was that the new American Athletic Conference (AAC) ranked higher than the ACC.  This is a non-intuitive finding as we expected that historically successful programs such as Florida State and Miami would lead the ACC past an AAC led by Louisville and Cincinnati.  The reason for this result is actually quite simple.  The ACC schools have invested in football at about the same level as the Big 12 and PAC 12 schools, but with lower resulting revenues.

NEXT: RANKING THE NON-BCS CONFERENCE SCHOOLS

Mike Lewis & Manish Tripathi, Emory University, 2013.

Native American Mascots Part II: Deconstructing the use of the “Chief” as a Marketing tool

Of all of our posts on the Emory Sports Marketing Analytics website, we have been most surprised by the reaction to our work on Native American Mascots.  We have gotten a good deal of feedback regarding the use of Native American mascots by professional franchises in general, and the Washington Redskins in particular.  We have wanted to revisit the issue to make a couple of additional points.  A recent “minor” controversy regarding a group of University of Illinois’ football team members dressing in headdresses provides an opportunity to revisit the topic.

In 2008, the University of Illinois bowed to pressure and retired its long time mascot who was known as “Chief Illiniwek”.  This decision was, of course, a controversial one.  A vocal group of alumni has been very clear in their dissatisfaction and efforts to reinstate the Chief continue.  This latest incident involving “Chief” related imagery was a recent charity “strongman” event during which multiple Illinois football players donned headdresses and war paint.  Given our earlier material on the economic value of “Indian Mascots” we decided to spend some time deconstructing this story.

First, it is important to note that the event was run by a group of players rather than the university.  This is important because I suspect that the issue of Native American mascots is not a significant issue to players in their late teens or early twenties.  I also suspect that these players view a lot of what has occurred with the Chief as political correctness gone wild.  So from the players side, and this is really just my speculation about the players motives, the use of Indian imagery has two main benefits.  First, they realize that using Chief-like symbolism will give the event a higher profile.  Second, it is a somewhat rebellious decision to use these images.  From the players perspective this is likely a win-win proposition.

From a marketing perspective, there are some interesting issues at play.  There still exists a sizable group of alumni that are very pro Chief.  For these fans, the Native American imagery is very much appreciated.  These fans are likely to be extremely vocal in terms of their opinion.  However, I think we need to be careful with how much importance we place on this vocal segment.  Our earlier analysis of mascot economics suggested that replacing Native American mascots has a negligible impact on revenues.  Our results mean that, despite what this segment says, when it comes to attending games and spending money there is little impact.  Of course, we can’t say whether the pro Indian mascot fans fail to follow through on their threats, or if these fans are replaced by other fans that previously stayed away because of the mascot.

One objection to our results was that the University of Illinois fundraisers have noted increased difficulty in raising funds since the Chief was retired.  And while we don’t doubt that fundraisers hear the retirement of the Chief as an excuse, I do know that all university fundraising has become more difficult since the economic slide of 2008, and I feel very confident in stating that if the football and basketball programs had not imploded at Illinois, that the “Chief” issue would be heard less frequently.

Thus far, I am not placing any blame on the student athletes, and I am suggesting that the use of Chief like symbolism can have a positive marketing impact.  So what is the issue?  While it isn’t an issue that can be addressed using data it is useful to consider why Native American mascots are important to fans and why they create anger or sadness in groups that want to see these mascots eliminated.  I would conjecture that in the case of fans, these mascots are associated with instances of team success or to memories of past enjoyment of games.  In the case of the University of Illinois it is the alumni and local community members that continue to lobby for the Chief.  I believe that they are fighting for an image or symbol that brings back happy memoires of their time on campus.  In the case of the Redskins, when fans think back to happy memories of watching games with friends, tailgating or championships these memories could be linked to the team name.  It’s not too far away from the old Seinfeld bit about how fans are really rooting for “the clothes.”  It’s not that fans care about the clothes; it is that the clothes trigger associations that bring happiness.  The relevant question is that if the team mascot is changed, will fans no longer have these memories?

For anti-mascot foes, I think the concerns move in the opposite direction.  By and large these anti-mascot advocates are concerned about how Native Americans are viewed by other segments of the population.  In this case the use of a Native American Mascot, and particularly a slur like Redskins, it is viewed as dangerous because they feel it associates a real population of people with a negative image.  This is important because it means that the anti-mascot forces are largely concerned about these mascots having a negative effect on current and future Native Americans while the pro mascot forces are mainly focused on preserving an element of their memories.

So where does this leave the University of Illinois or the Washington Redskins? For Illinois, the problem is that this mini-controversy results in an embarrassing and predictable course of events for the football team, and therefore the school.  Coach Beckman has promised to speak to the team about the issue and has stated “When dealing with the Chief and things involved in this program, in this university, we need to make sure we understand everything that’s involved in that. When making decisions on this, we need to make sure we’re making it in a way that’s right for the university. Everything we do, we do for the university.”

This puts Beckman in a no win situation.  He is placed squarely between the pro- and anti-chief segments.  He is either an insensitive, out of touch middle aged Caucasian male; or he lacks a backbone and he is just giving in to political correctness.  I have sympathy for Coach Backman and Chancellor Wise on these issues. Not because this is a difficult decision in that they are, guaranteed to offend a segment of the Illini nation with any decision, but because of the pointlessness of the discussion.  We just don’t have any evidence that it is worthwhile for Universities to fight this battle.  Retaining a Native American mascot seems to offend a portion of the community without providing any real benefits.

For the Redskins, our guess is that a change will eventually need to done and it is just a matter of when.  The tides are only moving in one direction as no new professional franchises have selected Native American mascots and college programs are moving away from these mascots as well.  It probably is a matter of whether the Washington NFL franchise wants to get ahead of the issue or if they want to have changed forced on them.

Basketball Conference Realignment: Winners and Losers

College sports are changing rapidly.  From the soon to be instituted college football playoff to the potential changes the Ed O’Bannon lawsuit forces on schools, we are clearly in a time of change.  The subject of today’s post is another example of these changes, as our focus is on conference realignment.  The cynic, who in this case would be correct, would say that the realignment activity of the past few years has been driven by money.  It has been the quest for new television markets (Rutgers to the Big Ten) and powerful brands (Nebraska, also to the Big Ten) that has led some conferences to grow, and for many teams to make moves.

The topic of realignment is top of mind today because it is the first day of the American Athletic Conference.  This new AAC is largely comprised of refugees from the Big East and Conference USA.  Today’s analysis looks at how the shuffling across conferences has increased the overall brand equity of each league.  For this analysis we use the results of our previous college basketball brand equity analysis.  The one significant change is that for this analysis we do not separate out the conference effects when computing team-level brand equity.  Each league’s rank is then the sum of its teams. We perform the analysis for both 2012 and 2014.

The analysis yields some expected and surprising results.  The Big Ten leads the way both in 2012 and 2014, with the ACC following behind in both years.  However, while the Big Ten has a large lead in cumulative brand equity in 2012, the gap is almost negligible in 2014 (In terms of percentages the brand equity of the ACC basketball programs was 81.7% of the Big Ten’s in 2012, but with the changes scheduled to occur, the ACC will have 97.2% of the Big Ten’s equity in 2014).

Of course, the most interesting part of the table concerns the new Big East (Catholic 7) and the new American Athletic Conference.   The Big East drops from being the 3rd ranked conference to being the 6th best conference in 2014.  However, it should be noted that this drop is primarily due to the reduction in the league size. In terms of average equity the remaining Big East schools still have the 3rd highest average score.

For the new American Athletic Conference the story is not very hopeful.  The new American Athletic Conference is projected to rank 9th behind the power 5 conferences, the Big East, the Mountain West and the Atlantic Ten.  This was a somewhat surprising finding given that the American Athletic Conference will still contain schools like Cincinnati, Memphis, and UCONN.  But the numbers suggest that Dayton, UNLV and New Mexico have sufficient fan equity to move their leagues past the American Athletic Conference.

The other big story is the positions of the PAC 12 and the Big Twelve.  In 2012, the Big Twelve had a 22% advantage in terms of brand equity, but we forecast that in 2014 it will trail the PAC 12 by 7%.  These types of changes are important as there is a bit of a game that occurs within conferences.  Schools in weaker conferences are likely to have a greater incentive to jump to stronger leagues because they fear being left in a dying league without great options.  The Big Twelve has recently lost Colorado, Texas A&M and Missouri.  If Texas were to leave, the conference would likely disintegrate.

We would also like to make a couple of notes regarding some assumptions implicit in the model.  Our use of revenue premium based brand equity as of 2012 means that each school’s brand equity can be viewed as partially a product of their affiliation in that year.  This is important if a league’s value is more than just the sum of its teams.  For example, the Big Ten pursued Rutgers largely to secure entry into the NY television market.  The logic behind this move would seem to be an assumption that competition with Big Ten teams will improve Rutgers’ attractiveness within the market.  Our analyses do not (as of now) include this type of potential synergy.  The new ACC has at least partially adopted a television based strategy as the members are widely distributed across the nation.  The hope has to be that this cross country coverage creates synergies that simultaneously create interest in the teams and the league.  However, given the current lack of brand equity and the aggressiveness of stronger leagues to form lucrative television networks, this will be a tough haul.

 

Purdue & Illinois Best at Converting Talent into NBA Draft Picks: Ranking the Big 10

We spend a lot of time on the site talking about statistical models.  Statistical models are great for identifying trends and relationships between variables when we have a significant amount of data.  Models are also useful for moving us beyond arguments based on examples and anecdotes.  We think this is particularly important when discussing sports.  Every guy in every bar has a theory that they can support with an example.

In our current series on college basketball programs’ abilities to convert recruits into NBA draft picks, we have decided to start with summary data for each school.  We plan on concluding the series with a statistical model that predicts the likelihood of a player being drafted based on the player’s recruiting ranking, the school’s investment in the program, the rankings of the player’s teammates and other factors. We decided to start with the summary efficiency rankings simply because these rankings are more accessible to fans and tend to generate more conversation.

I wanted to use today’s rankings of the Big Ten schools as an excuse to delve into a specific comparison between two schools.  I have two reasons for this.  The first is that looking at the data for a couple of schools will highlight why our statistical model gives the results it does.  The other reason is that I (Lewis) want to provide some recruiting material for my Illini.

The chart below lists our efficiency rankings for the Big Ten.  At the top, we have two solid programs in Purdue and Illinois.  These two are followed by the recent and traditional powers: Ohio State, Indiana and Michigan State.  While Ohio State has the most draft picks, they also had the greatest recruiting success with players like Greg Oden, Mike Conley, BJ Mullens, and Jared Sullenger coming through Columbus in the last decade.

(For more details about the methodology, click here)

Now back to my second motive.  As an aside, I thought about titling this piece “Why Jabari Parker, Cliff Alexander and Jahlil Okafor Don’t Need to Travel Far from Home.”  In our rankings of the ACC, the Duke Blue Devils finished in the middle of the pack.  What I’d like to do (and I know this is self-indulgent) is to compare the Illini with Duke.  In the table below I give the rankings of members of Duke’s and Illinois’ recruiting classes from 2001 to 2002 (I collected these by hand so please excuse any omissions).

Over the relevant drafts, Duke had 11 players selected compared to 4 for Illinois.  While this may seem to be a reason for a student athlete to choose Duke, when we look at the input, things are much less clear.  From 2002 to 2010 Illinois had 1 top twenty recruit.  In contrast, Duke had 13.  If we look at top thirty recruits, Illinois still had 1 while Duke had 15.

I think the explanation for these results is pretty simple.  When an athlete chooses a school in a power conference, but without a roster loaded with McDonald’s All-Americans, that athlete has more chances to see the floor, and even when on the floor the athlete has a better chance to be the focal point for the offense.  Going all the way back to 2002, Dee Brown was a featured star at Illinois while the similarly rated Sean Dockery was a role player for Duke.  Another highly rated player from Illinois Michael Thompson ended up transferring from Duke to Northwestern.  And while some attrition is natural, it is interesting that Thompson was rated higher (30th) than every single Illinois recruit in the period from 2002 to 2010.

So what is the take away?  In terms of the preceding comparison, it is that what the glitz and glamour of playing at a high profile school is attractive, the high profile nature of a Duke is likely meaningless when it comes to getting to the next level.  In fact, the tendency of very highly rated players to choose schools like Duke means that the player’s chances of making the pros might actually be a bit less at a Duke than an Illinois.

But, as noted, the comparison of Duke and Illinois is anecdotal.  What we really need to reach the preceding conclusions is more data.  My comparison of Illinois and Duke is mainly intended to foreshadow the statistical analysis we will provide next week.  This analysis is designed to tease out the effects of player quality, within roster competition, school investment and on-court success on player development.

PREVIOUS POST: RANKING THE ACC

NEXT POST: RANKING THE PAC-12

How Would Paying Players Change College Sports: O’Bannon vs the NCAA (Part 4)

In our series on the O’Bannon case and the associated issue of paying college athletes, we have focused on the value that athletes and universities provide to each other.  Another perspective that should be considered is how a shift to paying players might impact fans.  This is a tough issue to contemplate given that the ultimate impact on fans or customers would be a function of the specific system used to compensate athletes.

Our view is that the fan’s perspective should be considered in terms of how paying players would affect competitive balance levels across a mix of very different schools.  Perhaps the most frequent source of concern about competitive balance has been the New York Yankees in professional baseball.  The fear has always been that that large market teams like the Yankees will use their greater revenue bases to attract all the top talent, so that teams in small markets such as Kansas City or Milwaukee will be unable to field competitive teams.  The opening day payroll of the Yankees this year was $228 million while the Houston Astros lagged the field with a payroll of just $22 million.  However, concerns about competitive balance in MLB have faded in recent years as the teams such as the St. Louis Cardinals, Tampa Bay Rays, Colorado Rockies, and the Detroit Tigers have played in the World Series.  Notably, all major US professional leagues have adopted some form of revenue sharing or payroll constraints in order to maintain competitive balance and team profitability.

College sports have their own issues with competitive balance. The University of Texas athletic program is a $150+ million business while the 50th ranked (in terms of revenues) Northwestern program produced only $56 million.  This allows Texas to pay its football coach more than $5 million per year.  Some revenue sharing already occurs but it is at the conference level.  It must be noted that Northwestern’s spot in the top fifty is largely due to its membership in the Big Ten Conference (it has been reported that the Big Ten Network distributes more than $20 million per school).  Whether or not college sports operate with an acceptable level of balance (The SEC has won the last seven BCS Championships) is debatable, but the prohibition against paying athletes can be viewed as an incredibly rigid salary cap.  Paying players means that some other structure for maintaining competitive balance would be needed.

To a large degree, the conference structure of college sports increases the complexity of coming up with solutions for maintaining competitive balance.  Currently, conferences operate with extensive revenue sharing agreements.  But an extension to sharing revenue with non-members would require a paradigm shift.  In addition, Title IX regulations that strive to equalize expenditures on men’s and women’s sports are another source of complexity.  This means that revenue sharing is implicitly required within institutions.  If college football players receive salaries does that mean that women golfers would also need to be compensated?

All this is fine, but the question remains as to how big time college sports would evolve if college players could be paid and how might these changes affect the fans?  While considering the impact on the fans may seem a bit tangential, at the end of the day it is the fans that are the ultimate source of revenues and profits associated with college athletics. We, at Emory Sports Marketing Analytics view the entire situation as driven by marketing considerations.

The O’Bannon case began with a complaint about the embargo against athletes profiting from their own images.  A relatively minor change might allow athletes to market their own images to the highest bidders while still preventing direct compensation from colleges to players.  We would expect that such a change would have significant effects on recruiting, with the end result being an even greater concentration of elite recruits at high brand equity schools.  As high school athletes begin to make their college decision based on their personal brands, we expect that we would see many situations that are analogous to LeBron James’ decision to move to the high profile Miami market.  The potential would also exist for schools to gain recruiting advantages by more aggressively marketing their individual athletes.  While, we could argue that the situation described above already exists (e.g. Kentucky basketball) we expect that the trend would accelerate.   The preceding scenario would likely lead to a “rich getting richer” scenario.  The open question would be whether this increase in the advantages of more marketable schools would create dangerous levels of imbalance.

Allowing players to sign licensing deals would also mean that players would be able to sign with agents while still in school, since they would need representation when negotiating with video game, clothing and shoe companies.  Undoubtedly, shoe companies in particular would become even more powerful players in college basketball.  Shoe companies already sponsor AAU and college teams, and it’s not farfetched to imagine a scenario where a player such as Andrew Wiggins’ college choice would be made by a team of agents and other representatives working in conjunction with shoe companies.  A further question would then arise as to what schools could promise athletes in terms of marketing support?  Would high profile athletes insist on being featured on billboards or in other marketing communications?

A more extreme, and perhaps fairer, solution would be to allow athletes to participate in a free market system where they could sell their services to the highest bidder.  We say “fairer” since the college sports marketplace already includes many examples of coaches and athletic directors becoming extremely wealthy.

Moving to a totally free market would be a tremendously interesting experiment.  Just as in MLB, the college sports landscape is composed of schools that vary greatly in terms of market potential and current popularity.  Texas, Florida, Notre Dame, Ohio State and others have resources that would enable them to greatly outspend even other members of the power conferences.  Imagine a scenario where the power schools can outspend other institutions by a significant multiple.  We would also ask the question of what would happen to transfer rules.  How could the NCAA prohibit transfers or require athletes to sit a year when such a regulation would harm players earning capacities?  Would colleges need to negotiate compensation and contract length with prospective student athletes?  The real danger in moving to a free market system is that suddenly many schools would be entering a world of significant financial risk, where previously profitability was almost guaranteed (for examples of this look at the investments in programs made by Big Ten schools such as Northwestern and Illinois).

If our conjectures are true, a move to a free market could well have a negative effect on the capacity of the industry (and therefore on consumer welfare – which is a common consideration in anti-trust cases).  We expect that many schools would need to take a step back from competing at the highest level, unless some system of revenue sharing was put in place.  The challenge would be in creating a revenue sharing or salary cap system across a variety of conferences.  If anyone doubts the challenge this would involve, just consider the case of creating a college football playoff system.  For the last twenty years we have seen the College Bowl Coalition, The Bowl Alliance and multiple versions of the BCS.  Our guess is that this would lead to a system of four or so “super conferences”.  And even within these conferences we might evolve to a Harlem Globetrotters versus the Washington Generals model where perennial winners like Ohio State and Florida finance perennial losers like Illinois and Vanderbilt, so that they have someone to play.

In sum, our speculation is that any move towards paying players would essentially greatly reduce the incentives of many schools to play sports at the highest levels. Opportunities to leverage a school’s brand equity would shift the competitive balance while paying players directly would greatly increase school’s financial risks.  Absent strong revenue sharing mechanisms and some type of salary cap (would college players need belong to a union?) we would guess that a significant set of schools would move to lower levels of competition.  This would limit both consumer choice and, ironically, the choices of prospective student athletes.

Mike Lewis & Manish Tripathi, Emory University, 2013.

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

2013 NFL Draft Recap Part 3: ILL-INI and Badgers in the Big 10

The 2013 NFL Draft has concluded, and we would like to offer our thoughts on the ability of conferences and schools to turn high school talent into NFL Draft Picks.  We continue our team-level discussion with an analysis of the Big Ten.  (Our next conference will be the ACC, follow us @sportsmktprof for updates)

To reiterate from our previous post, this is only an analysis of the 2013 NFL Draft.  We are examining how many picks were produced by each school, relative to their recruiting classes over the relevant corresponding period for the 2013 Draft.  As with any analysis based on essentially a single data point it’s important to remember that these results are more anecdotal than conclusive.  That said, the 2013 draft does produce results that are largely consistent with our multiyear statistical study of recruit conversion.

Winners: The winners of the 2013 draft include Illinois, Wisconsin, Purdue and Michigan State.  This is an interesting mix of schools in that it includes two teams that tend to struggle on the field (but dammit Zook could identify talent!) and two teams that are often near the top of the Big Ten standings.  Wisconsin in particular seems to excel at turning out pros.

Middle of the Pack: The next group includes several historical powers.  Ohio State is an interesting case.  While the Buckeyes went undefeated, they actually had one less draft pick than Illinois (did we mention that Zook could identify talent)..

Losers: The “losers” category also included an interesting mix of schools.  Perennial power Michigan is in this category, but we also see schools that tend to recruit at a lower level such as Indiana.

By Mike Lewis & Manish Tripathi, Emory University 2013

Methodology for the study explained here.