You can upgrade the San Francisco 49ers‘ seat-license sales count from “most of them” to “pretty much all of them“:
The team disclosed late Friday it has sold more than 95 percent of the seat licenses at the nearly 70,000-capacity Levi’s Stadium — up from 75 percent a year ago and 50 percent a year and a half ago. The seat licenses, which are new for the 49ers, cost $2,000 to $80,000 apiece and give fans the right to buy season tickets.
The total value of the purchased seats is believed to be roughly half a billion dollars, which Santa Clara uses to help pay for the $1.3 billion stadium, though most of the cash will be paid over time in installments.
As we’ve covered before, the healthy PSL sales mean that pretty much everyone is going to come out looking okay from the 49ers stadium deal: Santa Clara doesn’t have to worry about repaying its stadium debt, while the 49ers are reportedly set to make money hand over fist. (Federal taxpayers have to take the hit from that $120 million tax subsidy for the PSLs, but that’s the IRS’s problem for not closing that loophole. Or Congress’s, I guess.) We finally have a model for a successful stadium project, then: Build it in a market where you have a fan base rabid and rich enough that they’re willing to pay anything for a chance to buy tickets, and where naming-rights fees run into the eight digits, and you’re all set. Too bad everybody can’t play in the Bay Area…
From the Mercury article: “Some fans are even asking for more than a half-million dollars for a pair of front-row, 50-yard line VIP seats that take up less real estate than a parking space.”
Obscene.
My model is public stadium cash, baby! That works everywhere, except L.A. That’s why we’re always about to move your team there, snicker.
If you have to privately build your stadiums is there any wonder why the A’s want to move into Silicon Valley. Earthquakes stadium is also privately funded. With most of the steel up it will open for 2015 season. Amazing that nfl/mlb is still holding onto to Oakland in the hopes of a significant public investment to support $1.5B of stadium construction–
Interesting that the PSL’s can be “paid for over time”. I would have thought that that would be a non-starter from both the team and city perspective… the whole point of PSL’s is that they raise “money up front” to help pay for the stadium. While I think the concept of PSLs is an appalling one from the fans’ perspective, it actually does work from a financing/public funding POV: those that want and can afford to enjoy the new stadium have to pony up to help pay for it.
Still, you can finance/amortize anything in the present world economy… including Alex Rodriguez, it seems.
re: the “Bay Area” link…
Nice article, Neil.
While I agree with most of it, I don’t necessarily think we could count on “dilution” of major markets with additional teams levelling the playing field. Noll is absolutely correct that it ‘should’ work that way, economically. However, if you own the NY Yankees or Toronto Maple Leafs, no amount of dilution is going to make you into a have not franchise (just like Leyton Orient, Crystal Palace and Fulham, despite their location in the largest city in England, are not on par with Arsenal, Chelsea or Tottenham and wouldn’t be no matter how long they managed to stay in the PL).
Lastly, I disagree with the idea that that Jacksonville Jaguars are “worth” a billion dollars. The standard for establishing fair market value is the transaction value recorded between a willing seller and a willing buyer. In professional sports in North America (and, to a degree, the world as a whole), there is no such thing as a fair market value transaction. The supply of franchises is artificially restricted, for one thing. The pool of buyers is also heavily restricted by conditions imposed by the leagues (including individual approval of prospective owners and, often, the leagues setting both the price of the transaction and a surcharge if the sale involves potential relocation).
In fact, it would be more accurate to suggest that the leagues themselves do the selling – the owner is pretty well restricted to deciding that he wants to sell, and what his minimum price is. The leagues can and do decide practically everything else.
The agencies that assign “franchise values” to sports teams are either incompetent or lazy, based on the conclusions they come to. As noted before, the Toronto Maple Leafs assigned value ballooned from $450m in 2010 to $1Bn in 2013. Yet the Maple Leafs’ actual revenues did not come close to doubling in that period (which is what should have happened if the value of the business had doubled).
What did happen?
Two communications companies – desperate for content – paid far more than the business was actually worth to secure their content at a fixed price.
Scarcity (real or perceived) is a major issue in determining valuations. When some idiot bought the (allegedly only) batmobile for $4.6m (including premiums), did this set the value for any other batmobile at $4.6m? Of course not. And the buyer admitted as much… he was going to buy it no matter how much it cost.
If George Barris ‘finds’ (ala Carroll Shelby) another batmobile underneath his sofa, does anyone believe it will sell for $4.6m too?
Most teams charge interest on PSLs that are paid over time.
That makes sense, Ben. After all, most used car dealers make as much (or more) money off financing charges as they do off the sale itself.
@Ben does the team charge interest or do the just find a third party to finance a loan (so they can get their money up front)?
The 49ers PSLs were interest free for a two year period, this period will end when stadium opens this aug. After this point there is an 8% interest charge on the amount that is left. Financing is provided by one of the banks that provided the loans for the stadium project.
From ticket rep, more than half of the PSLs have been paid in full during this interest free period.
@JMauro The Cowboys started up their own finance company for PSLs. I’m less certain about the others.