Value of public goods from sports stadiums: The CVM approach

Many state and local governments have subsidized the construction of arenas and stadiums for the use of professional sports teams. They often justify the subsidies by claiming the projects create valuable public goods and positive externalities, though such benefits are difficult to measure. An application of the contingent valuation method (CVM) is used to measure the value of public goods generated by two proposed projects in Lexington, Kentucky: a new basketball arena for the University of Kentucky and a minor league baseball stadium. Neither project would generate sufficiently valuable public goods to justify public financing. Although the results cannot be generalized to other cases, they do shed light on some of the main issues involved, and they demonstrate the feasibility of applying CVM to the evaluation of subsidized stadiums.