A Non-Judgmental Analysis of the NFL Rating Decline

Over the last week there has been a lot of discussion regarding the decline in NFL ratings this season.  The facts seem to be that the NFL is experiencing a weakness in prime time games that has resulted in an 11% drop in ratings.  The NFL has circulated a memo that cites a variety of factors such as the presidential campaign.  Notably the memo states that there is no evidence that “concern over player protests is having a material impact on our ratings.”

I have gone on record in multiple articles over the past few years talking about the likely impact of high profile or controversial events such as domestic violence incidents and concussions on NFL fandom.  My opinion has been that the NFL would continue to be strong and fans would continue to watch.  So what’s different now?  On this blog, the emphasis is almost always on data driven analyses.  In this case, it’s not possible to take that approach.  I would need much more detailed data on TV ratings and even then I likely wouldn’t have the ability to rule out different possible causes.

The NFL has suggested a confluence of events as the culprit.  I think this is true but perhaps not in the manner the NFL is implying.  I think the NFL is right that the presidential campaign is having an impact.  But I suspect it is having less of a direct impact due to people’s attention being shifted in a different direction.  College football does not seem to have experienced a decline in viewership.

I think it is the nature of the current political campaign and the emotions the campaign is generating.  This campaign has highlighted very distinct cultural differences.  The world views of Trump and Clinton supporters seem to be fundamentally different.  The potential problem is that a lot (majority?) of the NFL’s fan base may lean in the Trump direction while the protests lean in the Clinton direction.  In what follows I’m going to talk about this situation on a theoretical level.  I am making no value judgments about any protests or response to protests – I’m just looking at the marketing and branding issues.

Why are the protests potentially damaging to the NFL brand?  I think there are a couple of related issues.

First, the NFL has been known for shutting down individual expression by players.  Remember it is the No Fun League and it’s all about protecting the shield (brand).  Now, however, we seem to have a protest that is allowed.  And it is a protest with which many fans may disagree.  On some level the NFL seems to be changing its policies to accommodate the protests.  I think it is this “change” that may be the key issue.  Especially if the “change” is to accommodate something that is controversial to the core audience.  If a league is known for shutting down everything from TD celebrations to minor uniform violations then is not shutting something down an implicit endorsement?

The stridency of the current presidential campaign in terms of insiders versus outsider and political correctness makes this type of “authenticity” issue especially salient to certain segments of fans.  The impact may be  subtle.  It may manifest as a softening in enthusiasm or engagement with the NFL brand rather than a decrease in stated preference.  Fans still like the game and the players but maybe they are just not as compelled to watch.  (I don’t have access to the NFL’s data but this may be a tricky issue to assess using traditional marketing research techniques.)

The second, and related issue, is that there are other factors impacting the brand.  The current protests occurred in the wake of seasons that featured domestic abuse and the concussion issues.  The NFL brand may be resilient to any one event but over time problems can weaken the foundation.  This type of subtle brand weakness may be especially relevant given that the NFL is currently lacking some star power.  While the NFL is less of a star driven league than say the NBA, having Peyton Manning retired and Tom Brady suspended makes the league more vulnerable.

 

Amateur Sports and Brands

HBO Sports recently created a detailed report on the IOC.  The RIO Olympics do not come off well.  Pollution, doping, corruption and athlete exploitation are at the top of the list.  It is a fascinating story that seems to play out with each Olympic Games.

This issue of fair compensation for the athletes is high on the list. The number discussed in the report was $4 billion.  The question is whether and how this money from rights fees and sponsors should be allocated to the athletes.  Is (and should) there be an Olympic Ed O’Bannon?

In many respects this starts to sound like the debates about college sports in the US.  These debates are usually cast in terms of fairness.   to the athletes versus arguments about the purity of the sport or appropriateness of academic institutions running pro teams.

These debates are at best incomplete without considering the role of marketing and brands.  While college football players supply the product, the brands owned by the colleges or the Olympics is what drives fan interest.  Leonard Fournette is a Heisman favorite and a huge star.  But does he draw fans to LSU.  the truth is he probably doesn’t (in the short-term).  In the long-term its stars like Fournette that create the brand equity. 

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Likewise, in the case of the Olympics – we could ask how much interest in driven by the current athletes?  and how much is driven by the attachment people have to the Olympics (the brand).

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I think (in the US) the Olympic brand is about Carl Lewis, Bruce Jenner, Mary Lou Retton, Jesse Owens, Cassius Clay or many others.  It remains to be seen who from the current crop breaks out.

The real problem, I believe is one of equity.  This is true in both college sports and the Olympics.  The fundamental issue is who gets to harvest the value of the brands.  The problem – to many folks – is that this seems to just end up being the people that control the institutions at any one moment.  The athletes that have built the brands (the stars of the past) and the athletes that create the product (this years athletes) tend to get left out in the cold.

 

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.

NHL Fan Base Rankings: Americans may like Hockey, but Canadians Love it

PLEASE NOTE THAT THESE ARE OUR 2013 RANKINGS, FOR OUR 2014 RANKINGS AND IN-DEPTH STUDY, PLEASE CLICK HERE.

For our NHL Social Media Equity Rankings, please click here.

A quick search of the Internet about who has the best fans in any sport will lead to multiple articles and rankings.  These rankings tend to rely a lot on personal opinion, and very little on any type of analysis.  The best of these studies tend to use a little bit of data concerning metrics like attendance, or maybe how many “likes” the team has on Facebook.   Occasionally, the ranking will be some type of weighted average of several pieces of data.  The vast majority of these approaches are badly flawed.  In the case of looking at raw numbers such as attendance, a frequent mistake is to ignore that attendance is driven by winning rates.  If this is the case, then such a study inflates winning teams’ fan bases by including bandwagon fans.  In the case of using a weighted average of multiple criteria, we still have the problem of not accounting for winning rates, but we also have the problem that the “weights” for each factor tend to be arbitrary.

What we do in our rankings is to use a wide variety of data and some statistical modeling to get around these issues.  We use something called a revenue premium approach to assess a team’s fan equity (value of the fan base).  The basic procedure begins with a statistical model that predicts a team’s box office revenues based on market potential (population and median income), team quality (winning rates) and other factors (such as team payroll).  We then compare the predictions from this model with each team’s approximate box office revenues to determine which teams over and under perform.  More details on the approach are available here.  In today’s post, we rank NHL fan bases using the above approach.  Later in the week, we will present results that rank teams based on social media equity (rather than the economic value of the fan base).

Using the past three years of results, we find that the best NHL fan bases live north of the border.  In first place, we have the Toronto Maple Leafs.  The Leafs pack the fans in despite charging the highest prices in the league.  The key point is that while the Leafs have been up and down the last few seasons, the fans continue to show up and pay premium prices.

In second and third place, we have Edmonton and Montreal.  The Oilers ranking second may be a bit of a surprise given some of their recent struggles on the ice.  But Edmonton continues to sell out their building on a regular basis, while charging fairly high prices and losing more than half their games in recent seasons.  Remember, Edmonton does this with a metro area population that barely exceeds one million.  The Canadiens are number three on the list.  A comparison between the Canadiens and the Chicago Blackhawks might be instructive.  These two clubs are fairly similar in box office performance. The Hawks sell a few more tickets but Montreal charges higher prices.  But, Montreal achieves their results in a metro area a third the size of Chicago’s, and without being one of the best teams in the league.

In positions 4 through 6 we finally see the Americans represented.  The Penguins come in 4th, the Rangers 5th and the Flyers 6th.  Our initial reaction to these results was that Pittsburgh is a heck of a professional sports city.  The Steelers were the leaders in our study of social media equity in the NFL.  The Rangers and the Flyers are both solid franchises across all dimensions.

One of our favorite parts of doing these rankings is determining the bottom five.  It’s fun because we typically get to be insulted by folks from all over (thankfully, the Trashers left Atlanta so we are spared the local abuse*).  San Jose and Anaheim are 5th and 4th from the bottom, respectively.  Californians seem to be the opposite of Canadians (take it as a compliment or insult).  Third from the bottom is the Phoenix franchise (We’re not even sure of their name). Second from the bottom we have the Ottawa Senators.  This is just embarrassing for a Canadian team.  Let us respond to the Ottawa fans right now.  We don’t care that you sell out – read the description of the method.  In last place, we have Dallas.  Why would anyone move a hockey team from Minnesota to Dallas?

*On a related note, the Winnipeg Jets are excluded from the rankings because the team moved from Atlanta during the period of the study.

Mike Lewis & Manish Tripathi, Emory University 2013.

College Football Brand Equity Rankings: The Overall List

Over the last two weeks, we have been reporting our football fan base rankings conference by conference.  Today, we turn to our overall ranking.  We started the list with an analysis of the brand/customer equity of the major conferences.  The Big Ten and the SEC are the leading conferences largely because they have strong TV deals.  That being said, the number one team on our list is not a member of either the Big Ten or the SEC.

Number one on the list is the University of Texas.  The Longhorns have some built in advantages that make it such a powerhouse.  Texas is the flagship school in a highly populated state with an incredible football culture.  Texas is also interesting because it is such a frequent target in realignment discussions.   Texas would bring the most valuable fan base to any conference.   In fact, Texas football is such a valuable property that we doubt that they will move anytime soon.  Texas is a strong enough brand to keep the Big Twelve a viable conference.  This means that Texas has an immense amount of bargaining power within the Big Twelve; which would be lost in a move to the Big Ten or the SEC.

Number 2 on the list is a bit of a surprise.  Based on the numbers, we found Georgia to have the second highest customer equity.  We go into more detail about Georgia football in our SEC writeup.

Number three on the list is the Big Ten’s Ohio State Buckeyes.  Ohio State has many of the same advantages as Texas, as they are the flagship school in a highly populated and football crazy state.

Numbers 4 and 5 on the list also hail from the Big Ten.  We have Penn State in 4th place and Michigan in 5th.  These are two interesting cases, since PSU is obviously in a transitional stage, and may fade a bit over the next couple of years, while Michigan is making moves to become even more profitable.  In positions 6 through 8, we have Alabama, Auburn and Florida.  Our rankings seem to confirm that the SEC and Big Ten are college football’s top conferences.

The 9th place team is one that we haven’t talked about in any of our previous rankings, Notre Dame.  Our guess is that Notre Dame fans will feel slighted by their 9th place ranking.  But, at the end of the day, our approach is driven by a combination of revenue and team quality data.  What we find is that Notre Dame is a great college football brand, but far from the dominant brand their fans believe it to be.

In tenth place we have the lone West Coast team in the rankings.  The Washington Huskies were the surprise leader in the Pac 12, beating out teams like USC and Oregon.

Mike Lewis & Manish Tripathi, Emory University 2013.

PREVIOUS: RANKING THE SEC

Ranking SEC Football Fans: Georgia beats out Alabama

We are presenting a series ranking the “best” fan bases in college football.  The study uses data from the past ten years and the rankings are based on Revenue Premium Brand Equity.  For more information on the analysis/methodology, please click here.

As a rule, when we begin any analysis we start with no prior expectations about the results.  We let theory and numbers guide our findings.  However, living in the South, it is hard not to witness the extreme passion and loyalty of SEC fans on a daily basis.  The SEC football season is year-round (season, recruiting, spring football).  Therefore, we were not surprised when the SEC was the top rated conference in our college football Revenue Premium Brand Equity rankings.   Given the passion of SEC fans, we expect that our SEC conference rankings will engender a lot of “constructive discussion”.

The University of Georgia has the number one ranked football fan base in the SEC according to our study.  It should be pointed out that this study covers a ten year period, and that the top four ranked schools in the SEC are also among the top ranked football fan bases in the country.  So, what separates Georgia from Alabama?   Over the period of our study, both Georgia and Alabama averaged between 9 and 10 wins a season.  However, Georgia averaged 12% more in revenues per year than Alabama.  Alabama also had a couple of years in the beginning of our sample (2002 & 2004) where the home games were not all filled to capacity.  Thus, over the period of our study, when we control for team performance and other institutional factors, the Georgia fan base is just a bit more loyal and devoted.

Auburn University finished in third place, being just edged out by its friendly neighbor, Alabama.  The Crimson Tide generated slightly more revenue per year on average than the Tigers, despite averaging almost the identical number of wins.  Also, while Alabama’s revenues are growing, Auburn has been facing a decline.   The University of Florida finished fourth in our study.   The Gators actually average 6.9% more revenue per year than Auburn, however they also averaged 0.5 more wins per season during the period of our study.  Remember, our conjecture is that it is easier for a fan to shell out for a team when the team is winning games, thus we control for team performance.

Vanderbilt is ranked 11th in our study.  We would like to point out that the last couple of years have been positive for the Commodores, and although lagged, the revenues for the football program seem to be improving.  Ole Miss and Mississippi State are at the bottom of the study of SEC fan bases.  During the period of our study, Ole Miss and Mississippi State actually averaged more wins per season than Vanderbilt.  However, Ole Miss generated roughly the same amount of revenue as Vandy, and Mississippi State generated 20% less.

Mike Lewis & Manish Tripathi, Emory University 2013.

PREVIOUS: RANKING THE PAC-12

NEXT: OVERALL RANKINGS

The American Athletic Conference: Surprising Results that Portend a Bright Future

We are presenting a series ranking the “best” fan bases in college football.  The study uses data from the past ten years and the rankings are based on Revenue Premium Brand Equity.  For more information on the analysis/methodology, please click here.

The American Athletic Conference (AAC) is the product of conference realignment, and a fascinating story.  The former Big East schools are desperately trying to construct a league that can keep the AAC in discussion of the Power 6 conferences rather than fading back into the pack.  To some degree, our analyses suggest that the AAC has made a few good moves.  We already rank the AAC as the number five conference, and there is reason to believe that the AAC has landed several programs with bright futures.

Number one on our list of the most supportive fan bases is SMU.  This is both a surprising result, and also a result that illustrates the benefit of our approach.  While the last few seasons have seen SMU take a step forward and qualify for bowl games, over the ten years of data, the team has tended to play sub .500 football.  The fan support provided to SMU relative to the on field performance has been outstanding. This issue is best illustrated via a comparison between SMU and Cincinnati.  Over the ten year period of our analysis, SMU was a four win per year team while Cincinnati was a seven or eight win team.  However, while Cincinnati won almost double the number of games as SMU, their revenues were about 20% less.  Our interpretation of these results is that SMU has a sleeping giant of a fan base, and it would like make sense for SMU to invest heavily in their program.

In second place, we have the Memphis Tigers.  Memphis is fairly similar to SMU in that they have very solid support (30K+ attendance) for a team that has been average on the field.  It is these two programs that tell us that the AAC may have a chance to remain a major conference.  We suspect that if SMU and Memphis become on-field successes their fans will be highly supportive.

One the bottom half of our rankings, we had a couple of surprises.  We have already mentioned the issue with Cincinnati.  UCONN has generated revenues similar to SMU but these have been generated with a better performing team, and as a member of the former Big East.  Likewise, Louisville was also a bit of a surprise.  And again, the issue was that the fan support is just not what we should suspect given the Cardinals’ on-field success.  The Louisville story is also interesting because in our analysis of the brand equity of college basketball teams, Louisville finished number one overall.  The UConn and Louisville results suggest that it is a challenge to build fan equity in football when you are historically a basketball school.

Mike Lewis & Manish Tripathi, Emory University 2013.

PREVIOUS: RANKING THE ACC

NEXT: RANKING THE BIG 12


Ranking the “Best” Fan Bases in College Football

Over the next week or so, we will be publishing analyses of the “best” fan bases in college football.  Our plan is to go conference by conference, and talk about which teams have the most loyal fans.  Our approach is data and statistically driven, as we will be looking at how fans support their teams after controlling for how well the team performs.  The series will conclude with an overall ranking of teams.

Before we get to the team rankings we wanted to start with an analysis of conferences.  Beyond regional pride, our conference rankings are related to the topic of conference realignment.  Conferences are the sum of their parts with some added bonus due to the synergies the overall group creates.  Our fan equity analyses therefore provide a means for anticipating how new or changed conferences will compare with each other.

For those that have previously seen our other brand equity analyses, we should note that our conference-level analysis takes a slightly different approach.  For the fan analyses, we build a statistical model that predicts team revenues as a function of metrics related to team performance such as winning percentage and bowl participation.  We then compare actual revenues to what is predicted based purely on team performance (and other factors such as number of students, capacity, etc…).  Click here for an explanation of why we use this “revenue premium” approach to brand equity measurement.

For the conference analysis, we take a similar, but more financially oriented approach.  This analysis also begins with a statistical model of team revenues, but now the explanatory variables primarily involve team expenditures.  Team-level brand equity is then taken as the difference between actual revenues and revenues predicted based on expenditures.  The logic of this approach is that teams with more powerful brands should be able to more efficiently increase revenues.  As an example, imagine a comparison between the University of Notre Dame and perhaps Rutgers.  If these teams spent the same amount in a given year, we would still expect Notre Dame to have significantly greater revenues simply because ND has such a large and loyal following.

We rely on this ROI (Return on Investment) oriented measure for the conference ranking because we have a significant interest in conference realignment.  In this era of realignment, it seems obvious that conference membership decisions are almost entirely driven by financial considerations. In other words, while we feel that fan support should be measured relative to team performance, when it comes to conferences we believe that schools should be evaluated based on ROI.

Finally on to the rankings…

In an altogether unsurprising result, the SEC is ranked number one, followed by the Big Ten in the second position.  The SEC ranking is notable in that while we all know that the SEC has dominated on the field; our results also suggest that the conference schools are extremely efficient in translating the intensity of fans into dollars.  On the realignment front, it seems certain that Missouri and Texas A&M were largely driven by the financial attractiveness of the conference.  It remains to be seen if these schools have traded cash for also-ran status.

In second place, we have the Big Ten Conference.  The Big Ten is in many ways a leader in the space, as they have been successful in creating a network that leverages the appeal of its members.  The Big Ten has also been notable in its efforts to attract teams that expand the conference’s access to media markets.

In a distant third place we have the Big 12.  The Big 12 is interesting in that it has, and had, several very well-known brands such as Texas, Oklahoma and Nebraska.  Of course, the Big 12 has also been the major conference that has seen the most attrition as Missouri, Nebraska, Colorado, and Texas A&M have all moved to seemingly greener pastures.  Despite this attrition, the conference does well in our rankings, and out-performs two of the other Big 5 conferences.  The big question for the Big 12 is whether it will be sustainable in the long-term.  The Big 12 has two key weaknesses.  First, it’s unclear if it covers enough major markets to successfully develop a media strategy that will allow the conference schools to be competitive with other better-located conferences.  The second issue is that the Big 12 is very top heavy.  Texas is the obvious (financial) jewel of the league.  Will Texas share or will the Longhorns go their own way?

In fourth place, we have the PAC 12.  The PAC 12 is promising case in that it seems to be well positioned for the future.  In terms of teams, it contains both historical powers like USC and up and coming teams like Oregon.  The conference also covers major media markets, but its west coast time zone may be a limitation.

Perhaps the biggest surprise in our analysis was that the new American Athletic Conference (AAC) ranked higher than the ACC.  This is a non-intuitive finding as we expected that historically successful programs such as Florida State and Miami would lead the ACC past an AAC led by Louisville and Cincinnati.  The reason for this result is actually quite simple.  The ACC schools have invested in football at about the same level as the Big 12 and PAC 12 schools, but with lower resulting revenues.

NEXT: RANKING THE NON-BCS CONFERENCE SCHOOLS

Mike Lewis & Manish Tripathi, Emory University, 2013.

“Revenue Premium” Versus Survey-Based Attitudinal Measures

A criticism of our previous rankings of fan bases is that our approach is overly financial and doesn’t capture the “passion” of fans.  This critique has some validity but probably less than our critics realize.  When we talk about quantifying customer loyalty in sports or even in general marketing contexts we very quickly run into some challenges.

For example, when I speak to classes about what loyalty means, the first answer I get is that loyal customers engage in repeat buying of a brand.  I will then throw out the example of the local cable company.  The key to this example is that cable companies have very high repeat buying rates but they also frequently have fairly unhappy customers.  When asked if a company can have loyal but unhappy customers students quickly realize that it is difficult to cleanly measure loyalty.

Another distinction I make when teaching is the difference between observable and unobservable measures of loyalty.  As a marketer, I can often measure repeat buying and customer lifetime.  I can even convert this into some measure of customer lifetime value.  These are observable measures.  On the other hand other loyalty oriented factors such as customer satisfaction, preference or likelihood of repurchase are unobservable, unless I do an explicit survey.

I think what our critics are getting at is that they would prefer to see primary / survey data of customer preference or intensity (questions such as on a 1 to 7 scale rank how much you love the Florida Gators).  BUT, what our critics don’t seem to get is that this type of primary data collection would also suffer from some significant flaws.  First, whenever we do a consumer survey we worry about response bias.  The issue is how do we collect a representative sample of college or pro sports fans?  This is an unsolvable problem that we tend to live with in marketing since anyone who is willing to answer a survey (spend time with a marketing researcher) is by definition non-representative (a bit weird, I know).

A second and more profound issue is that it would be impossible to separate out the effects of current season performance from underlying loyalty using a survey.  I suspect that if you surveyed Michigan basketball fans this year you would find a great deal of loyalty to the team.  But I think we all know that fans of winning teams will be much happier and therefore respond much more positively during a winning season.

Related to the preceding two issues is that our critics seem to assume that they know what is in the heart of various fan bases.  Mike Decourcey took exception with our college basketball rankings that rated Louisville over Kentucky and Oklahoma State over Kansas.  A key mistake he makes is that he assumes that somehow he just knows that Kentucky fans are more passionate than Louisville’s, or that Kansas fans love their team more than Oklahoma State loves theirs.  He knows this based not on any systematic review of data, but based on a few anecdotes (this is especially convenient since the reliance on anecdotes means that there is no need to control for team quality) and his keen insight into the psyches of fans everywhere.

The other issue is whether our “Revenue Premium” captures fan passion or just disposable income.  This is another impossible question to fully answer, but in our defense the nice thing about this measure is that it is observable, and willingness to pay for a product is about the best measure of preference you can get short of climbing into someone’s head.  I think another way in which our critics are confused is that they associate noise with loyalty.  Is an active and loud student section a true measure of the fan base quality?  Perhaps so, but do we really believe that the 19 year old face painter is a better fan than the alumni who has been attending for 40 years but no longer stands up for the entire game?