Estimating Local Welfare Generated by a Professional Sports Team: An Application to the Minnesota Vikings under Threat of Relocation
AbstractThe issue of public financing for a professional sports team is one that has seen vigorous debate in the state of Minnesota. This study offers the opportunity to examine the welfare contribution of the Minnesota Vikings to Minnesota households in the context of a credible threat to team relocation. We find the credibility of relocation is essential to providing unbiased estimates of welfare. This study utilizes contingent valuation methodology (CVM) and a random utility model (RUM) to analyze Minnesotans’ decision-making mechanisms for supporting a new stadium initiative. While previous studies have attempted to measure the welfare associated with a sports franchise, we develop and discuss bias that may be imparted to estimates when the researcher fails to calculate a choke price. Further, we develop an unbiased approach to identify welfare when respondents perceive a risk of losing the franchise. Our study suggests a 95% confidence interval on the welfare contribution of the Vikings to households in Minnesota is $435.4 million to $1,499.1 million.
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Bibliographic InfoPaper provided by University of Central Missouri, Department of Economics & Finance in its series Working Papers with number 0805.
Length: 48 pages
Date of creation: May 2008
Date of revision: May 2008
Stadium Costs; Sports Economics; Contingent Valuation; Random Utility Model;
Find related papers by JEL classification:
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
- L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Recreation; Tourism
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-05-10 (All new papers)
- NEP-DCM-2008-05-10 (Discrete Choice Models)
- NEP-SPO-2008-05-10 (Sports & Economics)
- NEP-URE-2008-05-10 (Urban & Real Estate Economics)
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