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

  • John R. Crooker

    ()

    (University of Central Missouri)

  • Aju J. Fenn

    ()

    (The Colorado College)

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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File URL: http://faculty.ucmo.edu/econfinpapers/wpaper/wp0805.pdf
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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
Contact details of provider: Postal: Dockery 300, Warrensburg, MO 64093
Phone: (660) 543-4246
Fax: (660) 543-8465
Web page: http://www.ucmo.edu/econ

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  6. Bruce K. Johnson & Peter A. Groothuis & John C. Whitehead, 2001. "The Value of Public Goods Generated by a Major League Sports Team: The CVM Approach," Journal of Sports Economics, , vol. 2(1), pages 6-21, February.
  7. 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.
  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.
  9. 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.
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  11. Robert A. Baade & Robert Baumann & Victor A. Matheson, 2008. "Selling the Game: Estimating the Economic Impact of Professional Sports through Taxable Sales," Southern Economic Journal, Southern Economic Association, vol. 74(3), pages 794-810, January.
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  14. 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.
  15. 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.
  16. 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.
  17. 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.
  18. Hanemann, W Michael, 1984. "Discrete-Continuous Models of Consumer Demand," Econometrica, Econometric Society, vol. 52(3), pages 541-61, May.
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