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Revenue and Wealth Maximization in the National Football League: The Impact of Stadia

Author

Listed:
  • Brown, Matthew
  • Nagel, Mark
  • McEvoy, Chad
  • Rascher, Daniel

Abstract

The opening of the Palace of Auburn Hills, the SkyDome, and Oriole Park at Camden Yards led to the beginning of a construction boom in professional sport. In the National Football League (NFL) alone, 26 stadiums have been built or renovated in the past 10 years. Due to the additional revenue generated by these facilities and the NFL’s current revenue sharing system, professional football franchises are building new stadia for economic reasons rather than to replace unusable or unsafe facilities. The purpose of this study was to determine if a significant difference in net revenue change existed for NFL teams that moved into a new facility and to determine if there was a significant change in valuation for these franchises. The findings indicated that new stadia significantly increase revenue and franchise value in the NFL; therefore, the primary goal of every firm, wealth maximization, is met for teams after opening a new facility.

Suggested Citation

  • Brown, Matthew & Nagel, Mark & McEvoy, Chad & Rascher, Daniel, 2004. "Revenue and Wealth Maximization in the National Football League: The Impact of Stadia," MPRA Paper 25741, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:25741
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    File URL: https://mpra.ub.uni-muenchen.de/25741/1/MPRA_paper_25741.pdf
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    References listed on IDEAS

    as
    1. John J. 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.
    2. Jordan Rappaport & Chad R. Wilkerson, 2001. "What are the benefits of hosting a major league sports franchise?," Economic Review, Federal Reserve Bank of Kansas City, vol. 86(Q I), pages 55-86.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Kellison, Timothy B. & Mondello, Michael J., 2012. "Organisational perception management in sport: The use of corporate pro-environmental behaviour for desired facility referenda outcomes," Sport Management Review, Elsevier, vol. 15(4), pages 500-512.
    2. Geoffrey Propheter, 2017. "Subsidies and Stadia’ Opulence," Journal of Sports Economics, , vol. 18(1), pages 3-18, January.
    3. Daniel A. Rascher & Matthew T. Brown & Mark S. Nagel & Chad D. McEvoy, 2012. "Financial Risk Management," Journal of Sports Economics, , vol. 13(4), pages 431-450, August.
    4. Kimberly S. Schimmel, 2011. "From ‘Violence-complacent’ to ‘Terrorist-ready’," Urban Studies, Urban Studies Journal Limited, vol. 48(15), pages 3277-3291, November.
    5. Matthew T. Brown & Daniel A. Rascher & Wesley M. Ward, 2006. "The Use of Public Funds for Private Benefit: An Examination of the Relationship Between Public Stadium Funding and Ticket Prices in the National Football League," International Journal of Sport Finance, Fitness Information Technology, vol. 1(2), pages 109-118, May.

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    More about this item

    Keywords

    football; NFL; stadium; revenue; honeymoon;
    All these keywords.

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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