2014 NBA Fan Quality Analysis

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.

NBA Bandwagon Fans

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.

NBA Twitter-Based Fan “Personality”

Social media is increasingly being used as a market research tool, and we believe that it provides opportunities to develop some richer descriptions of NBA fan bases.  The foundation for today’s analysis is something known as social media sentiment.  The idea behind sentiment is that we look at the “tone” of tweets surrounding each team.  In this study, we are examining the distribution of positive versus negative tweets for each team over the past three years.

Our actual approach uses a variety of statistics used to characterize distributions (e.g. mean, variance, skewness, kurtosis, etc.…), and then we employ a technique known as cluster analysis.  We will avoid the details (feel free to contact us) but the general idea is to find teams that have similar distributions of social media sentiment.  We use cluster analysis on team social media sentiment on Twitter over the past three seasons to dynamically segment fan bases (we allow fan bases to move across clusters over time).  Perhaps, it is more accurate to describe what we are doing as segmenting the types of relationships fans have with their teams.  Do fans have unconditional love for their team?  Do they have violent mood swings?*

Based on our dynamic cluster analysis of Twitter sentiment, we are able to describe each NBA fan base.  The chart below summarizes the social media “personality” of all NBA fan bases over the past three seasons.  Please note that the summary statement for each team is our description of the Twitter sentiment based cluster.   Our decription is the least scientific aspect of all of our fan quality analyses.

NBA Twitter Personality*One caveat to this study is that since this is all based on Twitter data, the results reflect the opinions of fans on SOCIAL MEDIA only.  Also, please note that unlike our previous study of NBA social media equity that was based on the size of each team’s following, this analysis is based on sentiment or tone.

Mike Lewis & Manish Tripathi, Emory University 2014.