Which teams have the best brands in their respective leagues?
Something about that question may seem a bit off because sports fans don’t think about their teams the same way they think about their dish detergent or shampoo. But if we change the language to "what are the most iconic or marquis teams in any league?", the question sounds a bit more reasonable.
In this episode, we talk about the measurement of brand equity in the world of sports. Over the previous 7 classes, we have talked about the nature of fandom, the importance of narratives, player analytics and decision making. These are the ingredients to running a successful team (on the field and at the turnstile). As a capstone to this series of topics, today’s class is about measuring the organization’s ultimate success in developing a loyal following of valuable customers.
The core of the class is a discussion of the analytics of team brand equity. The basic method starts with the idea of a “revenue premium” measure of brand equity. and begins with a statistical model of team’s box office revenues. In practice, we create this model using multiple seasons of data for all teams in a league.
The theory that drives the model is that there is that team revenues are driven by observable factors related to market potential and team success. The idea is that team revenues should be determine by market characteristics like population and the quality of team play.
However, any fan knows that the story is going to be more complicated. The Green Bay Packers play in the smallest market and sometimes the team is not very good. But the Green Bay Packers sell out every game. This “extra” is brand equity.
We finish the class with a discussion of brand equity in the NBA. We discuss both revenue premium or “Fan” equity and an alternative metric I call “Social Equity” which uses a team’s social media success as a performance metric.
Next class is the last episode of the course. In this class we discuss how the rules of each league influence of team’s operate. This class is about collective bargaining agreements, salary caps, amateur drafts and other structures that have an enormous impact on competitive balance across teams.
Listen to Class 8 in its entirety here: