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
The Purpose of this Paper
Data Collection and Sample Stats.
The Empirical Model
Results
What lies Ahead?
2
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 Radio
May 21, 2002
3
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
4
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.
5
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.
6
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
7
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)
8
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%)
9
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.
10
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.
11
Empirical Model
• WTP = f(AMOUNT, INCOME,
PUBGOOD, SPEND, PRESTGE,
WINSUPER, LEAVE, TWINS, UOFM,Z)
• AMOUNT = $5or $15 or $25 or $100
12
INCOME
•
1.
2.
3.
4.
5.
6.
To the best of your memory what was your
income before taxes last year?
Less than $15,000
Between $15,000 - $29,999
Between $30,000 - $44,999
Between $45,000 - $59,999
Between $60,000 - $74,999
$75,000 or more
13
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.
14
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.
15
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
16
IMPLICIT COSTS
ICSG 
1
Hourly Wage Pr oxy* Travel Time   (Game Length)* Games Attended 
3
ICTV 
1
Hourly Wage Pr oxyGame Length* (Games Watched on TV )
3
17
PRESTGE
•
1.
2.
Do you think that a new stadium would
bring greater prestige to the Twin Cities
area?
Yes
No.
18
WINSUPER
• Do you think that a new stadium would help
the Vikings win the superbowl?
1.Yes
2. No.
19
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.
• 2.
Yes.
No.
20
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
21
UOFM
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
22
Z Demographic Variables
NONWHT
COLGRD
INCOME
SINGLE
MALE
KIDS
TIMINST
URBAN
1 if race is Non-white
1 if College or Grad School education
Annual Income
1 if Single
1 if Male
Number of kids
1 if respondent has been in the state for over twenty years
1 if respondent is from seven-county metropolitan area
23
Summary Stats.
Variable
AMOUNT
READ
INTEREST
DISCUSS
FUN
PUBGOOD
SPEND
PRESTGE
WINSUPER
LEAVE
TWINS
UOFM
NONWHT
COLGRD
INCOME
SINGLE
MALE
KIDS
TIMINST
URBAN
N = 565
Definition
MEAN
Bid Amount$5, $10, $25 or $100
37.26
1 if “A few days per week” or “Daily”
0.41
1 if “I am a die-hard fan”
0.18
1 if “A few days per week” or “Daily”
0.54
1 if “Fall slightly” or “Fall a great deal”
0.35
Public Good (Sum of Read, Interest, Discuss, Fun)
1.48
Money spent on tickets, merchandize and travel costs
323.80
1 if “A new stadium will bring more prestige to the area”
0.44
1 if “A new stadium will help the Vikings win a Superbowl”
0.11
1 if “The Vikings will leave if they do not get a new stadium”
0.55
1 if “Support the Twins over the Vikings for a new stadium”
0.06
1 if “Support joint stadium with University of MN football”
0.47
1 if race is Non-white
0.07
1 if College or Grad School education
0.51
Annual Income
56766.24
1 if Single
0.19
1 if Male
0.73
Number of kids
2.01
1 if respondent has been in the state for over twenty years
0.82
1 if respondent is from seven-county metropolitan area
0.50
Standard
Deviation MAXIMUM MINIMUM
36.71
100
5
0.49
1
0
0.39
1
0
0.50
1
0
0.48
1
0
1.47
4
0
325.57
1879.14
0
0.50
1
0
0.31
1
0
0.50
1
0
0.23
1
0
0.50
1
0
0.26
1
0
0.50
1
0
27781.22
100000
7500
0.39
1
0
0.45
1
0
1.72
9
0
0.38
1
0
0.50
1
0
24
Regression Results
Variable
CONSTANT
AMOUNT
PUBGOOD
SPEND
PRESTGE
WINSUPER
LEAVE
TWINS
UOFM
NONWHT
COLGRD
INCOME
SINGLE
MALE
KIDS
TIMINST
URBAN
Log-likelihood Function
Coefficient t-stat
-1.54
-0.01
0.29
0
0.62
0.56
0.38
0.25
0.85
0.02
0.19
0
0
0.1
-0.03
-0.03
0.03
-229.23
-4.8
-3.82
4.47
2.06
4.39
2.06
2.69
0.93
6.13
0.07
1.31
-0.55
0.01
0.62
-0.7
-0.13
0.23
Marginal Effects
-211.11
NA
39.85
0.09
85.69
76.23
52.27
34.84
117.32
2.86
25.94
0
0.17
13.9
-4.02
-3.51
4.3
25
Variable
CONSTANT
AMOUNT
PUBGOOD
SPEND
GAMES
PRESTGE
WINSUPER
LEAVE
TWINS
UOFM
NONWHT
COLGRD
INCOME
SINGLE
MALE
KIDS
TIMINST
URBAN
Log-likelihood Function
MODEL1
MODEL2 MODEL3
-1.54
(-4.8)
-0.01
(-3.82)
0.29
(4.47)
0
(2.06)
_
-1.55146
(-4.9)
-0.00728
(-3.8)
0.289945
(4.46)
0.000655
(2.06)
_
0.62
(4.39)
0.56
(2.06)
0.38
(2.69)
0.25
(0.93)
0.85
(6.13)
0.02
(0.07)
0.19
(1.31)
0
(-0.55)
0
(0.01)
0.1
(0.62)
-0.03
(-0.7)
-0.03
(-0.13)
0.03
(0.23)
-229.23
0.624588
(4.39)
0.552912
(2.05)
0.38508
(2.72)
0.254433
(0.92)
0.857795
(6.14)
-0.00401
(-0.0)
0.193554
(1.31)
-1.7E-06
(-0.5)
-0.00299
(-0.0)
0.106783
(0.64)
-0.02915
(-0.6)
-0.02404
(-0.1)
0.032204
(0.23)
-229.225
-1.72193
(-5.4)
-0.00737
(-3.8)
0.284453
(4.11)
_
0.028394
(1.89)
0.652453
(4.57)
0.574229
(2.12)
0.370588
(2.61)
0.273571
(0.98)
0.812788
(5.80)
0.062398
(0.19)
0.213567
(1.45)
1.62E-06
(0.61)
0.015113
(0.07)
0.086341
(0.51)
-0.02684
(-0.6)
-0.06338
(-0.3)
0.03184
(0.22)
-229.616
26
STADIUM SAMPLE
REGRESSION RESULTS
Variable
Regression Coefficient
t-stat
Marginal Impact on WTP
CONSTANT
AMOUNT
GAMES
INCOME
PUBGOOD
NONWHT
PRESTGE
SPEND
COLGRD
-0.398635
-0.003592
0.099864
-9.55E-06
0.384625
-0.672187
0.974799
-0.002334
-0.401847
-0.571526
-3.571777
2.423514
-1.573298
2.950841
-1.387339
3.484399
-0.710849
-1.57488
($110.98)
N/A
$27.80
$0.00
$107.08
($187.13)
$271.38
($0.65)
($111.87)
27