Social Media Equity: The NBA

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 5th, New Orleans ranks 6th, and Charlotte ranks 4th.  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.

Follow Up to the NBA Fan Equity Study & Why We Do This

Our post about which NBA teams have the best fan bases has generated a good deal of response.  This response has included insightful questions about the models and variables.  We wanted to use this post to provide some more detail and examples.

Before we get into the NBA study, it is probably useful to give folks a bit more background on what we are trying to accomplish.  Our unofficial mission is to use marketing concepts and statistical methods to understand the behavior of players, teams, and leagues.  We are both sports fans and academics, so our goal is to go beyond opinion, and use data to generate new insights into the world of sports.

When we start an analysis like the NBA fan equity study we really don’t start with an agenda (though Professor Lewis does acknowledge a personal bias against Duke Basketball).  We start with a bunch of data and some concepts (theory) that guide the way we approach the analysis.  In the case of the fan equity study, our guiding theory is that team revenue is based on the loyalty of fans, the size of the team’s market, the quality of the product and the entertainment value of the team.

The analysis begins with a model of box office revenue based on variables that correspond to market potential (capacity and market population), team quality (winning percentage) and entertainment value (number of all stars, payroll).  The insight or theory that drives the analysis is that this model can be used to predict the revenue that is due to quality and market potential.  Any difference between this predicted value and actual value is due to “fan loyalty.”

In their responses to us, readers tended to ask about a few specific teams.  For instance, there was a great deal of interest in comparisons between the Knicks and the Nets.  The table below shows several differences between the two teams that are drivers of the differential fan equity.  The teams share the largest population metropolitan areas but the Knicks achieve a 10.7% advantage in terms of attendance DESPITE charging much greater prices.  It is this greater pricing power that pushes the two teams to opposite ends of the ranking.

Another illuminating comparison could be made between Orlando and Golden State.  Given the excitement surrounding the Warriors the casual fan would likely assume that Golden State enjoyed a stronger fan base.  However, when we look at the numbers we see that Orlando generates almost the same attendance (and charges slightly higher prices) while operating in a market that is half the size and winning fewer than half as many games.  Our analytics driven approach accounts for these differences.  It also makes sense when you consider that Orlando fans provide about the same amount of box office revenue as GSW fans, while the team draws from a smaller market and wins only 24% of their games.

This last point is really the key to our analysis.  As a further example, while Miami is currently a great revenue driving team, we need to realize that their fans are attracted to a team that won 80% of their regular season games and has three all- stars and the likely MVP in the lineup.  The true test of fan loyalty is what happens when a team slumps.  This is why teams like Orlando and Dallas do so well in our rankings.

Mike Lewis & Manish Tripathi, Emory 2013.