The willingness to pay for a new vikings stadium under threat of relocation sale
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The Willingness to Pay for a New Vikings Stadium under Threat of Relocation/Sale. Aju J. Fenn (The Colorado College) And John R. Crooker (Central Missouri State U) Acknowledgements: Dr. Allen Sanderson & Dr. John Whitehead. Overview. Introduction Existing Studies

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The Willingness to Pay for a New Vikings Stadium under Threat of Relocation/Sale

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The willingness to pay for a new vikings stadium under threat of relocation sale

The Willingness to Pay for a New Vikings Stadium under Threat of Relocation/Sale

Aju J. Fenn

(The Colorado College)

And

John R. Crooker

(Central Missouri State U)

Acknowledgements: Dr. Allen Sanderson & Dr. John Whitehead


Overview

Overview

  • Introduction

  • Existing Studies

  • The Purpose of this Paper

  • Data Collection and Sample Stats.

  • The Empirical Model

  • Results

  • What lies Ahead?


Sale relocation of the vikings

Sale/ Relocation of the Vikings

  • In a written statement, Vikings owner Red McCombs expresses his frustration that the Legislature this year didn't do more to help the football team realize its stadium dreams.

  • In his statement, McCombs says he's engaged JP Morgan Securities to explore sale or relocation options for the team.

    • Minnesota Public RadioMay 21, 2002


Introduction

Introduction

  • Why study the willingness to pay (WTP) for a new stadium ?

    • Public funds are used to build new stadiums Traditional reasons such as economic development (Sanderson, 2000), (Baade & Dye 1990), and fans consumer surplus alone (Alexander et al. 2000) do not justify public subsidies for a new stadium


Introduction1

Introduction

  • Why study the willingness to pay (WTP) for a new stadium ?

    • Public good aspects & a credible threat of team relocation

      • There are public good aspects to sports teams (Johnson et al, 2001), (Johnson & Whitehead, 2000). The Vikings should be valued as a public good.

      • There is a credible threat of relocation.


Existing studies

Existing Studies

  • Johnson et al, 2001: They used a CVM approach to determine WTP for a new hockey arena for the Pittsburgh Penguins.

  • Johnson & Whitehead, 2000: They use a CVM approach to determine WTP for a new stadium for the KY Wildcats and a potential Minor league baseball team.

  • Johnson, Mondello & Whitehead: Examine the impact of temporal imbedding on WTP.


The purpose of this paper

The Purpose of this Paper

  • To examine the WTP for a stadium in the context of a credible threat of team relocation.

  • To examine the WTP for a stadium for a professional football team.

  • To improve upon the existing methodology by:

    • Conducting the study in the off-season.

    • Using a larger sample size (1400 Vs. 900)

    • Apply travel cost models from environmental economics to proxy the value of time and money spent watching games


Survey methodology

Survey Methodology

  • A random sample of 1400 households was purchased from a professional sampling firm.(Half of these were in the 7 county metro area)

  • A random sub-sample of 200 households were mailed out at first to test the survey for readability and logistic issues. Then the other 1200 surveys were mailed out.

    • Respondents received reminder postcards and follow up surveys. (Dillman, 1978)


Response rate

Response Rate

  • A total of 565 usable surveys have been returned.

  • 46 surveys could not be delivered

  • The overall response rate is 42% (Johnson et al. report a rate of 35.6%)


Data collection and sample statistics

Data Collection and Sample Statistics.

  • The first section deals with games viewed, fan interest questions, money spent on team merchandize and travel time to the stadium.

  • The second section outlines a payment scenario and solicits payment amounts using a yes – no format in response to a specific amount.

  • The last piece of the survey solicits ticket pricing, parking and demographic information.


Sample statistics

Sample Statistics

  • The mean number of games attended was 0.33

  • The median number of games watched on T.V. was 10

  • 41% read about the Vikings daily or weekly.

  • 54% discussed the team daily or weekly with friends and family.

  • 18% describe themselves as die-hard fans who “live and die” with the team.

  • 45% were WTP the amount on their survey.


Empirical model

Empirical Model

  • WTP = f(AMOUNT, INCOME, PUBGOOD, SPEND, PRESTGE, WINSUPER, LEAVE, TWINS, UOFM,Z)

  • AMOUNT = $5or $15 or $25 or $100


Income

INCOME

  • To the best of your memory what was your income before taxes last year?

    1.      Less than $15,000

    2.      Between $15,000 - $29,999

    3.      Between $30,000 - $44,999

    4.      Between $45,000 - $59,999

    5.      Between $60,000 - $74,999

    6.      $75,000 or more


Pubgood

PUBGOOD

  • In keeping with Johnson et al the index PUBGOOD is the sum of four dummy variables: READ, DISCUSS, INTEREST and FUN.

  • READ is equal to zero if the survey respondent answered never or rarely when asked about how often they read about the Vikings in newspapers, magazines or online.

  • DISCUSS was coded as zero if the respondent claimed that never or rarely discussed the teams fortunes with friends, family or co-workers.


Pubgood1

PUBGOOD

  • INTEREST was coded as one if the respondent claimed to “Live and die with the Vikings.”

  • FUN measures the change in the quality of life of the respondent if the Vikings were to leave town. If the respondent answered fall slightly or fall a great deal this variable was coded as one. It was coded as zero otherwise.


Spend

SPEND

  • SPEND = EXPLICIT COSTS + IMPLICIT COSTS

  • EXPLICIT COSTS = $ SPENT ON TICKETS + $ SPENT ON MERCHANDIZE

  • IMPLICIT COSTS = IMPLICIT STADIUM GAME COSTS + IMPLICIT T.V. GAME COSTS


Implicit costs

IMPLICIT COSTS


Prestge

PRESTGE

  • Do you think that a new stadium would bring greater prestige to the Twin Cities area?

    1.      Yes

    2.      No.


Winsuper

WINSUPER

  • Do you think that a new stadium would help the Vikings win the superbowl?

    1.Yes

    2. No.


Leave

LEAVE

  • Do you believe that the Vikings will leave town if they do not get a new stadium approved within the next few years?

  • 1.        Yes.

  • 2.        No.


Twins

TWINS

  • 1 if respondent indicated that they would not pay for a Vikings stadium because they would rather pay for a new Twins stadium.

  • 0 otherwise

  • TWINS =


The willingness to pay for a new vikings stadium under threat of relocation sale

UOFM

  • 1 if respondent indicated that they would be more likely to support the Vikings stadium drive if they sought a joint stadium with the U of M football program

  • 0 Otherwise

UOFM =


Z demographic variables

Z Demographic Variables


Summary stats

Summary Stats.


Regression results

Regression Results


Stadium sample regression results

STADIUM SAMPLE REGRESSION RESULTS


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