From the FAQ:
Q: Can you explain how Home Court Advantage is calculated?
A: Homecourt advantage changes based on numerous factors - opponent quality, whether you won or lost, margin of victory (or loss) and location of the game. On top of that, real life historical fan attendance numbers over the past 30 years were used to come up with a fan loyalty factor which also plays a role in how "fairweather" a schools fans are.