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

John Crooker () and Aju Fenn ()

Working Papers from University of Central Missouri, Department of Economics & Finance

Abstract: 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.

Keywords: Stadium Costs; Sports Economics; Contingent Valuation; Random Utility Model (search for similar items in EconPapers)
JEL-codes: H41 L83 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2008-05, Revised 2008-05
New Economics Papers: this item is included in nep-dcm, nep-spo and nep-ure
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