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Wednesday, March 31, 2004

If You Build It Will You Pay?

Two new stadiums open this year in baseball - San Diego and Philadelphia. This new working paper estimates the impact of new stadiums on concession prices in football and baseball. The impact on the price of parking is the largest and longest lived. However, all prices increase with increases in attendance, which can be an outcome of a new stadium. This can represent a "double tax" on the public if a stadium is built with public money. Not only does the local population have to service any debt incurred for stadium construction, they also see prices increase in order to ration the market for concessions within the stadium. One way to reduce the double burden is for host cities to negotiate with team owners for a portion of the increased revenues that are generated within a new stadium. For political (or other?) reasons, host cities have been loathe to take such strong negotiating stances - perhaps for fear of driving a team away which might reduce the quality of life of the local citizenry (which is debatable) but would likely reduce the odds of reelection.

Here is the breakdown on the impact of a new stadium on concession prices in the first five years of a stadium in football and baseball (Table 5 of the paper):

National Football League
Stadium Age Parking Beer (20oz) Soda (20oz)Hotdog ProgramBallcap
First Year $5.25 $0.33 $0.43 $0.29 $0.50 $0.00
Second Year $5.79 -$0.07 $0.39 $0.40 $0.70 $0.00
Third Year $2.80 $0.44 $0.00 $0.38 $0.67 -$2.27
Fourth Year $2.71 -$0.58 $0.00 $0.00 $0.09 $0.00
Fifth Year $0.00 $0.00 $0.00 $0.00 $0.92 -$2.41
Major League Baseball
Stadium AgeParking Beer
(20 oz)
Soda (20oz)Hotdog Program Ballcap
First Year $1.80 $0.10 $0.14 $0.16 $0.85 -$0.33
Second Year $2.30 $0.08 -$0.26 $0.12 $0.14 $1.07
Third Year $0.41 $0.08 -$0.17 $0.13 $0.15 $1.25
Fourth Year $1.69 $0.06 $0.09 $0.10 $0.11 -$0.21
Fifth Year $1.66 $0.06 $0.08 $0.09 $0.10 -$0.19
Notes: Estimates reflect total real price increase caused by a new stadium for each of the first five years of a stadium's existence, holding all other factors constant. Dollar values include both Attendance Effect and Stadium Effect, as reported in Table 4a and Table 4b, accounting for the impact of a new stadium on attendance as reported in Table 3.

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