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Estimating Local Welfare Generated by a Professional Sports Team: An Application to the Minnesota Vikings under Threat of Relocation

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Author Info
John R. Crooker () (University of Central Missouri)
Aju J. Fenn () (The Colorado College)

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Abstract

The 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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Publisher Info
Paper provided by University of Central Missouri, Department of Economics & Finance in its series Working Papers with number 0805.

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Length: 48 pages
Date of creation: May 2008
Date of revision: May 2008
Handle: RePEc:umn:wpaper:0805

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Related research
Keywords: 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:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Carson, Richard T. & Hanemann, W. Michael, 2006. "Contingent Valuation," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 2, chapter 17, pages 821-936 Elsevier. [Downloadable!] (restricted)
  2. BK. Johnson & JC. Whitehead, 2000. "Value of public goods from sports stadiums: the CVM approach," Contemporary Economic Policy, Western Economic Association International, vol. 18(1), pages 48-58, 01. [Downloadable!] (restricted)
  3. Bruce K. Johnson & Peter A. Groothuis & John C. Whitehead, 2000. "“The Value of Public Goods Generated by a Major League Sports Team: The CVM Approach,”," Working Papers 0014, East Carolina University, Department of Economics. [Downloadable!]
  4. Hanemann, W Michael, 1984. "Discrete-Continuous Models of Consumer Demand," Econometrica, Econometric Society, vol. 52(3), pages 541-61, May. [Downloadable!] (restricted)
  5. Kahneman, Daniel & Knetsch, Jack L., 1992. "Valuing public goods: The purchase of moral satisfaction," Journal of Environmental Economics and Management, Elsevier, vol. 22(1), pages 57-70, January. [Downloadable!] (restricted)
  6. John Siegfried & Andrew Zimbalist, 2000. "The Economics of Sports Facilities and Their Communities," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 95-114, Summer. [Downloadable!] (restricted)
  7. Kanninen Barbara J., 1993. "Design of Sequential Experiments for Contingent Valuation Studies," Journal of Environmental Economics and Management, Elsevier, vol. 25(1), pages S1-S11, July. [Downloadable!] (restricted)
  8. Alberini Anna, 1995. "Optimal Designs for Discrete Choice Contingent Valuation Surveys: Single-Bound, Double-Bound, and Bivariate Models," Journal of Environmental Economics and Management, Elsevier, vol. 28(3), pages 287-306, May. [Downloadable!] (restricted)
  9. Nyquist, Hans, 1992. "Optimal Designs of Discrete Response Experiments in Contingent Valuation Studies," The Review of Economics and Statistics, MIT Press, vol. 74(3), pages 559-63, August. [Downloadable!] (restricted)
  10. Hanemann, W Michael, 1994. "Valuing the Environment through Contingent Valuation," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 19-43, Fall. [Downloadable!] (restricted)
  11. Smith, V Kerry & Desvousges, William H, 1990. "Risk Communication and the Value of Information: Radon as a Case Study," The Review of Economics and Statistics, MIT Press, vol. 72(1), pages 137-42, February. [Downloadable!] (restricted)
  12. Cameron, Trudy Ann, 1988. "A new paradigm for valuing non-market goods using referendum data: Maximum likelihood estimation by censored logistic regression," Journal of Environmental Economics and Management, Elsevier, vol. 15(3), pages 355-379, September. [Downloadable!] (restricted)
  13. Cooper Joseph C., 1993. "Optimal Bid Selection for Dichotomous Choice Contingent Valuation Surveys," Journal of Environmental Economics and Management, Elsevier, vol. 24(1), pages 25-40, January. [Downloadable!] (restricted)
  14. T.A. Cameron & D.D. Huppert, 1988. ""Referendum" Contingent Valuation Estimates: Sensitivity to the Assignment of Offered Values," UCLA Economics Working Papers 519, UCLA Department of Economics. [Downloadable!]
  15. Creel, Michael & Loomis, John, 1997. "Semi-nonparametric Distribution-Free Dichotomous Choice Contingent Valuation," Journal of Environmental Economics and Management, Elsevier, vol. 32(3), pages 341-358, March. [Downloadable!] (restricted)
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  16. Ronald G. Cummings & Laura O. Taylor, 1999. "Unbiased Value Estimates for Environmental Goods: A Cheap Talk Design for the Contingent Valuation Method," American Economic Review, American Economic Association, vol. 89(3), pages 649-665, June. [Downloadable!] (restricted)
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