Dynamics and Peer Effects of Brand Revenue in College Sports

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