Dynamics and Peer Effects of Brand Revenue in College Sports

42 Pages Posted: 13 Mar 2015 Last revised: 14 Mar 2015

See all articles by Zhuping Liu

Zhuping Liu

Baruch College, City University of New York

Frenkel Ter Hofstede

University of Texas at Austin - Red McCombs School of Business

Jason A. Duan

University of Texas at Austin

Vijay Mahajan

University of Texas at Austin - Department of Information, Risk and Operations Management

Date Written: February 25, 2015

Abstract

Branding plays a key role in attracting corporate sponsorship and raising revenue for the multi-billion dollar business of college sports. In this paper, we study the peer effects of brand performance in the dynamic revenue evolution of major college sports teams that play in the National Collegiate Athletic Association conferences. To examine the peer effects for each conference, we propose a novel model that can identify conference-specific peer effects in the setting of the dynamic evolution of brand revenue. Our estimation results reveal significant positive peer effects in four major conferences — Big 12, Big Ten, Southeast Conference, and Pacific-12 — indicating that teams benefit from playing in a conference with teams of strong brands. Our approach also sheds light on the effect of conference switches on a team’s brand revenue. By constructing the counterfactual brand revenue trajectory of not switching conferences for a switched team, we show the difference between the counterfactual trajectory and the actual brand revenue evolution after switch, which quantifies the effect of a conference switch. We also study the case where a team had considered but did not make a conference switch.

Keywords: Peer Effects, Brand Revenue, College Sports, Conference Switch, Bayesian Dynamic Linear Model, Bayesian Analysis

JEL Classification: M31

Suggested Citation

Liu, Zhuping and Ter Hofstede, Frenkel and Duan, Jason A. and Mahajan, Vijay, Dynamics and Peer Effects of Brand Revenue in College Sports (February 25, 2015). Available at SSRN: https://ssrn.com/abstract=2576918 or http://dx.doi.org/10.2139/ssrn.2576918

Zhuping Liu (Contact Author)

Baruch College, City University of New York ( email )

New York, NY 10010
United States

Frenkel Ter Hofstede

University of Texas at Austin - Red McCombs School of Business ( email )

Austin, TX 78712
United States

Jason A. Duan

University of Texas at Austin ( email )

2317 Speedway
Austin, TX 78712
United States

Vijay Mahajan

University of Texas at Austin - Department of Information, Risk and Operations Management ( email )

Red McCombs School of Business
2100 Speedway, #B6600
Austin, TX 78712
United States

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