Why Should I Root for the Home-Town Team Again?

Hey there, Busenbarkemetricites (say that 4 times fast, I dare you)! Since all of my previous posts haven’t truly been related to “econometrics” in any explicit way, this week, I spend some time using actual econometric analysis to explore an argument related to one of my favorite pastimes – NCAA College Football. That’s right, we’re  finally getting into the good stuff – D1, true blooded, authentic, and passionate college football….well, kind of.

If you’re at all like me, you have a true passion for college football, as it represents one of the final bastions of true passion in sports. There are certainly fewer ulterior motives to playing the game than there are in professional sports, and for most college athletes, the game is played purely for the love of it and the camaraderie of others who enjoy it. If you’re even more like me, you long for a system that can accurately rank college football teams, or at least approach the quantification of a team’s ability on a purely objective scale. If there is anything I want in college football, it's a method of ranking teams such that subjective assertions from the media and other coaches are removed.

rockymountainnews.com

Growing up in South Bend, IN, of course, I witnessed first-hand the vast inferiority of our current ranking system, as Notre Dame is located in the city and a large majority of the population there and everywhere else in the world has a very real connection with the school. The inferiority of the ranking system was demonstrated time-and-time-again as Notre Dame, over the course of my cognizant lifetime, was continually unjustifiably over-ranked (if you don’t believe me, look here: http://preseason.stassen.com/over-under/teams.html). As the infuriation of this system that would allow such a continually “over-dog” to garner fandom grew, my distaste for Notre Dame football paralleled it.  As a result, I was berated by fellow South Bend townspeople for not supporting the team, as according to them, the success of the team directly impacts the South Bend (Michiana for people from the area) economy. 

Well, my friends, it is finally time for me to investigate whether or not I was doing South Bend a disservice by rooting against the Notre Dame football (when over-ranked – which was almost always).

Very briefly, right here, I’ll discuss how I did my analysis. First, I extracted data from the Bureau of Economic Analysis’ website for metropolitan GDP by year. I gathered data for three college football towns, all with similar characteristics in terms of potential impact of the school, but with glaringly dissimilar economic output. The three towns were South Bend/Mishawaka, Ann Arbor, and Champaign/Urbana. I then gathered the winning percentages of each of the teams in the towns – Notre Dame, Michigan, and Illinois, respectively. I controlled for inflation, chaining all of the GDP dollars to 2001 dollars (the year when the BEA began to collect this data), adjusted for the impact of the recession (which made no difference in the final results), and employed GLS regression analysis on the impact of winning and the towns’ respective GDPs. I did some other things, too, but just email me if you’re interested about that or why I used GLS regression.

….and the results are in, folks.

The performance of a college football team makes no significant difference on the economic performance of a town!

Reviewing the table to the right, it is apparent that there are no significant relationships between the winning percentage of a football team and the GDP of the town – even in Champaign, where the economy is relatively small and almost completely driven by the school. Even when using lagging indicators of team performance, the towns’ economies didn’t respond to any changes in performance of the team (that is, winning in previous years didn't impact current year GDP either). I also estimated Pearson Correlation Coefficients for all of the variables (not reported here), and the only even relatively significant correlations were between each of the towns’ economies – indicating macroeconomic trends are much more significant than football team performance.

So, now that we know the real truth, for those of you like me, don’t be guilted into liking a home-town team just because of potential economic implications. Although college sports have financial implications in the academic and higher education universe, performance of the team is fairly irrelevant to how well-off your local economy is. This is likely because of the inelasticity of college football, which would suggest that only MAJOR changes over great periods of time or the introduction/removal of a football program may be significant.

Next week, I’ll explore the elasticity of college football and compare it to the NFL and a comment continually perpetuated by Steve Young and some others at ESPN.