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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NBA Fan Rankings: 2016 Edition

On an (almost) annual basis I present rankings of fan bases across major professional and collegiate leagues.  Today it is time for the NBA.   First, the winners and losers in this year’s rankings.  At the top of the list we have the Knicks, Lakers and Bulls. This may be the trifecta of who the league would love to have playing at Christmas and in the Finals.  At the bottom we have the Grizzlies, Nets and Hornets.

nba2016

Before i get into the details it may be helpful to briefly mention what differentiates these rankings from other analyses of teams and fans. My rankings are driven by statistical models of how teams perform on a variety of marketing metrics.  The key insight is that these models allow us to control for short-run variation in team performance and permanent differences in market potential.  In other words – the analysis uses data to identify engagement or passion (based on attend and spend) beyond what is expected based on how a team is performing and where the team is located.   More details on the methodology can be found here.

spike-lee-knicks

The Winners

This year’s list contains no real surprises.  The top five teams are all major market teams with storied traditions.  The top fan base belongs to the Knicks.   The Lakers, Bulls, Heat and Celtics follow.  The Knicks  highlight how the model works.  While the Knicks might not be winning , Knicks fans still attend and spend.

The number two team on the list (The Lakers) is in much the same situation. A dominant brand with a struggling on-court product.   The Lakers and Clippers are an interesting comparison.  Last season, the Clippers did just a bit better in terms of attendance (100.7% versus 99.7%).  But the Lakers filled their seats with an average ticket price that was substantially higher.  The power of the Laker brand is shown in this comparison because these outcomes occurred in a season where the Clippers won many more games.

Why are the Lakers still the bigger draw?  Is this a star (Kobe) effect?  Probably in part, but fan loyalty is something that evolves over time.  The Lakers have the championships, tradition and therefore the brand loyalty.  It will be interesting to see how much equity is retained long-term if the team is unable to quickly reload.  The shared market makes this an interesting story to watch. I suspect that the Lakers will continue to be the stronger brand for quite a while.

The Losers

At the bottom of the list we have Memphis, Brooklyn and Charlotte.  The interesting one in this group is Brooklyn.  Why do the Nets rank poorly?  It ends up being driven by the relative success of the Knicks versus the Nets.  The Knicks have much more pricing power while the teams operate in basically the same market (we can debate this point).  According to ESPN, the Knicks drew 19,812 fans (100% of capacity) while the Nets filled 83.6% of their building.  The Knicks also command much higher ticket prices.  And while the Nets were worse (21 victories) the Knicks were far from special (32 wins).

What can the teams at the bottom of the list do?  When you go into the data and analyze what drives brand equity the results are intuitive.   Championships, deep playoff runs and consistent playoff appearances are the key to building equity.  easy to understand but tough to accomplish.

And a Draw

An interesting aside in all this is what it means for the league.  The NBA has long been a star and franchise driven league.  In the 1980s it was about the Lakers (Magic) and Celtics (Bird).  In the 1990s it was Michael Jordan and the Bulls.  From there we shifted into Kobe and Lebron.

On one hand, the league might be (even) stronger if the top teams were the Bulls, Knicks and Lakers.  On the other hand, the emergence of Steph Curry and Golden State has the potential to help build another powerful brand.

Some more thoughts…

The Fan Equity metric is just one possible means for assessing fan bases.  In this year’s NFL rankings I reported several more analyses that focus on different market outcomes.  These were social media following, road attendance and win sensitivity (bandwagon fans).  Looking at social following tells us something about the future of the brand as it (broadly) captures fan interest of a younger demographic.  Road Attendance tells us something about national rather than local following.  These analyses also use statistical models to control for market and team performance effects.

Social Equity

Top Social Equity Team: The Lakers

Bottom Social equity: The Nets

Comment: The Lakers are an immensely strong brand on many dimensions.  The Nets are a mid-range brand when you look at raw numbers.  But they suffer when we account for them operating in the NY market.

Road Equity

Top Road Equity: The Lakers

Bottom Road Equity: Portland

Comment: The Lakers dominate.  And as this analysis was done looking at fixed effects across 15 years it is not solely due to Kobe Bryant.  Portland does well locally but is not of much interest nationally.

It is possible to do even more.  We can even look at factors such as win or price sensitivity. Win sensitivity (or bandwagon behavior) tells us whose fans only show up when a team is winning and price sensitivity tells us if a fan base is willing to show up when prices go up.  I’m skipping these latter two analyses today just to avoid overkill (available upon request).  The big message is that we can potentially construct a collection of metrics that provide a fairly comprehensive and deep understanding of each team’s fan base and brand.

Note: I have left one team off the list.  I have decided to stop reporting the local teams (Emory is in Atlanta).  The local teams have all been great to both myself and the Emory community.  This is just a small effort to eliminate some headaches for myself.

Finally… The complete list

City Fan Equity
Boston 5
Charlotte 27
Chicago 3
Cleveland 20
Dallas 15
Denver 11
Detroit 25
GoldenState 16
Houston 7
Indiana 21
LAClips 17
LALakers 2
Memphis 29
Miami 4
Milwaukee 14
Minnesota 22
Brooklyn 28
NewOrleans 24
NYKnicks 1
OKCity 13
Orlando 19
Philadelphia 26
Phoenix 9
Portland 6
Sacramento 10
SanAntonio 12
Toronto 18
Utah 8
Washington 23
 

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.

Social Media Equity: The NBA

A challenge in evaluating fan bases in professional and college sports is how to adjust for capacity constraints.  Unlike most consumer categories, teams have a limited number of seats to sell.  One way to get around this issue is to look at team revenues.  But this approach also has some strong implicit assumptions in that we must assume that teams are trying to price in a manner that maximizes revenue.

The world of social media provides an opportunity to look at fan base support without worrying about capacity or pricing issues.  To look at NBA teams “social media equity” we collected follows and likes from Twitter and Facebook.  We then created a statistical model that predicts these measures of social media engagement as a function of market size, tweeting activity and team performance for this past season and for the season before that.  We then compared each team’s actual follows and likes against the model predictions.  This method attempts to control for short term fluctuations in winning percentage and market differences.

The top team in terms of social media equity is the LA Lakers.  The Lakers crush the competition both in terms of raw numbers and in our model.  In second place, we have the Miami Heat.  This one is interesting, and we suspect that the Heat results may be a bit misleading.  While the Heat does very well currently it is not possible to separate out how much of the social media equity is driven by the team versus by LeBron.  This is something to watch as we collect more social media data over the next few years.  In third place, we have another non-surprising result in the Celtics.

It is the next three teams that are surprising as Golden State ranks 5th, New Orleans ranks 6th, and Charlotte ranks 4th.  The case of Charlotte illustrates the value of our model based approach.  In absolute terms, Charlotte performs relatively poorly in terms of social media metrics.  However, when we adjust for team performance and market size, the team does fairly well.  This indicates that the Charlotte market has fairly resilient fans, and likely speaks to the potential of the market if a consistent winning team is developed.

At the bottom of the list, the most surprising result is the New York Knicks’ 27th place finish.  This is doubly interesting because when we ranked fan bases in terms of “economic” support, the Knicks were number one.  What these two results imply is that the Knicks’ fan base is economically valuable but not engaged (at least in terms of social media).  The Knicks play in the largest market but have only about 20% of the social media activity of the Lakers.

There were a couple of other interesting findings from this study.  First, the number of Twitter followers was uncorrelated with the number of times a team tweeted.  This suggests that fans follow based purely on their feelings for the teams, rather than the entertainment of following an interesting Tweeter.  We also found a very high correlation between the two social media platforms as the social media equity estimates across the two platforms exceeded 0.91. However, when we looked at the correlation between the social media equity and the economics based fan equity the correlation was just 0.3.  We will leave this disconnect between social media and revenues for a future post.

Mike Lewis & Manish Tripathi, Emory University, 2013.