Which MLB Team has the “Best” Home Fans? And Who has the Worst? Hint: It’s LA!

One of our favorite types of analyses at Emory Sports Marketing Analytics is to assess the brand equity (a proxy for fan intensity and loyalty) of sports teams.  Today, we present our analysis of MLB fan bases.  Thus far, in our short history, we have looked at the brand equity of college and pro basketball teams.   For those who are unfamiliar, brand equity is a common concept in marketing.  The basic idea is that well known and well regarded brands provide value to organizations.  Examples of high brand equity brands include Coca-Cola, McDonald’s and Apple.  These brands have value because consumers may have significant loyalty to the brand, or may be willing to pay a price premium.  There are a wide variety of methods for calculating brand equity.  Most methods involve surveys of consumers, and focus on data such as awareness levels, loyalty rates or consumer associations.

For our MLB brand equity analysis, we use a “Revenue Premium” method.  The intuition of this approach is that brand equity adds a premium to team’s revenues that goes beyond what would be expected based only on team quality and market size. To accomplish our analysis, we use a statistical model that predicts team revenues as a function of the team’s winning rates, division finish, market population, payroll, and stadium capacity.  We use this model to predict each team’s expected revenue.  To measure the quality of the team’s fan or brand equity we compare the forecasted revenue with estimates of actual revenue.  The key insight is that when a team achieves revenues that greatly exceed what would be expected based on team performance and market size it is an indication of significant brand equity / fan support. The reported results cover the past 5 seasons worth of data.

One complication in performing this analysis with MLB teams is that actual revenues are not public.  We get around this problem by using a couple of estimates of revenue.  The first projection is computed by multiplying average ticket prices by the team’s home attendance levels.  This measure is related to the size and passion of the fan base as it reflects the number of fans willing to travel to the stadium, and the economic sacrifice these fans are willing to make.  The second revenue measures we use are the team revenues estimated by Forbes magazine each year.  This measure has value in that television revenues are included.  For our analysis, we use both measures and then average the results.  We should add that the results are broadly consistent across the two different revenue estimates.

Our analysis finds some expected, and some surprising results.  We discover that the Red Sox and the Dodgers tie for having the “best” fan bases.  These teams are followed by the Cardinals, Giants and Cubs.  It is the next team on the list that first raises some eyebrows, as our model rates the struggling Houston Astros as having the 6th best fan base.  At the bottom of the list we have the Kansas City Royals, Miami Marlins, Chicago White Sox, Detroit Tigers and the Anaheim Angels.  The bottom five are also likely to cause debate and angst among Angels and Tigers supporters.

So why are the struggling Houston Astros rated above the Detroit Tigers? Over the last five years, Detroit has averaged about 2.8 million fans per year compared to about 2.4 million for the Astros.  But according to the Team Market Report the Astros have priced their tickets about 12% higher.  The end result is that the revenues of the two teams are fairly similar.  The key difference is that Detroit’s revenues are driven by a 53% winning rate compared to the Astros rate of about 43%.  Based purely on the quality of the clubs and adjusting for market size, we would expect that Detroit’s revenue would far exceed the Astros.  The fact that they don’t suggests that the Astros’ have the larger and more resilient fan base.  A similar comparison can be made between the Angels and the Dodgers.  Over the five years of data examined, the Angels won 56% of their games versus about 52% for the Dodgers.  But despite this difference the Dodgers still drew more fans (~ 300k per year) and had much higher ticket prices.

Finally, the last question is: What about the Yankees?  While the Yankees do have the highest attendance and ticket prices in the league, they also have the highest winning percentage, largest market size and by far the largest payroll.  In a straight comparison of revenues or a count of fans the Yankees would win.  The key is that our model adjusts for these advantages and in comparison to other teams the Yankees do not convert these advantages to revenues as well as some other teams.

Mike Lewis and Manish Tripathi, Emory University 2013.

Which NBA Team has the Best Home Fans? And Who has the Worst? Hint: It’s New York!

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 the size 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 at attendance 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:

Ranker.com on Teams with the Best Crowds (Golden State #1)

Forbes Study of Loyal Fans (Miami #1)

Bleacher Report on Best Fan Bases (Chicago #1)

Mike Lewis & Manish Tripathi, Emory University 2013.

 

Revenue Premium Based Brand Equity

Brand equity is a common concept in marketing.  The basic idea is that well known and well thought of brands provide value to organizations.  Examples of high brand equity brands include companies such as Coca-Cola, McDonald’s and Apple.  These brands have value because consumers may have significant loyalty to the brand, or may be willing to pay a price premium.  There are a wide variety of methods for calculating brand equity.  Most methods involve surveys of consumers, and focus on data such as awareness levels, loyalty rates or consumer associations.

For our “College Basketball” brand equity analysis we use a “Revenue Premium” method.  The intuition of this approach is that brand equity is reflected in a school’s men’s basketball revenue relative to the team’s quality.  To accomplish our analysis, we use a statistical model that predicts team revenues as a function of the team’s performance, as measured by winning rates and post season success.  The key insight is that when a team achieves revenues that greatly exceed what would be expected based on team performance, it is an indication of significant brand equity.

There are, of course, other possible measures of brand equity.  Consumer surveys could assess fan awareness, or we could look at a school’s ability to recruit five-star student athletes.  The advantage of a revenue premium approach is that the brand equity measure is directly determined by market performance.  This is not to say that a revenue premium approach is not without faults.  Schools may face short- or medium-term constraints that prevent them from fully exploiting the value of their brands.  For example, while the Duke Blue Devils score very well in our analysis, Duke University could likely increase overall revenue by replacing Cameron Indoor Stadium with a larger facility.

For now we have conducted two analyses related to revenue based brand equity premiums.  The first is a ranking of teams for the 6 major conferences.  Secondly, we have also ranked all the conferences in Division 1 basketball.

Our hope is that fans find these analyses of interest.  We will be happy to respond to questions about the method and to engage in debate.  We also expect to frequently update the site with additional analyses, insights and updates.