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Wednesday, November 15, 2006
New Study Shows Public Financing of Stadiums Lowers Ticket Prices

A newly released study suggests that, at least the NFL context, public financing of stadiums leads to lower ticket prices. The paper, The Use of Public Funds for Private Benefit: An Examination of the Relationship between Public Stadium Funding and Ticket Prices in the National Football League, by Matthew Brown (South Carolina), Daniel Rascher (USF), and Wesley Ward (Ohio), can be downloaded free of charge from this site. Here's part of the paper's abstract:
The purpose of this study was to examine the relationship between the use of public funds to build stadia and the profit maximizing goals of National Football League (NFL) franchises. A hypothesis was formulated that stated the impact of the public share of the construction cost would have no effect on relative ticket prices for those that consume the product. The cross-sectional data for a ticket price model, which consisted of seasonal data from every NFL team to play from 1991 through 2003, was investigated. The results showed an increase in public funding by 10% lowers ticket prices by 42 cents. As shown, the bulk of the variation in ticket prices was due to a general increase over time and MSA per capita income.


Ticket prices are ONLY determined by supply and demand. This being true, what this paper really shows is that somehow, having a publicly funded stadium somehow effects one of those two things. I didn't read the paper, but does it explain how this might work?

Anonymous Taylor -- 11/15/2006 11:16 AM  


You know this how?

As for the study, two potential problems:

1) the study assumes that there is no systematic variation in non-ticket attendance costs that correlates with the type of financing involved. (pg. 20). This assumption may be incorrect. For example, it might be that cities are more willing to invest money in inner-city stadiums where parking is more expensive. If so, then ticket prices will be cheaper.

2) The study does not take into account changes in non-ticket related prices. (see pg. 24) There may be a correlation between increases in non-ticket related prices and the percentage of public financing.

Either or both of these factors could account for the small positive result found.

Anonymous PK -- 11/15/2006 10:38 PM  

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