Category: personal seat licenses

Buffalo sportswriter: Bills fans aren’t actually mad about $50,000-a-ticket PSL fees, says some guy

access_time personNeil deMause

As noted on Friday, Buffalo Bills season ticket holders are up in arms about having to pay as much as $50,000 per seat in personal seat license fees just to get equivalent seats at the team’s new stadium, for which they and other New York state taxpayers are putting up just over a billion dollars. Only … maybe they’re not? That’s the bold conclusion of Buffalo News NFL columnist Ryan O’Halloran after talking with, let’s see, an “industry source”:

“The truth is very different from what’s out there,” an industry source told me. “The community is super behind it.”

So let’s try to picture what happened here: O’Halloran, after reading about disgruntlement among Bills fans over PSLs, decided to look into the matter. Rather than talk to any Bills fans, though, he called someone in the seat-license industry — possibly someone with the Bills or Legends Entertainment, the part–Dallas Cowboys–owned company that the Bills owners hired to conduct the PSL rollout — who said people are signing up at a “really exciting” rate. (The source also provided a bunch of fact-adjacent stats like “the average time of visit [to a PSL showing] is one hour, 40 minutes.”) We don’t know how the source knows this, or if they’re just straight-up lying about it, because O’Halloran allows the source to characterize what’s going on without revealing who they are or their potential self-interest.

This is just a flagrant violation of journalistic ethics, which say that anonymity should never be granted to people who are trafficking in opinion or speculation, and sources should always be identified in as much detail as possible so readers can be clear on their potential conflicts of interests. Honestly, this column alone should be grounds for discipline and/or firing of both O’Halloran and whichever Buffalo News editor greenlit it, unless there’s some extenuating (looks at calendar) … ohhhh, I get it, this is an April Fools joke! I take it all back, this is an extraordinarily clever satire of terrible sportswriting that bends over backwards to serve team owner interests, well played!

(If despite all this you still would prefer to hear from actual Bills fans about what Bills fans think, head over to the Bills season ticket holder page on Facebook, where you can read such sentiments as “I tried to get information about the PSL’s in other sections, like more towards the 30 yard line or the 20 yard line they couldn’t tell me” and “I bet all these people sold time shares before being hired to pitch these PSL’s” and “Will the Bills revoke my psl if I [resell some of my tickets and] don’t get a $5,000/year ticket reseller license like the Sabres are doing?” All good things for local journalists to investigate, if the Buffalo News has any left on staff.)

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Friday roundup: KC Star urges “no” vote on Royals/Chiefs sales tax; property tax breaks could cost KC schools, libraries $600m

access_time personNeil deMause

Moving a little slow today as I head home from the Sports Economics Conference 2024, which hopefully can become a regular event. As a reward for your patience, here’s audio of yesterday’s journalism panel discussion with me, Ken Belson of the New York Times, and Pat Garofalo of the American Economic Liberties Project, plus lots of questions from the assembled luminaries of the sports economics field. (That’s our host, Dennis Coates of that meta-study fame, introducing us, and the other co-authors of that paper, J.C. Bradbury and Brad Humphreys, make cameos as well.)

And now, if the Amtrak wifi is willing and the creek don’t rise, let’s move on with this week’s news lightning round:

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Seat license sales could lower Bills owners’ share of stadium costs to negative $90m

access_time personNeil deMause

The owners of the Buffalo Bills, fresh off winning a $1 billion subsidy deal from the state of New York, sent 40,000 of their fans a thank-you note last week: a chart listing how much money each of them will be expected to give the team owners if they ever want to think about buying season tickets.

Tim Johnson, a 34-year season ticket holder in Section 130, was angered by what he saw in the survey.

Johnson said he would be looking at between $6,000 to $7,000 for each seat license, according to the survey. Johnson isn’t sure he’s willing to pay that much.

“With the prices they showed me, I don’t know if I’m going to bother,” said Johnson, who has gone to games for years with his two sons.

Here’s the price list, per the Buffalo News:

That’s a little confusing what with all the “high end” and “low end” stuff, but basically if Bills fans want to buy season tickets to sit anywhere but the nosebleeds, they’re going to have to look at spending upwards of $4,000 per seat just to be able to log in and access tickets. Then it’ll be $150 and up per actual ticket for each game.

This is the kind of thing that gets fans in an uproar — and sportswriters too, as witness the fact that the News expended a bigger word count on this than on most of its articles analyzing the tax money going into the deal. And given the history of personal seat licenses, it’s fair for them to be steamed: When PSLs first came on the scene, for the Charlotte Hornets in 1987, they were meant to be a free bonus for fans who bought season tickets, allowing them to pass along their place in the season-ticket line to whoever they wanted when they were done with it instead of having to throw it back to a general waiting list. A few years later, the same consultant who came up with the PSL idea, Max Muhleman, used it to help finance a $160 million Carolina Panthers stadium so the team wouldn’t have to demand public funding.

Not long after that, though, team execs started to think: Hey guys, what if instead of using PSL money to reduce our tax kickback demands, we ask for the tax money anyway and then still do the PSLs? We would be even richer, if such a thing is even possible! And thus the modern PSL was born, which in most cases doesn’t help fans or local taxpayers (or fans who are local taxpayers, which is most of them) but just goes to defray the team owner’s stadium costs.

At last count, Bills owners Terry and Kim Pegula were, after cashing their checks from the NFL’s G-4 stadium funding program and from the sale of naming rights, looking at a total cost to themselves of perhaps $150 million toward a $1.4 billion stadium. If we assume even an average $4,000 PSL sale, times 60,000 seats, that’s $240 million, which would bring the Pegulas’ costs to a nifty –$90 million — in other words, the Pegulas would turn $90 million in profit before the stadium even opens, while taxpayers are out $1 billion and Bills fans are forced to ante up thousands of dollars before they can even think of buying tickets. “Worst stadium deal in recent memory” is sounding more and more accurate.

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Roughly 7,000 Falcons fans have now defaulted on their PSLs, because PSLs are kinda garbage

access_time personNeil deMause

Journalism may be dead and all, but the Atlanta Journal-Constitution is still giving it the old college try, today by publishing the results of their latest public records request into how many Atlanta Falcons season ticket holders are defaulting on their personal seat licenses, eating the payments they made already to avoid having to make any more. And the answer is a whole heck of a lot:

About 7,000 Falcons season-ticket account holders have defaulted on their seat licenses since 2016, records show, with the vast majority of those accounts representing two or more seats. About 650 of the account holders who defaulted later returned as PSL owners.

Records show that seat-license purchases made before the 71,000-seat stadium opened in August 2017 totaled $299.1 million, including interest added to accounts annually. Of that, $196.5 million had been paid as of June 30, and after the $42.9 million in defaults, $59.7 million remains outstanding (plus future interest).

The total “default write-off balance” of $42,933,454 as of June 30 was up from $32,001,679 as of one year earlier.

That’s a lot of numbers, so let’s break them down a bit. When the Falcons built their new stadium — with the help of more than half a billion dollars in taxpayer money — they forced fans to plunk down anywhere between $500 and $45,000 for the right to buy tickets to sit beneath the glory of Megatron’s Butthole. The magic of PSLs, though, was that if fans decided they didn’t want the tickets, they could sell their ticket rights to someone else.

At least 7,000 Falcons fans, representing perhaps double that in total seats, have instead decided over the past four years to just walk away from their seat rights, which the AJC notes “apparently reflect[s] the difficulty in finding buyers.” It probably doesn’t help that the Falcons have been aggressively mediocre the last couple of years, but they made the Super Bowl as recently as 2017, and anyway, no team is very good or very bad for long in today’s NFL. (Okay, no non-Cleveland Browns team.) And while the pandemic undoubtedly isn’t helping, the $10 million in defaults from July 2019 to June 2020 are right on pace with the previous three years.

The bigger issue appears to be something we’ve already seen in other NFL cities, which is that PSLs are kind of a scam. Despite the promise that they’re an investment, not an added cost on top of your actual ticket fees, way too often their resale value plummets soon after purchase, to the point where even finding a buyer may seem like less trouble than just stopping annual payments and eating what you’ve spent so far. Some fans appear to be catching on — the Los Angeles Chargers had to massively downgrade their expected PSL sales after it turned out no one really wanted to buy them (or just that there are no Los Angeles Chargers fans), and even the Falcons had more trouble selling them than they’d hoped. But even if they don’t always raise as much as team owners hope, PSLs are still worth it, since they’re essentially free money: Making a waitlist of fans for season tickets never used to generate any revenue until Max Muhleman accidentally invented them.

None of this is illegal, obviously, and in a “let the buyer beware” sense, it’s not even unethical, since you’re only scamming people who fail to understand that sale price doesn’t necessarily reflect actual market value. (And PSL money has enabled team owners to put up more capital toward stadium expenses, though as we saw with the Falcons, it hasn’t stopped them from demanding plenty of public cash as well.) Still, you have to wonder how long NFL owners will be able to keep on charging fans twice for the same product, especially as people get more used to sitting at home and watching TV, something that started before Covid but is only likely to accelerate now. Time for team owners to start demanding new stadiums with smaller capacity, you think? As with the PSL racket, you can’t get if you don’t ask.

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Court rules St. Louis Rams PSL contracts still valid, could cost Kroenke $150m+ in payouts (UPDATE: probably not that much)

access_time personNeil deMause

Well, ain’t that a kick in the head:

A federal judge in St. Louis ruled Wednesday that the Rams must refund deposits to some fans who purchased personal seat licenses during the franchise’s two decades in that city and offer others the opportunity to buy season tickets to games in Los Angeles.

I was dimly aware that St. Louis Rams PSL holders were suing over the season-ticket rights they’d purchased in perpetuity suddenly being worth nothing since there were no St. Louis Rams season tickets to buy anymore (see my brief note here), but I never thought they’d actually win. Nor, presumably, did Rams owner Stan Kroenke, because he is now seriously hosed, to a degree that we’ll attempt to figure out in a second.

First, a primer on PSLs: Initially created as a bonus for fans who bought inaugural Charlotte Hornets season tickets (not only do you get the tickets, but if you don’t want them anymore you can sell your spot on line to someone who does!), they quickly turned into a lucrative way for team owners to raise cash: Instead of first-come-first-serve tickets, offer fans the chance to buy the right to first dibs, with the carrot that they can then re-sell that right down the road to recoup at least some of what they laid out. In some cases with popular teams in cities with lots of fans with money to burn, it’s been lucrative indeed: The San Francisco 49ers managed to bring in more than $500 million from their PSL sales, which is a sizable chunk of change. And Kroenke has been hoping for similar revenue from PSL sales to help pay for his new $2.5-billion-ish stadium in L.A., though he can’t start selling them until next February as part of his relocation deal with the NFL.

So how much will this court decision, assuming it holds up on appeal, cost Kroenke? Of the 46,000 Rams PSL holders, there were two classes being represented — those whose PSLs were initially bought through a broker and those whose PSLs were bought directly from the team — and thanks to differences in the two contracts (whee lawyers!), each group now gets a slightly windfall: Broker purchasers get a refund of their PSL “deposit” (the judge declined to define what that means for now), while direct buyers get to actually transfer their PSL rights to the Rams’ new stadium. And while that may not sound so great — do any St. Louis Rams fans really want to fly to L.A. to see their former team play? — remember, the whole point of PSL rights is that they’re transferrable, so this is now a hugely valuable asset that they can sell, and more important, that Kroenke now can’t.

How much actual money would that cost Kroenke? Now we’re deep into speculation, since we don’t know how many direct vs. broker buyers there were, nor how much Kroenke was planning on selling L.A. PSLs for. Deadspin reported that the ruling will “likely cost the team millions of dollars in returned deposits and foregone profit,” but that’s almost certainly way too low: If there are 23,000 direct buyers and 23,000 broker buyers, say, then refunding 23,000 fans for their St. Louis purchases at $250 each would cost $5 million, while handing over free L.A. PSLs to another 23,000 fans could cost — let’s see, it’s a 70,000-seat stadium, so if Kroenke was shooting for $500 million in PSL sales, then scrapping 23,000 of those would lose him … $160 million, something like that, depending on which seats the judge says he has to set aside for St. Louis PSL holders?

It’s hardly a deal-breaker when you’re spending over $2 billion on a new facility, sure, but still, unexpected nine-digit losses are never fun. However all this turns out, it’s likely to be at least a moderate-sized headache for Kroenke and his accountants, as well as a cautionary tale for both teams writing up PSL contracts and fans buying them: Read the damn fine print, because it could end up being worth a hell of a lot of money.

UPDATES: As a couple of commenters have pointed out, the cost to Kroenke probably won’t be as much as I’d guesstimated: First off, more than 90% of the PSLs were sold by the broker, not the Rams, so that pushes most of the PSL holders into the less-lucrative “you get your deposit back” category. Second, the St. Louis PSLs were set to expire after the 2024 season (the Rams lawyers did something smart, anyway), so even for the L.A. PSLs Kroenke has to now pull off the market, he’ll get to resell them again in a few years. So we’re down in the $15-25 million cost range for Kroenke, which while it’s going to sting, is more of a rounding error for a guy playing in this spending stratosphere.

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Vikings near goal of selling $125m in PSLs, other NFL teams think that’s just adorable

access_time personNeil deMause

The owners of the Minnesota Vikings have announced they’re 90% of the way toward selling out their stadium-builder licenses (i.e., PSLs) for their new stadium, having raised $115 million toward their $125 million goal as part of funding for their $1 billion stadium.

That’s good for them, but it points up how crazily unbalanced the PSL market is, with the Dallas Cowboys raising about $650 million, the San Francisco 49ers, New York Giants, and New York Jets a bit over $300 million apiece, and teams like the Vikings and Atlanta Falcons down in the $100 million range. That sort of explains why NFL teams are willing to pay $550 million to go to Los Angeles for its supposed PSL riches, though not really, since unless the Rams suddenly become as popular as the Cowboys they’re still only looking at maybe $250 million of added PSL sales, which according to my math is less than $550 million.

The other interesting bit is that, as has been the case with other PSL deals, the Vikings sold out the best seats and the cheapest ones first, and it’s the mid-priced ones that are the toughest sells. That could be a commentary on our increasingly economically polarized society, though it could also just mean that NFL teams are lousy at setting prices. Either way, if you have $2,000 burning a hole in your pocket and a desire to spend it on the right to buy football tickets (which will cost extra money to actually buy, of course), then Minnesota has a deal for you.

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

access_time personNeil deMause

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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More 49ers fans dumping seat licenses, because 49ers’ new stadium sucks

access_time personNeil deMause

The San Francisco 49ers‘ new stadium in Santa Clara has had some problems since it opened last year — the grass won’t stay put, it was brutally hot, getting in and out by car was often painful, and the stadium lights blinded nearby airline pilots. And now, according to KGO-TV, some seat license holders are fed up and want out of their season-ticket deals:

If you were hoping to get your hands on a San Francisco 49ers Season Builders License, or SBL, you’re in luck. Thousands are now available, but re-sellers say it has nothing to do with the team’s current record. Still, a growing number of fans are very dissatisfied…

“Half the stadium, we get beat up by the sun. So if you’re going to watch a game, you want to enjoy, drink a few beers. Here, you drink a few beers, and you get beat up, come home with sunburn, it’s just a bad experience,” [San Jose resident Tuan] Le said.

Other fans complained that the 49ers changed their ticket policy this year, sending only electronic tickets that can’t be printed until 72 hours before the game, making it harder to sell unwanted tickets.

Now, it’s only 3,000 licenses that are up for resale, up only slightly from last spring, and not all that much in a 68,000-seat stadium. And besides, the magic of PSLs (or SBLs as the 49ers call them) is that the team doesn’t have to give a crap about any of this: They’ve sold the licenses already, and it’s the fans’ problem if they made a bad investment.

The more interesting question is what this means for plans to finance stadiums in Los Angeles by similar means: Will L.A. fans, seeing the mess in Santa Clara, be more hesitant to plunk down for Rams/Raiders/Chargers PSLs? Nobody knows, but then nobody knows how viable those PSL sales projections were in the first place. This is a cautionary tale for somebody, that’s for sure, but whether it’s for football fans, for city officials in Inglewood and Carson, or for cities that think they have to outbid L.A. for the right to keep their teams is yet to be determined.

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49ers PSLs nearing sellout, everybody can breathe easier about stadium debt

access_time personNeil deMause

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…

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