Inventor of PSLs says he never meant them to be a mere cash grab from fans

My Vice Sports colleague Aaron Gordon has a fascinating interview up today with sports marketer Max Muhleman, best known as the inventor of personal seat licenses. And he gets Muhleman to reveal something that I hadn’t heard before: The original idea for PSLs was not to charge for them at all, but rather use them as a reward for fan loyalty.

As the story goes, Muhleman’s first PSLs were developed for the then-expansion Charlotte Hornets, when owner George Shinn suggesting buying leather jackets for fans who’d put down non-refundable season ticket deposits without knowing if there would even be a team. Muhleman, who’d run the ticket drive, countered by suggesting that fans be allowed to pass their seats on to someone else if they gave them up, rather than having them go to the next person on the waitlist as was usual practice. He called this “charter seat rights.”

Then, history happened:

Muhleman never meant for the PSL to become an investment. It was simply about thanking the fans who pledged their own money to help support a new team or stadium. The idea of re-selling Charter Seat Rights didn’t even occur to Muhleman until he saw a classified ad in the paper after the Hornets’ incredibly successful inaugural season, when they sold out every game in the 23,000 seat arena. The ad read: “‘Leaving town. Two charter seat rights. $5000.” When Muhleman called the number, the person on the other end said they had already received about a dozen calls and they regretted not asking for $10,000.

Four years later, when Jerry Richardson was trying to raise money for a Carolina Panthers stadium, he turned to Muhleman, who remembered that classified ad. Eventually, the rebranded PSLs raised $92 million for Richardson at zero cost to him, and a revolution was born.

The Vice headline claims that Muhleman now “hates PSLs as much as you do,” and while I love a grabby headline as much as the next guy, it’s not quite accurate: He actually tells Gordon that he feels like PSLs have gotten so pricey that they’re just a money grab, losing the necessary balance of also building fan loyalty by offering them something in exchange for their fandom:

“I thought we were on to something that worked, that it made good music with the sport, the fan, the owners, we could all come together in a harmonious, mutually productive, helpful way,” he said. “But these programs I see, so many of them I can only say are unilateral, and unilateral in favor of ‘how much can we get out of these people?’ And I do not believe the path to success in sports is maximum leverage of fans.”

Of course, it depends on your meaning of “success.” When it’s a choice between hundreds of millions of dollars in cash now and potential good will down the road, that hasn’t been a decision that most NFL owners have had to think too hard about.

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13 comments on “Inventor of PSLs says he never meant them to be a mere cash grab from fans

  1. Didn’t the Cowboys make people buy a bond to finance construction of Texas Stadium before they could buy a ticket? (Obviously you couldn’t pass those rights along like a PSL, but it was tying stadium construction costs to tickets.)

    And I wish the fine people of Charlotte had told Jerry Richardson where he could put his PSLs. But, no, because footbawwwwwwwww.

  2. If the Cowboys made ticket buyers buy stadium bonds, I never heard about it. The bonds were all set to be repaid by tax revenue, anyway (albeit some of it special ticket/parking tax surcharges that came out of Jerry’s pocket, mostly), so it’s not like they were going to have a hard time finding buyers:

  3. I always believed it was Joe Robbie who created the personal seat lease.

  4. Joe Robbie financed his stadium by selling suites and club seats, but that’s just pre-selling tickets. PSLs aren’t tickets at all — just the *right* to buy tickets. That’s the innovation that Muhleman came up with.

  5. Anyone looking to buy a PSL to finance an NFL stadium should carefully look at what’s happened in Santa Clara with the expensive PSLs. Many fans who bought PSLs (and also have to buy season tickets each year or lose their right to keep their PSL) feel like a bait and switch was pulled on them by the team ownership. Just read the comments on articles in the SJ Merc News or SF Chronicle.

    In addition – Santa Clara’s agency The Stadium Authority is the entity which sold the PSLs – so no sales taxes were paid because a municipal agency sold the PSLs – but the PSL contract shows that The Stadium Authority is the entity to which PSL payments are made for fans who financed their PSLs. Contrary to what Santa Clarans were told – the municipal agency actually did serve as the financing entity for PSLs. Therefore, if anyone decides to default on his/her PSL contract, it will be a shortfall to The Stadium Authority, and it will be the responsibility of The Stadium Authority to sue anyone in default on his/her PSL to recover the money needed to pay off stadium construction loans.

  6. Neil – Yes, there are payment plans. PSL purchasers for Santa Clara’s stadium had three choices:
    1) Pay it all off at once.
    2) Pay it off in the short term, in which case there were no financing charges.
    3) Pay it off over 10 years, in which case there are finance charges, and payments are made to the Santa Clara Stadium Authority.

    The City of Santa Clara/Stadium Authority has never let citizens here know how the PSL owners were distributed among these three choices, therefore, we do not know how many PSL owners chose to finance their PSLs via the Stadium Authority.

    With the team performance what it has been this past season, people are openly grumbling on social media and on news article comment forums about not wanting to continue paying for season tickets. SJ Merc reporters have written/tweeted about fan dissatisfaction, and Mike Rosenberg (SJ Merc) tweeted about a ‘fire sale’ on PSLs. People cannot sell the PSLs for what they paid for them.

    Looking at the contract, it’s the Stadium Authority which would be responsible for going after any PSL owners in default. I’d say that’s public financing, when a municipal agency is issuing the financing for PSLs and responsible for collecting on the debt.

  7. SC: I agree with you on the public financing front.

    I’m not sure anyone buys PSL’s as a bona fide investment, however. There may be rare cases where due to fan demand or team performance that people can resell their PSL’s for face value (or potentially more).

    But in the vast majority of cases, I think fans know they are paying what amounts to a fee up front to be able to sit in a new stadium… just as Packer fans realized there was no real monetary value in the non-dividend paying non-voting ‘shares’ they bought from the club to help finance the renovation of Lambeau field.

    Fans may ultimately be able to sell their PSLs for more than face value (as with the original texas stadium bonds… thanks to Mark for that link, hadn’t realized that this happened for the original…), but no-one is pretending these are real investments.

  8. It’s funny that this grew out of a Shinn plan to offer “leather jackets” to fans to ponied up up front.

    I’ve always thought of PSLs as being something along the lines of the free merch that clubs used to offer to season ticket holders… which itself migrated over the years to become “the opportunity to purchase (!) apparel that is not available to the general public” in some cases.

    Or CDOs, I guess, if you want to migrate to a different industry.

    “We’ve created this wonderful new product that you almost certainly will want to buy”. Why? “Because we think we can sell it to you”.

    As noted on other threads, the PSL model may outrage some fans… but typically you don’t have to buy one for every seat in the stadium (and, if you are patient, you can almost certainly buy one on the secondary market a few years later at a significant discount… unless the NFL discovers the ‘re-earnable fee’ model that time share shills use the world over…).

    For general admission seat buyers and non-fan taxpayers, however, PSLs must seem like manna from heaven: The fans who actually want and can afford to sit in the new stadium actually have to pay for some of it themselves… what could be fairer than that (other than the business owner building his own commercial building, of course)?

  9. Not sure about the 9ers/Santa Clara model about the public agency picking up the default on PSLs, but I’ve read that the NFL teams consider PSLs to be a portion of the team’s contribution to stadium costs, even though it is purely the fans $$, so say for a $1B Oakland stadium, the Raiders offer to pay $500M but really of that number, they are claiming $200M in G4 loans, and say $150M in PSL’s, so are only purely financing $150M, while asking the City/Council to finance the $500M difference.

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