Note: We have received a lot of responses to this study. For more about the specifics of the study and answers to common questions, click here.
One of the core concepts we work with at Emory Sports Marketing Analytics is brand equity. Brand equity is basically the advantage that a firm has over its competitors due to their brand being better known and having more loyal followers. In the realm of sports, brand equity can be thought of as capturing thesize and intensity of a team’s fan base. As the NBA playoffs proceed to their climax this year, we decided to examine the brand equity of all 30 NBA franchises (for a similar analysis of NCAA basketball click here).
A quick Google search shows several other rankings of fan base quality (links below). These rankings are largely based on consumer surveys or opinion. In contrast, our method uses statistical models of team revenue results to measure which fan base best votes with their wallets. Basically, what we do is estimate a statistical model of team box office revenues as a function of the team’s winning percentage, team payroll, market population, arena capacity, number of all-stars, and other factors that capture the quality of the team’s product and revenue potential in a given year.
Home Revenue = f(win%, Payroll, Market Population, etc…)
We then compare team’s actual home revenue with predictions from our model to discern teams that out- or under-perform.* We call this quantity “Fan Equity.”
Fan Equity = Reported Home Revenue – Predicted Home Revenue
For the 2013 regular season, we find that the New York Knicks have the top ranked fan base. The Knicks are followed by Chicago, Boston, Portland and Dallas. Of these, Portland is probably the most interesting case. A quick look atattendance data from ESPN shows that the Trail Blazers regularly exceed capacity for entire seasons. Portland is a small market, but a market with passionate and supportive fans. Portland also likely does well because they are the only “pro” game in town.
At the other extreme, we find that the Brooklyn Nets, the Atlanta Hawks and the Detroit Pistons are the greatest underperformers. To reiterate, our method basically suggests that these teams should be making more revenues based on their markets and on-court performance. The Brooklyn Nets are a fascinating example, given the hype that surrounded the move to Brooklyn, and Jay-Zs “ownership.” While the Nets finished dead last in our rankings, if we look at year over year changes we do see signs of life. In terms of year-to-year changes, the Nets had the 5th greatest improvement from 2012 to 2013 (even though their overall ranking did not change).
On a local level, we find that the Atlanta Hawks have very little fan support. This comes as little surprise to folks from the South (aka SEC territory). Atlanta as a city has the reputation of a place where everyone is from somewhere else. This is probably a critical factor as a great deal of fan loyalty is built as fans grow up watching the home team.
*As with any analysis of this type, it is possible to quibble with assumptions. For example, our method does not consider television revenues or that some cities have a greater corporate presence.
Links to other rankings of fan base quality:
Mike Lewis & Manish Tripathi, Emory University 2013.
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 4th, New Orleans ranks 5th, and Charlotte ranks 6th. 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.