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Private Financing and Sports Franchise Values

Author

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  • Phillip Miller

    (Minnesota State University)

Abstract

This article examines the impact of receiving a new stadium on team franchise values. The author argues that a new stadium will increase the franchise values of teams regardless of how construction was financed. A team playing in a stadium that it owns will be able to capitalize the value of the stadium in the team's franchise value and will thus have a higher franchise value. Using panel data for Major League Baseball teams from 1990-2002, the author finds that after controlling for team quality and metro area differences, regardless of the financing mechanism, a team playing in a brand new stadium realizes an increase in its franchise value. It is also found that a team playing in its own stadium has a higher franchise value than a team playing in a public stadium. However, the difference in franchise values between playing in a team-owned stadium and playing in a public stadium does not offset the average cost of constructing the stadium. The article thus provides a deeper understanding of the determinants of franchise values and of the motives of sports team owners in their lobbying efforts for public subsidies.

Suggested Citation

  • Phillip Miller, 2007. "Private Financing and Sports Franchise Values," Journal of Sports Economics, , vol. 8(5), pages 449-467, October.
    • Handle: RePEc:sae:jospec:v:8:y:2007:i:5:p:449-467
    DOI: 10.1177/1527002506292583
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    References listed on IDEAS

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    1. Dennis Coates & Brad R. Humphreys, 1999. "The growth effects of sport franchises, stadia, and arenas," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 18(4), pages 601-624.
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    4. Donald L. Alexander & William Kern, 2004. "The Economic Determinants of Professional Sports Franchise Values," Journal of Sports Economics, , vol. 5(1), pages 51-66, February.
    5. Martin B. Schmidt & David J. Berri, 2004. "The Impact of Labor Strikes on Consumer Demand: An Application to Professional Sports," American Economic Review, American Economic Association, vol. 94(1), pages 344-357, March.
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    Cited by:

    1. Watanabe, Nicholas M. & Yan, Grace & Soebbing, Brian P., 2019. "Market disruption as a regime for athlete activism: An economic analysis of college football player protests," Sport Management Review, Elsevier, vol. 22(5), pages 600-612.
    2. Nicolas Scelles & Boris Helleu & Christophe Durand & Liliane Bonnal & Stephen Morrow, 2017. "Explaining the Number of Social Media Fans for North American and European Professional Sports Clubs with Determinants of Their Financial Value," IJFS, MDPI, vol. 5(4), pages 1-19, November.
    3. Zelenkov, Yu. & Solntsev, I., 2022. "Predicting the value of professional sport clubs. A study of European soccer, 2005-2018," Journal of the New Economic Association, New Economic Association, vol. 56(4), pages 28-46.
    4. John K. Wilson & Richard Pomfret, 2009. "Government Subsidies for Professional Team Sports in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 42(3), pages 264-275, September.
    5. Nicolas Scelles & Boris Helleu & Christophe Durand & Liliane Bonnal & Stephen Morrow, 2017. "Explaining the Number of Social Media Fans for North American and European Professional Sports Clubs with Determinants of Their Financial Value," Post-Print halshs-02110645, HAL.

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