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

1. 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

2. Overview • Introduction • Existing Studies • The Purpose of this Paper • Data Collection and Sample Stats. • The Empirical Model • Results • What lies Ahead?

3. 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

4. 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

5. 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.

6. 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.

7. 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

8. 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)

9. 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%)

10. 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.

11. 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.

12. Empirical Model • WTP = f(AMOUNT, INCOME, PUBGOOD, SPEND, PRESTGE, WINSUPER, LEAVE, TWINS, UOFM,Z) • AMOUNT = $5or $15 or $25 or $100

13. 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

14. 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.

15. 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.

16. 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

17. IMPLICIT COSTS

18. PRESTGE • Do you think that a new stadium would bring greater prestige to the Twin Cities area? 1.      Yes 2.      No.

19. WINSUPER • Do you think that a new stadium would help the Vikings win the superbowl? 1. Yes 2. No.

20. 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.

21. 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 =

22. 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 =

23. Z Demographic Variables

24. Summary Stats.

25. Regression Results

27. STADIUM SAMPLE REGRESSION RESULTS