I'll Stick with the Couch: How Personal Seat Licenses are Pricing The Average NFL Fan Out of the Live Game Market

by Paul Whitehair April 7 2010, 18:28

Personal Seat Licenses (PSLs) have pit owners and stadium operators against the fans since their inception.  The idea of paying for a right to buy tickets in a specific seat, is repugnant to some, and good business sense to others.  This issue has come to the forefront recently as one of the most successful franchises in professional sports, the New York “Football” Giants, have started selling personal seat licenses to fund their new billion dollar stadium.  This new stadium will be home to the Giants and neighbor New York Jets.[1] This article outlines why owners would use such a system, arguments against the practice, and a quick look at potential alternatives.

Background:

PSLs are essentially the right to purchase a ticket to a game or an event.[2]  PSLs are usually one time fees that allow you right of first refusal to purchase tickets to all games or events at the venue.  However, PSLs are usually several hundreds to thousands of dollars, and the fees for PSLs do not include tickets to sporting or other events at the venue; the tickets must be paid for separately.[3]   They are usually seat specific, but some venues have non-seat specific PSLs such at Soldier Field, home of the Chicago Bears.[4]   PSLs have not always been thought of in a negative light.  Rick Ohanian proposed a “ticket bond” in the 1980s to pay for a professional sports complex in Columbus, Ohio.[5]  The idea of ticket bound grew out of genuine belief that it was progressing the financing of sports and taking the burden off the taxpayers’ shoulders.[6]  The “ticket bond” has transformed into the Personal Seat License, and the debate has raged on since its inception. Today, almost half the teams in the NFL have PSL programs in place, and the practice is gaining momentum in other sports.[7]  The price for a PSL varies greatly by team and by location of the seat one is buying the rights to.  PSLs in the NFL can range anywhere from several hundred dollars to $150,000 in Jerry Jones’ “cathedral to football,” the new Dallas Cowboys’ stadium.[8] 

The Issue

At its face, PSLs, as envisioned by Rick Ohanian create a way to fund new sports venues without putting the burden solely on the taxpayers.  PSLs provide owners with a funding source beyond their personal means making them more amicable to constructing new facilities. Because public funding of private sports venues has been so controversial in the past, PSLs put the financial burden on the shoulders of only those who wish to consume the product, the sports/music fan.  These cost allocation alternatives are positive aspects of the PSL system, and their utility cannot readily be questioned.  Major sports franchises have been successful in raising money for the projects without public funding.  The St. Louis Cardinals built the new Busch Stadium in St. Louis without public grant money in part because of the help of $40 million in revenue for the sale of 10,300 PSLs.[9]  Some fans even use these programs to make a profit, buying PSLs when they are first offered and selling them when their resale value is at its highest (i.e. after a championship or excitement around a new coach/player).[10] Although PSLs provide an alternative stream of revenue apart from public tax grants or completely private funding, there are several issues that fans and sports writers have criticized.  First, the cost to attend an NFL game is rising, preventing NFL fans from being able to afford to go to the games.  This is especially true for families.  The average cost of one NFL game ticket hovers around $75, which does not take into account parking, concessions or souvenirs.[11] An NFL marketing group has compiled a Fan Cost Index which takes into account a family of four attending a game and purchasing average tickets, concessions, and a couple souvenirs.[12]  The NFL average is already well above $400, and the fans of the Dallas Cowboys can look forward to an average price of around $750 to take a family of four to the game.  This is largely due to the Cowboys’ steep $159.65 average ticket price.[13]This alarming cost of attending an NFL game is only accentuated by the rising use of the PSL.  Even fans using StubHub or other third party ticket brokers will see the cost of a single game rise because of fans trying to recoup some of the cost of their PSL.  Individuals who have had the same seats for decades, must now pay an additional “one time” fee for the right to buy the tickets they have purchased year after year.[14]  A Giants fan with season tickets since 1962 recently stated that he does not plan to buy the PSL and renew his tickets because he would have to spend an extra $30,000 on top of the steadily increasing ticket prices for his seats in the lower deck.[15]  Major franchises across all sports have been ripe with horror stories such as this. Season tickets being passed down generation to generation now have to be turned over because a family cannot afford the tens of thousands of dollars it would cost to retain those seats through a PSL.  Mike Florio writes pointedly that, “. . .a real problem will arise if and when the blue-collar fans who form the heart and soul of so many NFL franchises must yield to the polo and caviar crowd. This is especially true in towns like Pittsburgh, Cleveland, Buffalo and Philly, where the local football team forms such an important part of the city's identity and spirit. Whether it happens through PSLs, increased ticket prices or both, the same tax bracket that now ends up with all the Super Bowl tickets might eventually take over the regular season games, as well.”[16]                To put simply, the franchises that are utilizing PSLs are pricing the real fans out of the market and making it more of a social networking event and client breeding ground for wealthy business executives.  These franchises are forgetting the fans who have continued to pour what little money they have into the sport even through strike and controversy after controversy.   The average businessmen looking to entertain clients will not bring a franchise out from the brink of bankruptcy if they start to struggle or a strike hits, the average fan will; and team owners should do well to remember that.

Possible Alternatives to the PSL System

Owners of professional sports franchises need more revenue streams, especially when they are looking to build a new facility.  Largely gone are the days of private financing by the owner himself. Hoping for a return to that system is somewhat unrealistic. The economy and current well-grounded frugality of the American public may also bleed over and make it improper to place a several hundred million or billion dollar burden on the taxpayers.  Instead of placing the burden solely on the fans through PSLs and thus cutting the average fan out, a combination of programs should be put in place to maintain the status quo.  When a single approach is taken, it usually has an extremely adverse affect on one group of people; in this case, the average sports fan.  These alternatives to PSLs are not ideal, and should be utilized only after other revenue streams have been exhausted.Although frowned upon as against the true nature of the game, in-game advertising could help create a substantial revenue stream for owners, while making games more affordable for the middle-class fan.  Although repugnant to some, commercials on the big screens during timeouts or between quarters would provide businesses an opportunity for a local and captive audience as well as provide owners with a consistent game-by-game revenue stream. Other less direct means of advertising could be initiated, and the creative marketing teams of NFL franchises could create a program more tailored to the needs and values of each NFL team.  Increased advertising is especially attractive because it puts the costs on a third party and does not directly affect the pocketbook of the average fan.  While the Stadium itself is usually branded with a company’s namesake, there is a world of potential sponsorships that could be utilized to defray the costs for constructing and updating athletic facilities.  Soccer has utilized advertising on jerseys, which may be a little too much for the sports purist.  However, increased branding on the field and throughout the stadium could bring in substantial revenue.  While not ideal, raising ticket prices for a few years after building an athletic facility may also be a possibility. Once the cost is realized, owners can drop ticket prices down to previous levels.  If owners are up front with fans and tell them about the reasons for the ticket hike, to prevent the use of PSLs and agree to drop prices after a few years, fans would be more receptive.  For example, if the New York Giants (who share the new Meadowlands Stadium with the New York Jets) were to raise each ticket to each game by $5, an individual with four season tickets would only see an increase of $320 for a few years instead of several thousands of dollars to buy a PSL.  For the franchise, an increase of $5 per ticket per game would equate to $6.6 million dollars per year for Meadowlands Stadium 82,500 fan capacity.[17] A franchise may be well suited to do a survey to gauge fans tolerance of ticket price increase in lieu of a PSL system.  The owner may find that even a higher increase is tolerable to avoid shifting to PSLs. 

Conclusion 

Obviously, some alternatives by themselves cannot rise to the level of funding PSLs would provide.  However, a combination of in-game advertising and increased ticket prices for only a few years provides a start of new revenue streams for franchise owners, and at least starts the dialogue for alternatives to PSLs.  New technology and digital mediums may also provide a new revenue stream to help pay for new sports complexes.  The opportunity for revenue is there, but franchises may need to be open and receptive to unconventional means of raising capital. Fans need to believe that owners are not abandoning them for the almighty dollar. Owners will undoubtedly have their PSL sacrifice repaid when their franchise or the league struggles, as it will be the average fan that brings them back to prominence.
  



[1] Associated Press, Giants to sell personal seat licenses to help build $1.6 billion stadium, (2008), http://www.nfl.com/news/story?id=09000d5d809066fb&template=without-video&confirm=true

[2] Tom Barlow, Personal seat licenses are a license to print money, DailyFinance, May 17, 2009, http://www.dailyfinance.com/story/investing/sports-biz-personal-seat-licenses-are-a-license-to-print-money/1547028/

[3] Id.

[4] ChicagoBears.com Seat Specific PSL questions and answers, http://www.chicagobears.com/tickets/psl.asp (last visited March 9, 2010).

[5] Jemele Hill, Bleeding the Fans!, ESPN Page 2, Aug. 4, 2008, http://sports.espn.go.com/espn/page2/story?page=hill/080801&sportCat=nfl

[6] Id.

[7] Id.

[8] Id.

[9] Danielle Sessa, Yankees, Mets Won't Sell Seat Licenses; Stadium Funds in Place, Bloomberg.com, May 11, 2007, http://www.bloomberg.com/apps/news?pid=20601103&sid=akeCVF7vEDlU&refer=us

[10] Jeff Barker, Owning a Ravens Seat Can Pay off Big Time, The Baltimore Sun, June 25, 2009, http://articles.baltimoresun.com/2009-06-25/news/0906240127_1_ravens-psls-seat-licenses

[11] Larry Weisman, NFL Blitz: Ticket Prices and the Fan Cost Index, Redskins.com, Sept. 18, 2009, http://www.redskins.com/gen/articles/NFL_Blitz__Holding_the_Line_On_Ticket_Prices_51755.jsp

[12] Id.

[13] Id.

[14] Cat Contiguglia and Tracy Connor, Seat hits the fan over prices for Giants Personal Seat Licenses, NYDailyNews.com, Sept. 6, 2008, http://www.nydailynews.com/sports/football/giants/2008/09/05/2008-09-05_seat_hits_the_fan_over_prices_for_giants.html

[15] Id.

[16] Mike Florio, Expensive seats squeezing out NFL fans?, Sporting News, June 27, 2008, http://nbcsports.msnbc.com/id/25417558/

[17] Joe Lapointe, New Meadowlands Stadium has Bells and Whistles, NYTimes.com, Oct. 30, 2008, http://www.nytimes.com/2008/10/31/sports/football/31stadium.html?_r=1

Tags:

Sports

Comments are closed

Theme by Mads Kristensen

Invitation


We invite law professors, practitioners, and students to submit short articles for publication on this website. Simply email articles to the editors of the journal using the "Contact" form link above.   We also strongly encourage readers to post comments relating to a specific article or a topic covered by an article on the website. Just click on the "Comments" link located in the post footer below each article.

Recent Comments

Comment RSS

Disclaimer

This Journal is published by members of the Business Law Society at the University of Illinois College of Law. It is not a publication of the University of Illinois, and, therefore, the University of Illinois bears no responsibility for its content. Moreover, this Internet publication is prepared as an informational service only and should not be relied upon as legal advice. Although every attempt is made to ensure the information is accurate and timely, the information is presented "as is" and without warranties, either express or implied.