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Why Rent Your Stadium Seat When You Can Own It?

The introduction of personal seat licenses about 20 years ago revolutionized the financing of stadium and arena construction around the country. By asking fans to pony up a lump sum merely for the right to buy tickets, team owners and colleges and universities created a revenue stream basically out of thin air. The personal seat license revenue stream could then be used to collateralize bonds to pay for a portion of the construction costs of the stadium. Who would have thought, prior to this, that fans would pay for the right just to buy a ticket.

Well, the next logical step is now being tried by the University of California. The problem with the PSL from the standpoint of the fan, is that you are always exposed to market rate risk. As ticket prices rise, your costs of attendance increase and since most PSLs were for no more than 10 years, at the end of the ten years, another PSL fee would come due. What the folks at Cal are doing, according to the Wall Street Journal, is essentially taking a stadium seat and transforming it from a rental into a condominium. For a significantly larger fee than a PSL, $170,000 to $225,000, payable over 50 years, for the best seats, a fan has "title" to his seat and has capped his cost for the next 50 years: no ticket price to pay, no fee increases. Cal secures the funds to pay for its stadium renovation and the fans secure cost certainty.

Nice idea, but I'm skeptical than enough people in this economy will be willing to sign on to that type of commitment. Of course, we are talking about football and I've learned never to underestimate the lengths to which college football fans will go to spend their money in pursuit of their sport.

Full post as published by Sports Biz on September 30, 2009 (boomark / email).