Private Financing and Sports Franchise Values: The Case of Major League Baseball

Phil Miller ()

No 626, Working Papers from International Association of Sports Economists, North American Association of Sports Economists

Abstract: This paper examines the impact of receiving a new stadium on team franchise values. I argue 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, I find 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. I also find 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 paper thus provides a deeper understanding the determinants of franchise values and of the motives of sports team owners in their lobbying efforts for public subsidies.

Keywords: Stadiums; Baseball (search for similar items in EconPapers)
JEL-codes: L83 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2006-11
New Economics Papers: this item is included in nep-spo
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Citations: View citations in EconPapers (4)

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