2014 NBA Fan Quality Part 2: Demanding or Bandwagon Fans?

Note: This summer we are studying the fan quality of various sports leagues.  We have already examined MLBNHL, and College Basketball.  For Part 1 of our NBA study on Fan & Social Equity, please click here.

An analysis we have had fun with this summer involves looking at fan response to winning rates.  This encompasses looking at how different fan bases respond to variations in winning.  If fans only show up when the team wins, does this mean they are bandwagon fans?  Or does it mean that they demand quality?  We report, you decide.

We looked at the last fourteen years of data for our study.  For more details on our methodology, please click here.  Our analysis suggests that the city with the most bandwagon or demanding basketball fans is Detroit.  Pistons fans are followed by 76ers fans and Pacers fans.  At the other end of the spectrum, we have fan bases that either always or never show up, regardless of the team’s fortunes.  The Spurs fan base is the most indifferent to winning (or the most loyal, if you’re a glass half-full type).  New Orleans, Oklahoma City and the Lakers also have fans whose attendance doesn’t seem to have much to do with the team’s success.

2014 NBA Attendance Sensitivity to Wins

This summer we have also looked at the fan bases that are the most and least responsive to ticket prices.  The table below shows the five cheapest (or value-conscious) fans bases and the five that don’t seem to react to prices.

2014 NBA Attendance Sensitivity to Price

New Orleans is an interesting fan base:  indifferent to performance, but the most price sensitive in the league.  We are starting to feel very sorry for 76ers management.  Philadelphia’s basketball fans are the most demanding in terms of winning, but the least willing to pay.  Quite the dilemma!  At the other extreme, we have an interesting collection of teams.  Orlando, Portland and Atlanta also seem to have attendance that is minimally affected by average prices.  It’s an interesting list, because Portland is generally regarded as having passionate fans, while Atlanta is not.

Mike Lewis & Manish Tripathi, Emory University 2014.

NHL Fan Analysis Part 3: Sensitivity of Attendance to Price

Note: This is Part III 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 I, click here.  For Part II click here.

The next study in our NHL fan analysis is a quick look at price sensitivity.  The central idea here is to understand (statistically) which teams’ fans are the most value-oriented and which are willing to spend.  The results are based on a regression model that predicts home attendance based on winning rates, prices, team fixed effects and interactions between the winning rates, prices and team dummies.

The most “value-oriented” fans live in Columbus, Ohio.  The Blue Jackets are in a tough competitive position.  While the Blue Jackets have fewer resources than most of the other NHL teams, their local competition is one of the biggest spenders and most successful college programs.  Following Columbus, other frugal fans reside in Colorado, St. Louis, and Minnesota.

On the other extreme, we have teams whose fans seem to be insensitive to the prices charged.  At the top of this list are the Buffalo Sabres.  The Sabres are followed by the Red Wings, Blackhawks, Bruins and Dallas Stars.  And interesting aside in this analysis is that several of these markets like Detroit and Chicago also made our list of teams with high sensitivity of attendance to winsWhile our conclusions are limited by our use of aggregate data this observation does suggest that these teams would be better served by increasing prices and using the incremental revenues to enhance team quality (assuming they have room under the salary cap). 

Mike Lewis & Manish Tripathi, Emory University 2014.

MLB Fan Analysis 2014 Part 2: Attendance Sensitivity to Performance & Prices

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Note: Please click here for Part 1.  

For part 2 of our analyses of MLB fan bases, we change direction and focus on fan response to team performance and pricing.  These analyses complement the analyses of fan equity by drilling down a bit, and considering how demanding fans are of their teams.  We develop our fan sensitivity rankings using statistical models of consumer demand (attendance).  These models are built to estimate team-level response to price and winning percentage.  We use data from 1998 to 2013.  For more on our methodology, please click here.

Team Performance

Our first analysis looks at the responsiveness of fan demand to team winning percentage.  This can be thought of as a measure of how demanding fans are of their teams.  In other words, we are looking at the tolerances fan bases have for losing (or maybe we could view this as insight into which cities are the most prone to bandwagon behavior).

MLB 2014 Win Sensitivity

The most demanding MLB fans live in Philadelphia.  This fits the stereotype of Philadelphia fans as aggressive, demanding fans that are willing to cheer injuries and boo Santa.  The numbers say that Philadelphia fans require their team to perform or they won’t show up.  Following the Phillies are the fans of Baltimore, Oakland, the White Sox, Detroit and Cleveland.

At the other extreme, the teams with fans that are the least sensitive to winning rates are the Yankees, Cardinals, Marlins, Red Sox and Diamondbacks.  This group of non-demanding fans bases probably includes two types.  We have the loyal and passionate fans of the Yankees, Cardinal and Red Sox.  But, we probably also have the apathetic fans of the Marlins and the Diamondbacks.

Prices

Our second analysis examines the relationship between average ticket prices and attendance.  This analysis is focused on the degree to which fan bases are sensitive (or insensitive) to high ticket prices.  We should point out that the analysis of price sensitivity in sports is a tough issue (so the results should be taken with a grain of salt).  We are using average prices in the analysis.  Given the range of prices within a stadium, this is debatable assumption.  But it’s the best data we have access to, and we’re all friends, so why not.

MLB 2014 Price Sensitivity

We find that the most price sensitive fans live in Arizona, Cleveland, Baltimore, Seattle, Atlanta and Tampa Bay. Frankly, we are not sure what to make of this list.  Several of the cities are located in warm weather cities (which seems to reduce fan interest).  Cleveland and Baltimore are older cities and Seattle is a vibrant city in the Pacific Northwest.

At the other extreme, we have Milwaukee, Anaheim, Minnesota, San Francisco, and Philadelphia.  Perhaps these cities should raise prices.  The case of Philadelphia is especially interesting given that Phillies fans are also the most sensitive to winning.  It seems the Phillies should charge more and use the funds to invest in players.

The Brewers are another fascinating case.  This team does well in social media equity and the fans don’t seem to be very price sensitive.  This seems to be a team that is rapidly developing a highly loyal following. 

Mike Lewis & Manish Tripathi, Emory University 2014.

NHL Pricing: A Social Media Based Approach to Assessing Ticket Pricing “Fairness”

Of late we have been looking at value provided by sports franchises in different leagues.  For most of these analyses, we have basically focused on how much fans are asked to pay for each win.  We also make adjustments for factors related to market size, median income and capacity.  Today’s analysis looks at pricing in the NHL.

Of all the pricing analyses we have done, the NHL is the strangest.  The most surprising result is a lack of a positive correlation between winning rates and ticket prices.  Our standard procedure is to develop a model that predicts ticket prices as a function of winning percentage, payroll, market size, median income and other factors that we would expect to be related to demand for tickets.  We do a lot of testing in these models in terms of evaluating different specifications (interactions, nonlinear effects, etc…). In none of these specifications did we find a significant positive relationship between winning rates and prices.  The most powerful predictor was median income.

The other thing that we have been experimenting with in these models is using social media data as an explanatory variable.  The logic is that social media metrics (follows and likes) provide an unconstrained measure of fan support.  This provides a means to assess the relative aggressiveness of how team’s price.

Something to consider in these pricing analysis is the question of how prices are set.  At one extreme, we might suppose that prices are set in order to maximize revenues.  This is a reasonable starting assumption but the implication is that teams are extracting every dollar possible.  On the other hand, teams may price below fan’s reservation prices if the team is trying to build brand loyalty.  The key point is that while consumers might be willing to pay very high prices, if they don’t view the prices as “fair” then loyalty can be adversely affected.  Perhaps the best way to look at our list is that the teams at one extreme price the least aggressively (most benevolently?) while the teams at the other extreme are trying to extract every dollar they can from their fans.

At the top of the list we have Ottawa, Dallas, Boston, San Jose and Chicago.  After adjusting for market sizes, income levels and social media presences we find that these teams underprice. This is an interesting list as it contains both high brand equity teams like the Blackhawks and the Bruins as well as less prominent teams like Dallas and San Jose.  It is also notable that the Blackhawks and Bruins price above the league average while Dallas and Ottawa price near the bottom.  Interestingly, over the past 3 years Ottawa has basically sold out its arena.  The implication is that Ottawa (and the other teams on the list) could likely impose a price increase without too much loss of demand).

At the other extreme we have Philadelphia, Florida, Winnipeg, Toronto and Edmonton.  Again, this list contains both high (Toronto, Philly) and low profile teams (Florida).  Toronto is especially notable as they charge by far the highest prices in the league.  Winnipeg’s price are also extreme as they price higher (according to Team Marketing Report) than teams in New York, Chicago or Los Angeles.

Mike Lewis & Manish Tripathi, Emory University 2013.