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Estimating Local Welfare Generated by an NFL Team under Credible Threat of Relocation

  • Aju J. Fenn

    ()

    (Department of Economics & Business, 14 E. Cache La Poudre St., Colorado College, Colorado Springs, CO 80903, USA)

  • John R. Crooker

    ()

    (Department of Economics & Finance, Dockery 300-G, University of Central Missouri, Warrensburg, MO 64093, USA)

This study offers the opportunity to examine the welfare contribution of the Minnesota Vikings to Minnesota households in the context of a credible threat of team relocation. We find the credibility of the threat 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. The range of welfare contribution by the Vikings to households in Minnesota is $445.3 million to $1,571.3 million according to a 95% confidence interval based on our study.

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Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 76 (2009)
Issue (Month): 1 (July)
Pages: 198-223

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Handle: RePEc:sej:ancoec:v:76:1:y:2009:p:198-223
Contact details of provider: Web page: http://www.southerneconomic.org/

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