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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

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
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 =
slide22
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 =