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.

The Best Sports Cities: Boston Wins in a Rout; Twin Cities Better than NY & Chicago

Boston InfographicWe started the Emory Sports Marketing Analytics blog back in March of last year.  Our goal was to bring analytics to the world of sports business.  To put a finishing touch on 2013, we are going to present our rankings of the best and worst sports fans by city.  These rankings are based on our revenue premium model of fan equity and our analyses of social media equity.

Phoenix InfographicFor our rankings, we have divided cities into categories based on how many of the four major sports (NFL, NBA, MLB, & NHL) have franchises representing the city.  This categorization does introduce a bit of oddness since Los Angeles becomes a “three-sport” city.  Another tough issue is how to treat teams like the Packers.  Is Green Bay a one-sport city or is Milwaukee as three-sport city (we decided that we would treat Milwaukee as a three-sport city)?

Today we reveal our rankings of the four-sport cities, and a summary of the best and worst markets in the other categories (one, two, & three-sports cities).  Before the actual rankings, a couple of clarifying comments are in order.  The key to our rankings is that we are looking at fan support after controlling for short term variations in team quality and market characteristics.  Basically we create statistical models of revenues as a function of quality measures like winning percentage and market potential factors like population.  This allows our results to speak how much support fans provide as if market size and winning rates were equal.

The number one team on our four-sport city list is Boston; and it wasn’t even all that close.  All of the Boston teams have impressive fan followings.  The Red Sox ranked 1st in terms of fan equity and 1st in social equity. The Celtics finished 3rd in the NBA in both our fan and social media equity rankings.  The Patriots rank 2nd in fan equity and 3rd in social media equity in the NFL.  The Bruins rank relatively low in fan equity (perhaps because they could price higher), but very high in social media equity.  Number two on the list is Philadelphia.  The Eagles, Phillies and Flyers are all very strong fan bases.  The Sixers are weak within the NBA, but the three other sports carry Philly to a second place finish.

The city in third place is likely going to generate Twitter complaints about how clueless we are, and how academics should stay away from sports.  We rank the Twin Cities of Minneapolis and Saint Paul as having the third most supportive fans among the four-sport cities.  Minneapolis/Saint Paul show great support of the Twins and solid support for the Vikings.  The Wild also do surprisingly well in the NHL.

How could Minnesota finish in front of New York and Chicago?  It’s because these cities don’t do a great job in terms of supporting all their teams.  For example, The Brooklyn Nets perform poorly when market size is considered and the White Sox have very poor support on all metrics.  We can hardly wait for the semi-literate Twitter attacks to commence.

At the bottom of the list we have Phoenix.  We should note that the Suns perform well and finish 7th in terms of fan equity in the NBA.  But beyond that, Phoenix sports are a disaster.  In terms of fan equity, the Diamondbacks finish 26th in MLB, the Cardinals 30th in the NFL and the Coyotes 28th in the NHL.  As we have learned over the past year, it seems that weather and tradition are what creates a strong fan culture.  Perhaps the Phoenix teams overall are too new, and the weather is too warm.

Our other winners and losers are given below with linked infographics that summarize raw data and final rankings.

For the three-sport cities, the overall winner is St. Louis, and the worst fan support occurs in Tampa Bay.

For the two-sport markets, the leader in fan support is NashvilleOakland is at the bottom of the rankings.

For the one-sport cities, Portland leads the way, while Memphis trails the field.

Mike Lewis & Manish Tripathi, Emory University 2014.

Don’t Want to Get Fired? Best and Worst Cities for Firing Professional Coaches

Mike_Shanahan_RedskinsIt’s “Black Monday” in the NFL.  The Vikings, Redskins, Lions, and Bucs have already fired their coaches today, and more firings are possible before the day is done.  There are many variables that can affect the firing of a coach in professional sports.  Of course, three easily observable factors are the performance of the coach (winning percentage, playoff appearances, and championships), the investment by the ownership (team payroll), and the sports league (NFL, MLB, NBA, and NHL).   There are also intangible factors endemic to each city in America and Canada with a professional sports team that can influence the probability of a coach getting fired.

We decided to estimate a logistic regression model that could explain the probability of getting fired as a function of performance, investment by ownership, and professional league affiliation.  We looked at data from all four professional sports leagues over the last twelve years.  We then compared the predicted probability from our model of getting fired with the actual firings in each city.  In theory, cities with intangible characteristics that make it more likely for a coach to get fired would have actual firings at a higher probability than predicted through our model of performance and investment.  We tried several specifications of our model, and these rankings are robust.

Based on our study, the Top 8 Worst Cities (Highest probability for getting fired above predicted) are:

  1. Orlando
  2. San Francisco
  3. Montreal
  4. Sacramento
  5. Milwaukee
  6. Oklahoma City
  7. Jacksonville
  8. Miami

The Top 8 Best Cities (Lowest probability for getting fired below predicted) are:

  1. Winnipeg
  2. Nashville
  3. Salt Lake City
  4. Memphis
  5. Los Angeles
  6. Portland
  7. Buffalo
  8. Minneapolis

It’s interesting to note that the top 8 worst cities does not include big media markets like New York, LA or Chicago, where one might think there is large expectation for winning.

Mike Lewis & Manish Tripathi, Emory University 2013.

The Financial Impact of Mascots on Sports Brands

MascotValue

When we started this endeavor, we had no intention of spending time thinking and writing about mascots.  What we did plan on, was writing about sports marketing assets such as team brands.  However, as we have progressed we have found ourselves going beyond measurement of team brands to also look into how valuable brands are created.  Since mascots are an element of teams’ brands it makes sense for us to spend time on the topic.

We have been surprised by the interest generated by our previous work on mascots.  This interest is likely due to the fact that we go beyond emotion-based arguments, and try to examine how mascots affect the bottom line.  We should also emphasize that this is a statistically “tricky” area.  In general, there just isn’t enough variation in the world for us to perfectly identify how a specific or even a type of mascot impacts the fortunes of a given team.  For example, in the case of Native American themed mascots our perfect “data” would include examples of teams switching back and forth between Indian and non-Indian mascots.  This doesn’t mean that it is impossible to study how different types of mascots impact financial performance.  It just means that we have to make some assumptions and we have to make clear how these assumptions limit our results.

Today’s post is a bit more long-form than our usual entries.  This is because we have multiple issues, and because we want to be transparent regarding our assumptions.  The two issues that we address in this post arose from conversations with readers of our previous mascot analyses.  The first was a question related to some work we did related to the financial value of Native American mascots in professional sports.  In the previous work, we had simply looked at how teams with Native-American mascots performed relative to all other mascot types.  Our readers were interested on the impact of other classifications of mascots.  The second question was related to our previous work on college mascots.  Specifically, the interest was in the financial impact of using ‘live” animal mascots.  Frankly, this was a controversy of which we were unaware.

Why do Mascots Matter?

Before we get into the analyses, it may be useful to make a couple of comments regarding why or why not mascots matter.  There are a variety of theories about sports fandom, and almost all emphasize the importance of factors such as team history and fan community.  These are related because it is often the historical accomplishments of a team that provide a basis for fan communities.  For example, in Chicago fans still talk about the 1985 Bears, and it is doubtful that you can find many Steelers fans that don’t know about the “Steel Curtain.”

Mascots provide a symbol that can be a focal point for a fan community.  At a very simple level, when fans wear a jersey with a Redskins or Cowboys logo they are identifying themselves as part of a fan community.  There is research in psychology that that has studied the wearing of team symbols following wins and losses.  Researchers, unsurprisingly, find that team logos are worn more frequently after victories than after losses.  The term “Basking in Reflected Glory” has been used to explain this phenomenon.

Mascots may play a similar role in that they provide a shared experience.  When the University of Illinois dropped the “Chief,” t-shirts that commemorated the “last dance” of the Chief quickly appeared.  Illinois students witnessed the Chief’s halftime dance for decades, and this experience has therefore been shared across generations of students.

Teams’ and fans’ reluctance to drop or change mascots may be based on fears about how losing a focal symbol will alter the fan community.  In our first analysis of “Native American” mascots we looked at college basketball revenues for schools with and without this type of mascot.  We also included time since mascot change in our statistical models.  The key result was that switching away from a Native American mascot didn’t have a long-term negative effect.

Classes of Mascots in Professional Football and Baseball

But the college environment is unique in that we have a fair number of schools that have made switches.  At the professional level there isn’t a similar body of data that exists.  Not having perfect data doesn’t mean that we can’t study an issue (though many unimaginative academics might say so).  We just need to use a bit of theory to structure the problem and then be clear about the assumptions to avoid over-interpretation of the results.

We did perform a preliminary analysis related to the financial impact of Native American themed mascots.  That analysis was based on the simple idea that we could build a statistical model of team box office revenues as a function of team quality (winning percentage, playoff participation, etc…) and market potential (market population, median income, stadium capacity, etc…).  We included a binary (i.e. dummy or indicator) variable in these regressions to indicate if the team had a Native American mascot.  We also included an interaction variable between the Native American dummy variable and the year to account for changing consumer preferences.

One common response to this analysis was to ask how other types of mascots influence financial results.  We thought this was an interesting question.  But it was also a question that wasn’t straight-forward to address.  Our first stumbling block was how to determine the different mascot categories.  For example, we could have a classification of “human” mascots but then the question arises of if we should differentiate between aggressive humans such as Pirates or Raiders and the gentler Padres or Saints.  Similar questions occurred with animal mascots: should we have a separate category for birds and what about aquatic animals?

To get a handle on these questions we created something called a perceptual map.  Perceptual maps are used in marketing to visually display the perceptions of customers or potential customers along a number of dimensions (e.g. affordability, social appeal, etc…).  For our mascot study, the map was based on survey data that asked subjects to rate the similarity between team names.  The survey involved 18 team names split between the NFL and MLB.  We tried to assemble a cross section of names that included different types of animals (Tigers, Bears, Dolphins, etc…), humans (Rangers, Packers, Pirates, etc…), miscellaneous names (Rockies, Giants) and a split between baseball and football.  The technical term for the procedure is Multidimensional Scaling (MDS).

MDS is great in that we allow subjects the freedom to rate items however it makes sense to them, but this freedom comes with a cost: the perceptual maps generated do not come with labeled dimensions.  We generated a three dimensional perceptual map (using SAS software).  Dimension 1 (the horizontal axis in the chart below) seems to roughly correspond to human versus animal mascots.  We say roughly because Cardinals are rated more “human” on this axis than Packers.  A potential issue with our study is that subjects are rating the team names based on factors beyond the literal meaning of the name.  This is probably unavoidable given the focal nature of sports teams in American culture.  The second dimension (not displayed) was difficult to interpret.  At one extreme we had the Padres and Rockies.  At the other, it was the Dodgers and Packers.  One thought was that this dimension was about historical success.  However, the Steelers were in the middle of the scale.

The third dimension (the vertical axis in the chart below) was also difficult to interpret.  The Redskins and Indians are at the top of the scale while the Tigers, Cardinals, and Dodgers are at the bottom.  While we will not try to name this axis, it is interesting that the two Native American mascots were viewed as extreme on this dimension.

MDS Mascots

The fundamental point to the MDS exercise was to develop an understanding of how fans perceive different types of mascots.  Based on the preceding, we decided to evaluate four mascot types: Human, Native American, Animal and Other.

We conducted statistical analysis separately for the NFL and for MLB.  Our logic is that because the games are very different and played at different times of year, the effect of different types of mascots may vary.  For each league, we created statistical models of revenue as a function of winning percentage, winning percentage squared, playoff participation, relative payroll, population, population squared, median income and stadium capacity.

A baseline model (without mascot dummy variables) for the NFL yielded an R-squared of 0.44.  R-squared provides information about the goodness of fit of a model (the higher the R-squared the better the model fits the data).  This model was estimated using data from the 2002 to 2012 seasons.  In addition, all coefficients were of the expected sign.  For example, winning percentage was positively correlated with box office revenue.  We next estimated the same model but included the mascot dummy variables.  Including the mascot dummies increased the R-squared to 0.51.

The coefficients associated with each class of mascot are provided in the table below.  The model suggests that over this time period, having a Native American mascot had a significant positive revenue impact relative to the “other” category of mascots.  Animal mascots had a negative impact.

Mascot Type

Coefficient Value

T-Stat

P-Value

Native American

12,117,107.2

4.86

<.0001

Human

1,353,243.8

0.83

0.409

Animal

-3,567,963.7

-2.49

0.013

However, as we noted above, our analysis includes some strong implicit assumptions.  In the case of the NFL results above, the Native American variable is associated with just two cities: Kansas City and DC.  The danger is that this variable may be picking up some common trait of the two cities other than the mascot.  An additional concern is that the preceding model treats the mascot issue as staticIt seems more likely that opinions change over time.  To account for these issues we next re-estimated the model but now included interactions between time and the mascot indicators.  This model yields an R-squared of 0.55.  Again all of the control variables (win percent, population, etc…) are of the expected signs.

This model is the most instructive of the three models as it allows for both dynamic effects and lessens the concern about a shared latent factor between Kansas City and Washington DC.  The key result is that there seems to be a shift in preferences.  In particular, the Native American mascots seem to be becoming less popular over time.  Historically, the Chiefs and Redskins have been strong franchises so it makes sense that the static Native American indicator would be positive.  Given the increased scrutiny applied to Native American mascots it also makes sense that we observe a negative long-term trend.

Mascot Type

Coefficient Value

T-Stat

P-Value

Native American

21,861,806.2

4.89

<.0001

Human

-2,924,904.4

-1.19

0.234

Animal

-6,616,731.1

-3.32

0.001

Native American*YR

-1,636,981.4

-2.6

0.010

Human*YR

722,698.9

2.31

0.021

Animal*YR

508,348.0

2.15

0.032

In the preceding model the dependent variable is box office revenues (in constant 2008 dollars).  The interaction between time and the Native American dummy variable suggests that the value of having a Native American mascot is dropping by about $1.6 million per year.  Again, we fully admit that this is a messy statistical problem and readers may be able to construct alternative explanations for the findings.  But the KEY point is that we have intentionally performed a simple analysis in an effort to just let the data speak.  The data seems to be saying that considering mascot type significantly improves model fit and that Native American mascots are becoming less valuable brand assets over time.

In the case of MLB we executed a similar procedure.  The baseline revenue model for MLB used the same variables as the NFL analysis.  The R-squared of the baseline model was 0.627.  In the second analysis, we added dummy variables for the three classes of mascots: Native American, Human and Animal Mascots. In this case, the improvement in the model is minimal as the R-Squared increases to just 0.631.  None of the mascot dummies are significant.

Mascot Type

Coefficient Value

T-Stat

P-Value

Native American

-8,494.4

-1.64

0.1015

Human

-2,822.0

-0.92

0.360

Animal

3,782.2

1.22

0.224

 

However, adding the interactions between time and mascot type produces an interesting set of results.  In particular, we find the same pattern of results for the Native American mascot terms.  In both leagues these mascots have positive coefficient associated with the static dummy variable but a negative interaction between the dummy for Native American mascot and time.

Mascot Type

Coefficient Value

T-Stat

P-Value

Native American

24,567,815.9

2.34

0.0196

Human

697,834.0

0.11

0.909

Animal

22,957,750.4

3.48

0.001

Native American*YR

-2,675,563.5

-3.6

0.000

Human*YR

-260,405.6

-0.59

0.555

Animal*YR

-1,523,533.9

-3.28

0.001

In the case of MLB, the model results suggest that having a Native American is also driving lower box office revenues over time.  The effect is bit higher in MLB with the trend being a loss of about $2.6 per year.

Despite the limitations inherent to our analyses, the consistency between the NFL and MLB findings is in accordance with a trend of growing opposition to these mascots.  However, we do acknowledge that our claim of a trend of “growing opposition” is based largely on anecdotal data such as retirements of prominent Native American mascots in college sports, journalists dropping the use of “offensive” nicknames and politicians beginning to weigh in on the issue.  Our results imply that fans are also becoming less enthusiastic about these mascots.

To be blunt, the implication is that the trends suggest that keeping a Native American mascot is reducing financial performance and harming team brand equity.

Live Animal Mascots in College Football

Bulldog MoneyWe also had a brief correspondence from a reader asking if we had ever investigated the financial consequences of “Live” animal mascots.  At the time of this question, we were basically unaware of the controversy surrounding the use of this type of mascot.  We were familiar with some of the more spectacular live mascots such as Bevo, Uga and Ralphie.  In hindsight, it does make sense that animal rights activists would be concerned about the welfare of these living symbols.

For this study, we used publically available data on college football team revenues.  We decided to restrict the analysis to football because many of the most notable animal mascots only appear during the football season.  But, we should note that we do not know if Colorado has ever run Ralphie across the basketball floor.

For this analysis, we used relative revenue as our dependent variable.  This was computed by dividing each team’s self-reported football revenues by the overall average for each season.  Relative revenue was modeled as a function of AQ (automatic qualifying conference) status, winning percentage, level of bowl game participation, local population and student body size.  We included a dummy variable for a “live mascot” and an interaction variable between AQ status and having a live mascot.  The interaction is included to account for the possibility that live mascot effectiveness varies across level of competition.

Mascot Type

Estimate

Standard Error

t-Value

Pr>|t|

Live Mascot

0.018

0.072

0.25

0.1015

Live Mascot*AQ

0.369

0.086

4.28

<.0001

In order to interpret the preceding results we need to remember that the statistical results were generated using relative revenues as the dependent variable.  Again, these coefficients are easily translated into dollars.  In 2010, average revenues across the FBS schools were about $23 million and about $35 million for members of the AQ conferences.  The model therefore suggests that on average an AQ member school with a live animal mascot generates about $8.5 million in incremental revenue!  However, the net effect for a non-AQ school is negligible.

This is an amazing number, but it does have some logic, as live animals may be exceptional community builders.  In the case of mascots like Reveille or UGA it is almost as if the entire student body and alumni base co-owns a dog.  And in the case of Bevo or Ralphie, it is hard to imagine a more spectacular halftime display.

These results highlight the tough battle that PETA and other animal rights organizations fight.  Unlike the Native American mascots, the data suggests that live mascots drive incremental revenue and brand equity.

Conclusion

The preceding analyses will hopefully generate interest and debate.  From our perspective, this type of work is a lot of fun.  We are able to investigate the topic using data and analytical techniques without having to endure a multi-year journal review process.  As we have noted, our work does include assumptions but we have tried to be as transparent as possible.

In our minds, what we have produced are data driven and unbiased analyses of how mascots affect brand equity and revenues.  Could we extend the models?  Absolutely.  We could find more data, we could use more categories of mascots, and we could use a more sophisticated statistical model.  But for now we have put a stake in the ground, and have hopefully provided a basis for extending the conversations surround these two mascot controversies.

Mike Lewis & Manish Tripathi, Emory University 2013.

St. Louis Tops Rankings of Three Team Cities, Tampa Bay is Last

Our city ranking series continues today with a look at cities with three professional sports teams.  These markets tend to be a bit on the smaller side, but many have significant sports histories.  We also fully admit that we struggled a bit with how to classify several of these markets.  For example, what is the city of Milwaukee?  Is Milwaukee a two sport town with NBA and MLB franchises or should we include the Packers and call it a three sport town?  Having lived in Chicago, it always seemed like all the Wisconsin teams should be lumped together.  Toronto was another decision.  Until now, we have only considered US cities, and avoided one professional team Canadian markets such as Calgary and Edmonton.  So before the complaints begin, please realize that we have made some assumptions about markets.

The table on the right provides our ranking of the eight markets with three professional teams.  According to the data, St. Louis is the best of these markets.  Professor Lewis used to live in St. Louis and the first place ranking was a bit of a surprise to him.  While the Cardinals have an amazing following,  Lewis’ sense was that the Rams and Blues only had average fan bases. The Cardinals do have an exceptional fan base ranking 4th in MLB in both fan equity and social media equity.  The Blues have an above average fan base ranking 14th in the NHL.  The Rams do struggle with a fan equity ranking of 22th in the NFL.  So it really is the Cardinals that elevate St. Louis to the top of the list.

Following St. Louis, we have Toronto ranked 2nd, Milwaukee 3rd and Pittsburgh 4th.  Frankly, we would have predicted Pittsburgh would rank higher.  The issue is that our fan equity metric is based on a “revenue premium” model, and the Steelers don’t seem to price nearly as high as they could.  But, this was a close competition.  Toronto has the best NHL fan base and the Packers and Steelers have devoted followings.

At the bottom of the list we have Tampa Bay.  The Lightning ranked 18th in NHL fan equity.  The Bucs ranked 29th in the NFL and Rays ranked 22nd in MLB.  On a side note, the Atlanta ranking should put to rest any complaints about the Braves relocating.  The Braves have delivered phenomenal quality and have only gained an average fan following.  Add in a history that includes players like Hank Aaron and Dale Murphy, and you would expect that the Braves would have a monster following.  Our expectation is that the move to Cobb County and the building of a mixed use development around the stadium should lead to a stronger fan base in the near future.

Mike Lewis & Manish Tripathi, Emory University 2013.

Ranking Sports Cities: Nashville & New Orleans Are the Best “Two-Sport” Towns

There are ten cities on our list with teams in two pro leagues.  These cities include Baltimore, Buffalo, Cincinnati, Indianapolis, Kansas City, Nashville, New Orleans, Oakland, Seattle and San Diego.  While our previous analysis of one team towns was driven by a single team’s results, we now shift to cities with multiple franchises.

#1 Nashville

We have to admit, this was a bit of a surprise.  Not because of anything negative about Nashville itself, but because both Nashville teams are relative newcomers.  Our data suggest that Nashville has a population that will support teams even without having generations of history. This is somewhat unusual and suggests that Nashville should be considered as a candidate for future expansion clubs.

When Mike thinks of the Titans his mind goes back to Bum Phillips and Earl Campbell (Manish thinks of the Music City Miracle).  But despite Mike’s aging memory, the numbers suggest that the Titans have been able to develop a strong following in a relatively short time.  The Titans rank 10th in terms of NFL fan equity.  According to ESPN, Tennessee has sold out all tickets for the last several years.  Notably, these sell-outs continue whether the team goes 10-6 or 6-10.

Over the past 3 seasons, the Nashville Predators have sold at least 94% of available tickets.  This is impressive attendance considering the size of the market and ticket prices.  The Nashville market contains only 1.7 million people but Predators are able to charge ticket prices in excess of teams in larger markets.  The Predators rank 11th in our fan equity ranking and 15th in our social media ranking.

#2 New Orleans

New Orleans was one of the markets that enthusiastically embraced some of our earlier studies, so New Orleans finishing number two in our 2-sport city rankings was not a surprise.  Well, maybe it was a little bit of a surprise because we are old enough to remember the “Aints.”

New Orleans provides amazing support to the Saints.  In our fan equity rankings the Saints finished 4th in the NFL.  This placed the Saints ahead of more “prominent” teams like the Giants or the Bears.  The key is that our rankings account for population and variation in winning percent.  The results therefore mean that when you control for these factors, Saints fans are truly exceptional.

The Pelicans also have a solid fan base.  The Pelicans finished 16th in terms of fan equity and 7th in social media equity.

#3 Baltimore

We now turn to the top two-professional team markets.  At #3 we have the tradition rich Baltimore metro area.

The Orioles rank a solid 14th in our fan equity rankings of MLB.  This is impressive since up until the past two seasons, the Orioles struggled to compete in the AL East.  It is also impressive since some of the Orioles support was likely lost to the Nationals.  The Orioles also ranked 14th in our social media equity ranking.  The key to the Orioles success in the rankings?  If we had to guess we would say it is tradition. Frank Robinson, Jim Palmer, Brooks Robinson, Cal Ripken etc… Also students have told Professor Lewis that he looks like Ripken.

The Ravens actually score bit better in our rankings with a 8th place fan equity and a 9th place social equity ranking.  Again, this is no surprise given the success of the Ravens franchise.  It is interesting, however, that each team’s equity seems to come from a different era.  While the Orioles glory days were probably from the late 60s to the early 90s, the Ravens equity has been built on recent success and stars.

#4 Buffalo

Just as we find that teams in warm markets seem to struggle to build followings, teams in colder climates seem to outperform their competition.  So it is no surprise that Buffalo (where Manish will be spending Thanksgiving) is in the top half of two team cities.

For the respective teams, the Bills finish 24th in fan equity and 14th is social media equity.  The Sabers finish 16th in the NHL fan equity rankings.

#5 Indianapolis

The Pacers and the Colts fan bases combine to give Indiana/Indianapolis a rank right in the middle of the list.  Despite their recent success, the Pacers rank near the bottom of the NBA with a fan equity ranking of 23rd.  In contrast, the Colts have a very solid fan equity ranking of 6th.  It will be interesting to see if the Colts can maintain this performance as a quarterback now playing in Denver becomes a memory.

#6 Seattle

Seattle ranks 6th on the list.  The Seahawks rank 23rd in the NFL in both fan equity and social media equity. The Mariners do a bit better with a fan equity ranking of 20th in MLB and a social media rank of 12th.

#7 Cincinnati

At number seven on our list of cities with two professional teams we have the home of the Bengals and Reds.  Even prior to running the numbers, this is about what we would have expected.  Our expectations were that the Reds had a strong fan base while the Bengals were fairly weak.  In terms of population Cincinnati is the 28th largest market in the US and the median income rank is #55.

The Bengals’ fan base is relatively weak.  The team usually ranks below average in terms of attendance and finished dead last in 2011.  The Bengals also do not have a great deal of pricing power as the average price of a Bengals’ ticket is well below the league average ($68.96 versus $81.54 league average in 2013).  The end result of this data is that the Bengals ranked 19th in our fan equity rankings.  The team scored even worse in social media with a ranking of 26.

The Reds do indeed have a stronger fan base.  In terms of fan equity the Reds ranked 11th in MLB and the social media rank was a strong 13th.  The Reds also price well below the MLB average ($21.35 versus $27.48 league average) but the team ranks right in the middle of the pack with attendance of more than 2.2 million in each of the last three years.

#8 San Diego

San Diego ranks 8th on our list of “2 sport” cities.  As we have noted, it seems that the better the weather, the more “fair-weather” the fans.  In terms of demographics, San Diego is a respectable market with a population of about 3.2 million (17th largest market) and the 27th highest median income.  But, fan support is questionable.  Strangely, especially for California, the NFL Chargers perform a bit better on our fan indexes than the Padres.

Last year the Chargers ranked 28th in attendance and only sold 84% of capacity.  In our fan equity rankings, the Chargers were ranked 11th.  The social media rank was 15th.  These are respectable numbers.  The reason that the Chargers are fairly highly ranked is that while attendance is low the team is able to charge relatively high prices.  This season, the Chargers average ticket price is actually higher than NFL stalwarts such as Green Bay and Pittsburgh.

The Padres ranked 20th in attendance this past season and 21st in 2012.  The Padres showing is particularly bad because the team’s average ticket price is the lowest in the league.  In terms of fan equity, the Padres ranked 19th in MLB.  The team’s social media rank was also 19th.

#9 Kansas City

Kansas City is our 9th ranked “Two Sport” town.  While Kansas City has been a poster child for the issue of the competitive balance between big and small markets, our analyses suggest that even after controlling for population and income differences that Kansas City is a relatively poor sports market.

This past season the Royals ranked 26th in terms of attendance and only sold 57% of capacity despite being in the hunt for a playoff spot.  And given that Royals prices are well below the league average, it is hard to make the case that price is the factor that is limiting support.  In terms of fan equity the Royals ranked 15th in MLB.

Chiefs are more of a middle of the road team in terms of attendance.  The Chiefs ranked 8th in terms of attendance in 2011 and 16th in 2012.  However, while the Chiefs raw attendance is higher many of their competitor’s attendance figures are limited by capacity constraints.  In 2012, KC attendance was just 89% of capacity.  And like the Royals, the Chiefs also price well below the league average.  In terms of fan equity, the Chiefs ranked 21st in the NFL.

#10 Oakland

At the bottom of the list we have the city of Oakland.  Oakland has two storied franchises in the A’s and the Raiders.  But despite the previous success of these teams they both rank near the bottom of their respective leagues.  The A’s finish 26th in terms of fan equity and 28th in social media equity in our MLB results.  The Raiders finish dead last in fan equity in the NFL.

Interestingly, the Raiders finish 10th in the social media ranking of NFL teams.  This is an important finding because it suggests that the Raiders may enjoy an above average following nationally while they struggle locally.  This means that the Raiders are likely to benefit from relocating.  Of course, this has been tried in the past, but perhaps the key is to move to a place where the team doesn’t compete with the weather.  How about the Portland Raiders?

To some degree Oakland’s finish at the bottom is not surprising.  While both teams have tremendous histories of success, this success mainly occurred in the 70s and 80s.  The Oakland teams may be suffering from fans being disappointed that the teams have fallen a long ways.  This type of “reference” effect is critical because the primary segment of affluent fans is likely to be in their 40s and 50s.

We have also noted in previous posts that there does seem to be a systematic weakness that happens in markets located in California, Florida and other “good” weather cities.  For whatever reason fans in these regions tend not to show the support that fans in colder climates tend to exhibit.

Mike Lewis & Manish Tripathi, Emory University 2013.

Ranking American Sports Cities: The Top “One Team” Markets – Candidates for Expansion Teams?

Over the last 9 months we have looked at fan support across the 4 major US professional sports leagues using a variety of financial and social media metrics.  The thing that sets our  evaluations of fan support apart is that we focus on observable, objective measures of support AND we control for factors related to market size and team quality.  Our measures are therefore not biased towards large cities and we adjust for the bandwagon nature of fans in markets with teams that are currently winning.

To end the year, we are putting all of these rankings together in order to create a ranking of cities.  For this list we combine our revenue premium based fan equity measure with our social media measure.  To combine these we assume that a social media follower or like is worth $1.  Today we begin our list of the best and worst one team sport towns (cities that have a professional team in only one of the four major sports).  The set of single team sports towns includes Columbus, Jacksonville, Memphis, Oklahoma City, Orlando, Portland, Sacramento, Salt Lake City and San Antonio.

#1 Portland

The number one small market (only one professional team) sports city is Portland.  Portland provides exceptional support to the Trail Blazers.  In terms of the fan equity measure the Trail Blazers ranked 4th in the NBA and the social media ranking was 11th.

According to the US Census, the Portland metropolitan area is the 24th largest with a population of almost 2.3 million.  But despite this mid-level population base the Trail Blazers had the 4th highest attendance in the NBA last season and the second highest in 2012.  Notably, this support occurred despite the team missing the playoffs in each season.  The attendance also was NOT generated by deep discounts as the Trail Blazers price at just below the league average.

Our analysis suggests that the Portland market has a great deal of potential.  The population base is decent, median income is above average and the fans seem to be extremely supportive.  We know that there has been some interest in trying to attract an MLB team to Portland.  With the number of struggling franchises across all the major leagues, it is somewhat surprising to us that Portland isn’t mentioned more frequently.

#2 Sacramento

The Sacramento market’s 2nd place ranking was a bit of a surprise.  Sacramento just doesn’t ever seem to be top of mind when we think about sports cities.  The most recent time Sacramento has really been in the news was during the controversy surrounding the proposed sale of the team to a Seattle based group.

The Kings have struggled in recent years.  The last two years’ annual attendance rankings have been 30th and 27th.  But we need to consider that these attendance numbers have occurred in seasons when the team has played well below .500 basketball.  If we go back a few years to when the Kings were winning, the team was able to generate consistent sell-outs.  When we run our analysis over a ten year period the Kings end up with a fan equity ranking of 6thWhat this means is that Sacramento fans are well above average in terms of supporting their team.  If the Kings are reasonably successful then our data suggests that the fans will turn out.

The Sacramento market has a population of more than 2 million and a respectable median income of more than $46,000.  These demographics are favorable to many small markets so it is a bit surprising that Sacramento has been in danger of becoming a “zero” team market.

#3 Salt Lake City

Salt Lake City is our number three “one sport” city.  Salt Lake City is a small market with a population of just 1.1 million but the metro area’s median income is a solid $48K (ranking 21st).

The Jazz rank 11th in our NBA fan equity ranking and 19th in the social media ranking.  These rankings are not surprising.  The Jazz has been a very successful franchise with notable players such as John Stockton and Karl Malone.  But recent seasons may not be meeting fan expectations causing the relatively poor social media results.

Based on the metro area population we don’t know that the city could support multiple pro franchises but Salt Lake City is a tremendous “one sport” city.

#4 San Antonio

Now we are getting into the “good” one team cities, but my guess is that folks in San Antonio will be upset by a 4th place finish.  This is the beauty (or enraging) part of our rankings.  When we assess revenue or social media we explicitly control for team performance.  This is important because it is obviously easier and more enjoyable to be a fan of a team that is winning.  It is also likely that fans are willing to pay more for a winning team.  The goal of our rankings is to get at the underlying passion and support of each city’s fans.

The Spurs ranked 10th in our NBA fan equity measure and only 24th in social media.  This is a very solid showing on the fan equity metric.  In terms of social media, San Antonio is an under performer. Based on the San Antonio market’s demographics and the Spurs on-court success our model suggests that the Spurs should have an additional 1.7 million Facebook Likes and Twitter followers.  In other words, in comparison to other NBA teams’ social media communities the Spurs fall short of what is expected for a market with San Antonio’s population and the Spurs’ winning rate.

#5 Orlando

The number 5 city on the list is Orlando.  While many observers might question the intensity of the Magic fans, the numbers tell an interesting  story.  For example, last season the Magic won only 24% of their games.  However, despite this futility, the team reported a 93.4% attendance rate.

Orlando also has a relatively rich history for a newer team. In addition to two conference titles, the team has featured notable players such as Shaquille O’Neal, Tracy McGrady and Dwight Howard.

Within the NBA, the Magic rank 17th in terms of fan equity and 21st in social media equity.  As we noted below, Florida teams tend to struggle in our rankings.  Demographically Orlando is a decent market with a population of over 2.2 million.  However, while the Magic doesn’t compete with other pro teams, the Magic does face tough competition. In the case of Orlando, pro sports compete with the weather, golf and the mouse.

#6 Oklahoma City

Oklahoma at number 6 may be a bit of a surprise. The Thunder has enjoyed recent success, Kevin Durant is a marquee player and over the past few years the team has usually played  before a packed arena.  But the sellouts have only been achieved as the team has become a winner.

Our analysis explicitly controls for bandwagon fans.  After controlling for winning percentage and market characteristics we find that the Thunder ranks 19th in terms of revenue based fan equity and 15th in social media equity.

From a marketing perspective, the Oklahoma City NBA franchise made an interesting decision to drop ties to the team’s previous incarnation.  Typically, the belief is that the previous brand contains some value.  By keeping names like the Jazz or Colts some connection to historical achievements is often retained. We should note that we don’t know why the Sonics name was dropped – perhaps this was negotiated with the city of Seattle.

On the plus side, our analyses also confirm that the key to building fan equity is a tradition of winning.  The Thunder has not gotten over the hump but they have made strides.  We also suspect that the social media results are a leading indicator for fan equity.   

#7 Columbus

Columbus finishes #7 on the list of one team towns.  Columbus is the 32nd largest metropolitan area by population and the 57th ranked based on median income.  In terms of our rankings the Blue Jackets ranked 23rd in the NHL based on revenue premium based fan equity and 29th for social media equity.

The Blue Jackets were founded in 2000 and they therefore lack the multi-generation history of other franchises.  The team has also struggled on the ice as it took 9 years for the team to reach the NHL playoffs.  As such it’s not surprising that Blue Jackets are below average in terms of fan support.  Of course, the real issue with the Columbus market is that it is dominated by Ohio State sports.

#8 Jacksonville

The state of Florida is an interesting situation for professional leagues.  The state population has boomed and college sports have great following.  However, almost all professional franchises have struggled and many believe that the pro leagues have created too many Florida teams.  In terms of key demographics, Jacksonville ranks 82 in median income and 40th in population.  This is a bad combination of population and income given that the average ticket price in the NFL exceeds $80.

Within the NFL, the Jaguars ranked 27th in terms of revenue premium based fan equity but the team did score a much healthier ranking of 17th for our social media measure. It’s not surprising that Jacksonville ranks low as a market given these marginal demographics, a lack of franchise history and stiff competition from college teams. 

On the plus side, Tebow is still available.

#9 Memphis

In last place on our list we have the city of Memphis.  The Grizzlies are the only pro game in town.  Within our NBA rankings the Grizzlies were ranked 25th in terms of revenue premium based brand equity and 20th in terms of social media equity.  Of the nine onesport markets, Memphis was ranked last in terms of revenue premium equity and 7th for social media equity.

Memphis as a market has some natural disadvantages for teams in terms of population base (ranked number #41) and income levels (ranked number 104).  But even after controlling for these factors Memphis fans support levels are well below the levels provided by other cities.  For example, the Grizzlies average ticket price of $29.49 is far less than the league average of $50.99).  Even at these low levels attendance has been poor.  Despite winning 56% of games in the 2010-2011 season, the Grizzlies only sold 74.4% of their available seats (ESPN.com).  It was only last year when the Grizzlies broke the 90% capacity utilization rate and the team needed to win 68% of its game to do that well.  In comparison, Orlando sold about 94% of seats with a winning percentage of 24%.  In terms of social media, the Grizzlies have just over 407,000 Facebook Likes compared to Portland with 550,000 and Oklahoma City with about 2.3 million.  For reference the Lakers have 17 million Facebook Likes.

But while Memphis ranks last on our list, there are a few positive indicators.  Last year was the team’s most successful season and ESPN has ranked the Grizzlies organization as the top professional franchise.  It is also true that the Grizzlies have only been in Memphis since 2001.

Mike Lewis & Manish Tripathi, Emory University 2013.

Social Media Equity in Major League Baseball: Boston Wins, Cubs Fans Lose and Southern California Baseball is Social Media Challenged

A new way to assess the health of a brand is to examine its social media following.  Social media metrics have an appeal because consumers can show their interests without regard to price.  Of course, this is also the downside of social media, since it’s difficult to tell how consumer interest can be converted to revenue.  In the case of professional sports, social media metrics are of special importance because team revenues are often constrained by finite stadium capacities.  Another equity measurement challenge in sports is that teams are tied to specific metropolitan areas.  If we don’t control for differences in market size, we would almost always find that the New York teams have the best brands and teams in markets like Kansas City and Milwaukee would appear to have weak brands.

To examine social media equity in major league baseball, we developed a model that predicts social media following (in this case the sum of Facebook likes and Twitter followers) as a function of market size, Twitter activity as measured by tweets, and variables that control for short-term variation in winning rates.  We use this statistical model to predict social media following, and then compare our prediction to the team’s actual social media presence.

The number one ranked team in terms of our social media equity measure is the Boston Red Sox.  Boston is followed by the Cubs, Yankees, Cardinals and Houston.  The one surprise in this top 5 is the Astros. Conventional wisdom would suggest that the Astros don’t belong, but the key to our method is that we are controlling for team performance.  The data says that the Astros have a much greater social media following than we would expect for a team that has had back to back 100 game loss seasons.

That the Cubs having a great fan following on social media is not a surprise but this result continues to strengthen the case that Cubs fans are the most abused in baseball.  The fans consistently provide great support on every dimension, and the Cubs’ management continues to fail to produce a decent team.  In an earlier study we even found that the Cubs fan support is basically unrelated to the team’s performance.  We are not sure who should be the most embarrassed: the front office for their amazing lack of ability to build a constant winner or the fans for their relentless support.

The losers on the list are predictable with one exception.  While the Angels and Diamondbacks being near the bottom are unsurprising, the Dodgers at third from the bottom are a shocker.  In a previous study based on economic loyalty, the Dodgers were at the top of the list.  The Dodgers have great fan support as evidenced by the league leading attendance.  But when it comes to social media, the Dodgers struggle for some reason.  For example, while the Dodgers play in the second largest market they have similar social media presences as teams such as the Rangers and Cardinals.  Perhaps it is a Southern California issue, since the Angels finished dead last in our ranking.

Mike Lewis & Manish Tripathi, Emory University 2013.

Dynamic Pricing and the Dual Entitlement Principle: When is Dynamic Pricing Price Gouging?

This article in the Kansas City Star discusses the Kansas City Royals’ dynamic pricing plans for the post-season.  The key excerpt from the article is…

“Diamond Box seats located behind the dugout on the lower level normally sell for $39 in the regular season. That price jumps to $155 for a wild-card game or the divisional series, $220 for the championship series and $275 for the World Series.

That represents increases of 297.4 percent, 464.1 percent and 605.1 percent. Seem high? Several professionals in the field say they are among the sharpest increases they’ve ever seen for any event.”

The obvious question is “are these prices really too high?”  The knee jerk response from dynamic pricing advocates is usually that the prices are fair since the prices are set by the market.  The concern I have with the idea of market prices being “fair,” is that fairness is subjective.  In other words, it is the consumer that gets to make the judgment as to whether a given practice or price is fair.

There is an academic theory that speaks to this issue of fairness. The theory of “dual entitlement” basically says that consumers evaluate prices with the belief that while the firm is entitled to a profit, the consumer is also entitled to a fair price.  In the case of increasing prices of post-season games, the dual entitlement principle suggests that while the team is entitled to some price increase, the consumers should not be exploited with exorbitant prices.

What is the downside to violating this principle?  The Royals should be concerned with whether these prices damage their stock of fan loyalty.  As a small market team, the Royals are likely to have more losing seasons in their future.  If they want fans to stand by the team during the tough times, it seems like extracting every last dollar during a rare playoff series might be a bad idea.

So when is dynamic pricing price gouging?   Whenever the fans think it is.