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

Aju Fenn and John Crooker

Southern Economic Journal, 2009, vol. 76, issue 1, 198-223

Abstract: 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.

Date: 2009
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https://doi.org/10.4284/sej.2009.76.1.198

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Persistent link: https://EconPapers.repec.org/RePEc:wly:soecon:v:76:y:2009:i:1:p:198-223

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