Willingness to pay for downtown public goods generated by large, sports-anchored development projects: The CVM approach

North American cities have long encouraged redevelopment of their downtown cores to counteract the flight of residents and business to the suburbs in the postwar period. Building subsidized arenas and stadiums for professional sports teams downtown became common in the 1990s. In recent years, downtown stadiums and arenas have been proposed as components in larger redevelopment projects containing a number of other amenities, as well, including housing and other entertainment attractions. The justification for such developments rests in part on the public goods generated by vibrant, prosperous downtowns. Yet little is known about the value of such downtown public goods. This paper reports the results of two Contingent Valuation Method surveys to determine willingness to pay for new National Hockey League arenas in downtown Edmonton and Calgary in the Canadian province of Alberta. The hypothetical scenarios in both surveys varied to include affordable housing, a casino, and cultural space in addition to the arena. The surveys provide the first estimates of willingness to pay for downtown public goods for sports arenas, and also provide the first estimates of scope effects, that is, the willingness to pay for expansions of public goods, in the sports economics literature.

► First evidence of scope effects in sports CVM studies, evidence of the validity of the CVM in the sports context. ► Based on survey results in Calgary and Edmonton, downtowns produce valuable public goods that suburbs do not. ► Public goods may not justify a downtown arena if costs are 7 or 8 percent higher than suburban costs.