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

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.

The Economic Impact and Civic Pride Effects of Sports Teams and Mega‐Events: Do The Public and the Professionals Agree?

“…A contingent valuation study of the Jacksonville Jaguars in the US National Football League (NFL) undertaken by Johnson et al (2007) finds that the overall benefits to the community amount to $36.5m, less than the funds Jacksonville allocated to the Jaguars. Fenn and Crooker (2009), analysing the public goods generated by the Minnesota Vikings of the NFL, find that the benefits to the community warrant the stadium subsidy given to retain the team in Minnesota. Whitehead et al (2013), using a combination of the contingent valuation and travel cost techniques, find that the residents of Alberta, Canada, derive both significant use and non-use benefits from the Calgary Flames of the National Hockey League: up to C$82m dollars a year.…”

Consumption Benefits of National Hockey League Game Trips Estimated From Revealed and Stated Preference Demand Data

“…Civic unity, community pride, improved racial relations, and topics of conversation are some of the public goods addressed by sports CVM studies covering the NFL, NBA, MLB, amateur participatory sports, and the Olympics (Johnson 2008). Although the later CVM studies tend to find substantially larger values of sports public goods than did Johnson and Whitehead, peer‐reviewed sports CVM articles tend to find that the value of sports public goods fall short of the cost of constructing arenas, stadiums, and other venues, except in the case of the Minnesota Vikings of the NFL (Fenn and Crooker 2009). 1…”

Sports Arenas, Teams and Property Values: Temporary and Permanent Shocks to Local Amenity Flows

“…Civic pride, "world class city" status, and other intangible factors represent the most likely source of these amenity flows. Evidence using stated preference data and the Contingent Valuation Method also finds strong evidence that the presence of a professional sports facility and team in a city generate important intangible benefits (Johnson et al, 2001(Johnson et al, , 2007Fenn and Crooker, 2009). Patterns in voting on sports facility subsidy referendums also support the presence of local intangible benefits (Coates and Humphreys, 2006;Horn et al, 2015).…”