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Estimating Local Welfare Generated by an NFL Team under Credible Threat of Relocation
Author(s) -
Fenn Aju J.,
Crooker John R.
Publication year - 2009
Publication title -
southern economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.762
H-Index - 58
eISSN - 2325-8012
pISSN - 0038-4038
DOI - 10.4284/sej.2009.76.1.198
Subject(s) - relocation , welfare , credibility , willingness to pay , context (archaeology) , economics , public economics , actuarial science , microeconomics , political science , geography , computer science , archaeology , law , market economy , programming language
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.