2014 NBA Fan Quality Part 1: Fan & Social Equity

Note: This summer we are studying the fan quality of various sports leagues.  We have already examined MLB, NHL, and College Basketball.

This week we turn our attention to analyses of the NBA fan bases.  Today, we start with our signature “Fan Equity” analysis that is based on a revenue-premium measure of brand equity.  We also include a ranking based on our “Social Media Equity” metric.  The Fan Equity measure is our gold standard because it reflects what fans are willing to spend after controlling for team performance and market potential.  In general terms, marketers are almost always better off assessing customers based on how they spend their money rather than what they say.  However, no metric is perfect, and our Fan Equity measure can definitely be criticized.  Our Social Media Equity measure, while only based on a couple of years of data, is a useful supplement to the Fan Equity measure.  The Social Media analysis allows for fans from outside the market to be counted in a team’s equity score; the social media equity measure is not constrained by capacity limitations, and team pricing strategies less influence the measure.

2014 NBA FAN EQUITYFan Equity

The winners in our 2014 Fan equity rankings are fairly consistent with the conventional wisdom.  We rank the Knicks 1st, the Lakers 2nd, the Celtics 3rd, the Bulls 4th and the Heat 5th.  The Knicks finish is largely driven by their exceptional pricing power.  The Knicks sell out while charging the highest prices in the league.  The Lakers are second in terms of pricing, and also do very well in terms of attendance.  This is indicative of exceptional fan loyalty, given that the Lakers won only 33% of their games last year.  Miami is perhaps the most intriguing team on the list.  Future years will reveal how much “Fan Equity” is owned by the Heat, and how much was temporarily contributed by LeBron James.

The next few teams on the list are where things get especially interesting.  Portland finished 6th on the list.  This finish continues to provide support for the notion that Portland is an extraordinary sports town for a small market team.  While market size is important in terms of TV deals, when leagues consider expansion Portland should not be neglected.  Cleveland’s finish is also notable.  While Cleveland has suffered in recent years, there does appear to be a solid base of support.  With great young talent and LeBron returning, this should be an fascinating story to watch.  Of course, on the downside, Cleveland fans are likely to find their loyalty rewarded with higher prices.

At the bottom of the list, we DON’T have the Atlanta Hawks!  The Memphis Grizzlies are second from the bottom.  Memphis simply doesn’t generate the revenues that they should for a team of their quality.  At the very bottom, we have the Nets.  Yes, they are in New York, and even more so in the hipster paradise of Brooklyn.  They draw and play well.  So, what is the problem?  When you compare the Nets fan support to that of other big market teams like the Knicks, Bulls and Lakers, the Nets just don’t have the pricing and drawing power that they should.

Please note that we develop our revenue forecasting models using thirteen years of data, but only use the last three years to rank Fan Equity.  We limit the Fan equity rankings to three years because while fan loyalty and brand equity are enduring, they do change over time (this is also why we don’t simply estimate fixed effects).

Social Media Equity

As we have previously noted, Social Media Equity has some advantages (and disadvantages) relative to our Fan Equity measure.  The big difference is that the social media metric isn’t constraint by prices, capacities and travel distances.  Maybe the biggest disadvantage is that we only have limited data for these calculations.  In the table below, we provide our Social Media Equity rankings, and also a ranking for the year-over-year growth rates.

2014 NBA SOCIAL EQUITY

The top teams in terms of social media equity very similar to the Fan Equity rankings.  The Lakers are 1st followed by the Bulls, Heat and Celtics.  In 5th place, however, we have the Rockets.  These rankings again show the extreme strength of the Lakers and Bulls.  The Miami results should again come with an asterisk due to the LeBron James effect.  The Rockets results suggest hope for the future.  Social media users tend to be younger and less affluent, so perhaps the Social Equity measure is more of a leading indicator of where a fan base is going.  Of the top teams, the Lakers and Bulls are at the top and growing while Celtics and Rockets show slowing growth.

The bottom of the list includes the Pistons, Grizzlies, Knicks, Raptors, and again in last place, the Nets.  The Knicks are the most interesting story.  While this team draws and extracts maximum prices, they may be falling behind with younger fans.  However, playing in Manhattan, we seriously doubt that this team will ever struggle with fans.

In our next post, we will examine the sensitivity of attendance (demand) to price and winning.

Mike Lewis & Manish Tripathi, Emory University 2014.

2014 College Basketball Fan Equity Rankings

As we publish our ranking of college basketball fan base support across the “power” conferences (AAC, ACC, Big 12, Big 10, Big East, SEC, & PAC 12), we can already hear the abuse we are about to take on Twitter and through the media.  Our rankings are based on a statistical analysis of self-reported revenue data.  We create a statistical model of revenue as a function of team quality (winning percentage, NCAA tournament qualification, etc…) and market potential (conference affiliation, median income, area population, number of students, etc…) and then compare the model’s prediction to the self-reported revenues.  Yes, we get that this self-reported revenue data can be a bit quirky, but it’s what the schools choose to report.

The key point in the analysis is that we are looking at support after controlling for team quality.  Some of our critics seem to think that selling out a 16,000 seat arena when your team regularly wins 30 plus games and makes deep tournament runs is amazing support.  Reality check: pretty much any major school would be able to sell out under these conditions.

Our overall top 15 schools are listed in the table below.  Louisville repeats last year’s 1st place finish.  The rest of the top five are Duke, Arizona, Texas and Xavier.  Other notables include Kentucky in 7th, North Carolina in 11th and Indiana in 12thWe fully realize that Kentucky fans will once again be incensed by these rankings. 

2014 CBB Fan Equity

Strictly speaking, the fan equity rankings are probably most appropriately done within each conference due to conference revenue sharing, but it seemed like more fun to do a simple list of the top schools.  At the other end of the spectrum, we have the bottom finishers in each conference (based on conference affiliation in 2013-2014).  In the ACC, the data says that the worst fan base is Boston College.  In the Big Ten, Iowa is in the cellar.  The last place fan base in the Big Twelve is Baylor.  Seton Hall just beats out DePaul for last place in the Big East.  Colorado is last in the Pac 12.  In a surprise, given their recent success, it appears that Florida basketball still ranks after football and spring football as sports that the Gator nation cares about.  And finally, at the bottom of the AAC we have the Cincinnati Bearcats.

For more on the concept of fan equity, please click here and here.  For our ranking of the “non-power” conferences, please click here.

Mike Lewis & Manish Tripathi, Emory University 2014.

2014 College Basketball Fan Equity: Introduction and “Non-Power” Rankings

When we evaluate college sports fan bases, we find ourselves in an altered environment from the professional leagues.  There are differences in data availability (both good and bad) and differences in structure of the leagues that must be considered.

In the case of data, for example, we do not have sources for ticket prices, and team payroll is not relevant (as of now).  However, on the plus side, we have self-reported revenue for each sport (and yes, we know that schools employ different accounting rules).

The other major issue is that of league structure.  While Division I college basketball operates as a singular entity for the purposes of championships, revenue sharing for basketball and football occurs at the level of the conferences.  This makes it a bit tricky to compare schools across conferences since a bottom tier school in a power conference starts out with significant revenue, while a non-power conference school has to earn their own keep.  For example, if we don’t adjust for conference membership, Northwestern ranks as a top five fan equity team simply because their Big Ten shared revenues are by themselves a phenomenal haul for a team of Northwestern’s quality.

Because of this conference issue, we prefer to report our fan equity rankings at the conference level rather than a single ranking for all D-1 teams.  Today we begin with the “non-power” conference teams.  For the purposes of college basketball, we are identifying the “power” conferences as: AAC, ACC, Big 10, Big 12, Big East, SEC, & PAC-12.  Our top ten teams are based on the last 3 years (for our statistical analysis we use all data since 2001 but for the rankings we use team results for the last 3 years).  The rankings reflect the conference the team played in during the 2013-2014 season.

The top ten “non-power” conferences rankings are given below.  The number 1 fan base was Dayton.  The Flyers were followed by Gonzaga and UNLV.

2014 Fan Equity Non Power

When we do these rankings we always have to make the point that our estimates of fan base quality are based on fan support AFTER controlling for team quality and market potential.  Therefore a team like Duquesne can still make the list because the fan support is very good despite the team struggling on the court.

At the other end of the scale, the bottom 10 teams in terms of fan equity are given below.  The team with the worst fan support in all of D-1 college basketball is UNC Greensboro.

2014 Worst Fan Equity Non Power

We can also evaluate which teams are trending upward and which are falling fast.  We do this by comparing the fan equity for the first three years of our data with the last 3 years.  This analysis is important because it speaks to which coaches and athletic directors have been the most successful.  At the “non-power” conference level, this list might be a good place for major schools to search for coaches and athletic directors.  Unlike  the traditional approach of just looking at winning or losing, this change metric speaks to the creation of “economic value” while controlling for factors such as team tradition, investment, capacity and other fixed factors for which sports executives should not get credit (or blame).

2014 Risers Non power

The biggest risers in the non-power conferences include Gonzaga, Kent State, Dayton, Northern Iowa and Nevada.

In terms of moving in the wrong direction, Montana & Florida A&M had the biggest drop in fan equity.

For more on the concept of fan equity, please click here and here.  In our next post, we will examine the fan equity rankings for the “power” conferences.

Mike Lewis & Manish Tripathi, Emory 2014.    

AdWeek: Tim Howard Talks About the Perfect Brand Partner

AdWeek: Tim Howard Talks About the Perfect Brand Partner

As for Howard, “Tim can make some money in the U.S. I wouldn’t call it a big payday compared to other athletes,” says Paul Danforth, head of global sales at CAA Sports. Manish Tripathi, a marketing professor at Emory University who focuses on sports, advises Howard to “make deals as soon as possible. Once the World Cup ends, the enthusiasm will wane. Think Landon Donovan after he had the big goal against Algeria in the last World Cup.”

Chicago Business Journal: Why Chicago Blackhawks fans aren’t the best in the NHL

Chicago Business Journal: Why Chicago Blackhawks fans aren’t the best in the NHL

This is a statistics thing — at least as the numbers were crunched by the Emory (University) Sports Marketing Analytics team. Not sure if Atlanta, GA.-based Emory has the market cornered on expertise in hockey analytics. But they’re doing it.

And Chicago wound up in sixth place on Emory’s list of cities where hockey fans are most invested (think ticket sales) in their teams — right behind the aforementioned five Canadian cities.

NHL Fan Analysis Part 1: Fan Equity

Note: This is Part I of our study of NHL Fan Quality.  This week we will be ranking NHL teams/fans on the following dimensions: Fan Equity, Social Media Equity, Fan Equity Growth, Price Elasticity, Win Elasticity, and Social Media based Personality.  For more details on our measures of quality, please click here.  For Part II, click here.  For Part III, click here.

Our goal this week is to give NHL fans something to talk about during the offseason (and by talk about, we mean an opportunity to say awful things about us via Twitter and e-mail).  We begin our review of NHL fan bases with our “Fan Equity” rankings.  This ranking looks at fans’ willingness to financially support their teams using a model that controls for winning rates, population, income, and other factors.  The basic idea is that we look at how teams over or under perform in terms of home ticket revenue to what similar (with respect to market potential and on-ice results) teams produce.  More details on the revenue premium model we use to evaluate fan equity and an overview of the various rankings to be published this week may be found here and here respectively.

So where do the best NHL fan bases live?  Sorry America, but Canada dominates these rankings.  The top six teams in terms of fan equity are Toronto, Montreal, Edmonton, Winnipeg, Vancouver, and Chicago.  The top US based teams are Chicago, Philadelphia, New York (Rangers), and Minnesota.

NHL 2014 Fan Equity

Really?  Edmonton has a better fan base than Chicago?  Pointy-headed academics should stick topics they know something about, and hockey is obviously not one of those topics. What drives these findings?  Let us highlight some of the underlying factors that drive the results.  Chicago won 46 games (107 points) and averaged over 22,000 fans last season.

This is great support for the Blackhawks, and this is why they crack the otherwise Canadian top six.  So, why does Edmonton beat Chicago?  Because Edmonton’s support is stronger once we control for market characteristics and team performance.  Last year, Edmonton averaged 16,800 fans per home game while winning only 29 games (67 points).  Both teams sell out, but Edmonton does it despite playing well below .500.  In addition, the Edmonton market is less than 1/8 the size of the Chicago market.  And despite these differences in success and market size, Edmonton is able to charge slightly higher average ticket prices.

The big winner in all this is the Toronto Maple Leafs.  The Leafs achieve amazing pricing power and consistent sell-outs despite only average on-ice performance.  Toronto is truly Hockeytown North America.

At the bottom of the rankings, we have Columbus, Tampa, Dallas, and Phoenix.  This grouping suggests that the key to having a vibrant fan base is locating somewhere where people play hockey.  We understand the desire to achieve a broad television footprint, but there is also something to locating where the fans live.  For example, last year Dallas drew an average of 14,600 fans despite charging some of the lowest prices and winning 40 games.  As a contrast, Winnipeg drew more fans despite winning fewer games.  But the kicker is that Winnipeg is able to charge more than twice the average ticket price as Dallas.  Also these results occur despite Dallas having a population of about 6.8 million compared around 700,000 in Winnipeg!

Mike Lewis & Manish Tripathi, Emory University 2014.

MLB Fan Analysis Part 1: Fan & Social Media Equity

Who are the best fan bases in Major League Baseball?  A quick Google search of “best MLB fan bases” produces more than a million results.  Specific rankings are published by entities ranging from news organizations to ticket brokers.  In general, these rankings are based more on subjective opinion than data and analysis.  In contrast, we take a 100% data-driven approach.

That said, we readily acknowledge that fan base analysis is a complex topic.  Our core metric is something we term “fan equity.” This metric is based created using a revenue-premium model of brand equity.  This model is driven by the financial support shown by fans conditional on team performance and market characteristics.  This approach has significant advantages in that it is based on spending behavior and not driven by short variations in winning.  But, the revenue-premium approach is not perfect.  Therefore, this year we will be publishing a number of rankings (and providing descriptions of the strengths and weaknesses of each approach).  Click here for an overview of each method.

Today, we present three analyses of MLB fan bases.  We begin with the fan equity / revenue-premium model (based on the last three years), a trend analysis of fan equity growth over the past 15 seasons, and an analysis of each team’s social media equity.

2014 MLB Fan Equity

The winners in the fan equity analysis include the Red Sox, Yankees, Cubs, Phillies, Cardinals and Twins.  The Red Sox and Yankees placing at the top of the list is simultaneously unsurprising and interesting.  It is unsurprising because these are two of the league’s most prominent teams, and interesting because the two teams are bitter rivals.  The intense competition between these two teams provides an added factor that may be lacking for teams like the Cubs or the Phillies.  And yes, we do know that Cardinals fans love to beat the Cubs. (Click here for more details on our methodology for fan and social equity)

At the bottom of the list, we have teams in cities with great weather (or maybe summers that are too hot) and teams that are generally regarded as number two in their markets.  The bottom five are the White Sox, Angels, A’s, Mets and Rays.  As an aside, how about the “Portland A’s”?

We know the winners and the losers, but fan bases are not static entities.  As teams win, lose or market themselves, their fan equity evolves.  As a second analysis, we examined fan equity trends over the past 15 years.  This analysis revealed that MLB’s high equity teams are tending to even greater levels of fan support.  In this analysis, the Yankees finished first followed by the Red Sox, Cubs, Nats, Phillies, Dodgers and Giants.  This list of teams is overwhelmingly concentrated in the largest markets.  At the bottom of the list, we have teams like the Diamondbacks, Indians, Orioles, Padres and Rays.

2014 MLB Trend

The last analysis for today is something we term social media equity.  This analysis looks at each team’s social media following (again controlling for market size and winning).  Social media equity is important because it is unconstrained by stadium size, unaffected by a team’s pricing decisions and provides a measure of national following. It may also be a forward looking indicator if social media participants are younger than those fans who attend games.

2014 MLB Social Equity

The social media ranking is fairly different.  While the Yankees are number one, the top five also includes the Padres, Brewers, Rangers and Pirates.  Perhaps, the revenue-premium measure is picking up the economics of the big markets while the social media metric is best for identifying current interest.  However, the bottom of the social media list is consistent with the bottom of the fan equity list with teams like the Mets, A’s and Angels.

In our next post, we will present analyses of fan base sensitivity to winning and pricing.

Mike Lewis & Manish Tripathi, Emory University 2014.

Fan Rankings 2014

Evaluating sports brands, or any brands, is a complicated endeavor.  The fundamental issue is that a brand is an intangible asset so the analyst must rely on indirect measures of the brand.  Last year, we introduced a measure of fan loyalty that we termed “fan equity.”  This measure was based on the degree to which fans were willing to support a franchise after controlling for factors such as population and winning percentage.  We also explored a social media based metric that used a similar approach to evaluate a team’s success in building a social media footprint.

This summer, we are updating our analyses across the four major sports leagues (NFL, NBA, MLB, & NHL) and the two major college sports (football & basketball).  We are also including several additional analyses that further illuminate fan support and brand equity.  Shifting to multiple measures of “fan support” provides significant benefits.  First, using multiple measures allows for a form of triangulation, since we expect that a great fan base will excel on most or all of the measures.  The second benefit is that since each measure has some unique elements, the construction of multiple measures allows for a richer description of each fan base.  Next, we provide basic descriptions and critiques of each of the metrics to be published.

Fan Equity

Our baseline concept of fan quality is something we term fan equity.  This is similar in spirit to “brand equity” but is adapted to focus specifically on the intensity of customer preference (rather than to consider market coverage or awareness).  We calculate fan equity using a revenue-premium model.  The basic approach is to develop a statistical model of team revenues based on team performance and market characteristics.  We then compare the forecasted revenues from this model for each team to actual revenues.  When teams actual revenues exceed predicted revenues, we take this as evidence of superior fan support.

The fan equity measure has some significant benefits.  First, since it is calculated using revenues, it is based on actual fan spending decisions.  In general, measures based on actual purchasing are preferred to survey based data.  The other prime benefit is that a statistical model is used to control for factors such as market size, and short variations in team performance.  This allows the measure to reflect true preference levels for a team rather than effects due to a team playing in a large market, or because a team is currently a winner. However, the fan equity measure also has a couple of potential issues.  First, one of the distinguishing features of sports is capacity constraints.  Measures of attendance or revenues may therefore underestimate true consumer demand simply because we do not observe demand above stadium capacity.  The second issue relates to owner pricing decisions.  An implicit assumption in the revenue-premium model is that teams are revenue maximizers.

Social Media Equity

Our social media equity metric is similar in spirit to our fan equity measure, but rather than focus on revenues we use social community size as the key dependent measure.  The calculation of social media equity involves a statistical model that predicts social media community size as a function of market characteristics and current season performance.  Social media equity is then based on a comparison of actual versus predicted social media following.

The social media equity metric provides two key advantages relative to the revenue-premium metric.  Since social media following is not constrained by stadium size and does not require fans to make a financial sacrifice, this metric provides 1) a measure of unconstrained demand and 2) avoids assumptions about owner’s pricing decisions.  On the negative side, the social media equity does not differentiate between passive and engaged fans.  Following of a team on Facebook or Twitter requires a minimal, one time effort.

Trend Analysis (Fan Equity Growth)

A key issue in evaluating fan or brand equity is the time horizon used in the analysis.  The methods described above produce an estimate of “equity” for each season.  The dilemma is in determining how many years should be used to construct rankings.  The shorter the time horizon used, the more likely the results are to be biased by random fluctuations or one-time events.  On the other hand, using a long time horizon is problematic because fan equity is likely to evolve over time.  This year, we present an analysis of each team’s fan equity trajectory.

Price Elasticity and Win Elasticity

This year we are adding analyses that look at the sensitivity of attendance to winning and price at the team-level.  This is accomplished by estimating a model of attendance (demand) as a function of various factors such as price, population, and winning rates.  The key thing about this model specification is that we include team level dummy variables and interactions between the team dummies and the focal variables of winning and price.

The win elasticity provides a measure of the importance of quality in driving demand.  For example, if the statistical model finds that a team’s demand is unrelated to winning rate, then the implication is that fans have so much of a preference for the team that winning and losing don’t matter.  For a weaker team (brand) the model would produce a strong relationship between demand and winning.

This benefit of this measure is that the results come directly from data.  A possible issue with this analysis is that the results may be driven by omitted variables.  For example, prior to conducting the analysis we might speculate that demand for the Chicago Cubs might only be slightly related to the team’s winning percentage.  This speculation is based on the fact that the Cubs never seem to win but always seem to have a loyal following.  Our finding would, however, need to be evaluated with care since the “Cub” effect is perfectly correlated with a “Wrigleyville Neighborhood” effect.

Social Media Based Personality

This year we are adding another new analysis that uses social media (Twitter) data to evaluate the personality of different fan bases.  The foundation for this analysis is information on “sentiment.”  Sentiment is basically a measure of the tone of the conversation about a team.  To understand fan personality, we examine how Twitter sentiment varies over time.  We do comparisons of how much sentiment varies across teams.  This tells us if some fan bases are even-keeled while other are more volatile.  We can also look at whether some teams tend have higher highs or lower lows.  These analyses are based on the distribution of sentiment scores over a multiple year period.

Twitter based sentiment has both positives and negatives.  On the positive side, Twitter conversations are useful because they represent the unfiltered opinions of fans.  Fans are free to be as happy or as distraught as they want to be.  The availability of sentiment over time is also useful as it allows for the capture of how opinion changes over time.  On the downside, Twitter sentiment scores are only as good as the algorithm used to evaluate each Tweet.  Twitter data may also be a bit biased towards the opinions of younger fans.

Mike Lewis & Manish Tripathi, Emory University 2014.