Press Box Article

 

As Bears trample Wall Street, seat licenses find a bull market

 

The Star Ledger

Kevin Manahan

 

Link to Article on NJ.com

 

Sunday, October 19, 2008

The daily economic drumbeat is depressing: Job losses mount. Corporations beg for handouts. Economists aren't sure which is shriveling faster -- consumers' confidence or 401(k)s.

But if you think the Giants and Jets have picked the worst time to ask their fans to scrap together thousands of dollars for personal seat licenses in the $1.5 billion Meadowlands stadium that will open in 2010, think again. Even in these nervous days, the local market for personal seat licenses is as strong as ever, experts and fans say, thanks to an insatiable fan base that lusts for hard-to-get tickets, the affluence of the metropolitan area, investors who are hoarding cash, and the near certainty that the value of the PSL will appreciate.

"Sports is different from a lot of other industries, and New York and New Jersey are different from just about any other sports market," said Kyle Burks, the founder of www.seasonticketrights.com, a website devoted to the buying and selling of PSLs. "A lot of times, sports are not influenced by a recession, not negatively anyway.

"People want to get away from the bad news. They want to escape, so they'll spend money on entertainment, and nowhere in the country is there more money than in New York or New Jersey."

Burks says "the biggest hurdle to a PSL is, 'Do you have the cash on hand, or can you get it?' And with investors fleeing a volatile stock market, there is a lot of cash on the sidelines."

A personal seat license, or PSL, gives the holder the right to buy season tickets for a certain seat in a stadium. PSLs in the new stadium will cost between $1,000 (for the Giants' upper-level seats) to $20,000 or more for mezzanine-level or lower-level seats on or near the 50-yard line.

If a PSL holder no longer wishes to buy season tickets, the holder can sell the PSL to another fan. PSLs are valid for as long as the team plays in the venue. For Giants games, each of the 82,500 seats will require a PSL. The Jets have exempted 27,000 upper-deck seats.

While the Nets are slashing ticket prices and devising gimmicky packages to fill the Izod Center seats, and other sports wonder if their attendance can survive household belt-tightening, Giants fans are snatching up pricey PSLs during the club's ongoing sale. The Jets, meanwhile, expect to sell out more than 1,000 of their most expensive seats in a special internet auction that begins today and kicks off their PSL sales.

Giants president and CEO John Mara said the team's season-ticket holders, who are getting first shot at the PSLs, are overwhelmingly choosing to buy them, even if it means moving to cheaper seats. In a section-by-section sale that will take several months, ticket office workers are meeting with season-ticket holders to explain the options and help them choose their new seats.

While the fans who are being squeezed out are getting headlines as they rail against the price and morality of PSLs, they are few in number, even in these tough times, team officials say.

"I don't think we've seen much of an effect from the economy so far," Mara said. "We've seen very few cancellations."

Not selling out is the worst-case scenario for a team instituting PSLs. That places a fan who paid for a PSL next to one who didn't, an awkward situation. But with combined season-ticket waiting lists of more than 150,000, the Giants and Jets aren't concerned.

"I've never been that worried that we could sell the tickets," Mara said. "My biggest concern was trying to find a way for existing ticket holders to stay in the building with the added cost. It bothers me that some people might feel that they can't afford this. We're very conscious of trying to keep the same people in the building, fans who have been coming for generations."

To make PSLs more affordable, the Giants and Jets are offering financing options. The Giants have teamed with Wachovia Bank, while the Jets will underwrite the financing themselves, owner Woody Johnson said. Most Giants fans are paying cash or arranging their own financing, Mara said.

For the Coaches Club seats being auctioned on www.stubhub.com, beginning today and running until Oct. 27, the Jets are offering five-year financing at 6.5 percent and a 15-year plan at 8 percent.

"We expect the auction to go very well," Johnson said. "The seats we're selling in this auction haven't seen the light of day in 50 years. From the scarcity standpoint alone, we expect a great demand."

The two teams have stimulated their PSL markets -- the Giants by winning an unexpected Super Bowl title in February, then starting strongly this season; the Jets by acquiring quarterback Brett Favre.

Season-ticket holder Paul Sendik, a 35-year-old manager for a payroll company, is one of the fans who dug deep to find cash for PSLs. Sendik -- who has been attending games for three decades -- takes his wife, two young children, sister and a buddy to each Giants home game. He couldn't afford the PSL for each of his 40-yard-line seats, so he moved and downgraded. Still, coming up with $30,000 was not easy.

"With six seats in a $20,000 section ... good economy, bad economy, I don't have that kind of money," Sendik said. "I sent in the first payment before the economy totally tanked. Do I regret it? No. Am I worried about where I'll get the next installment nine months from now? Yeah, a little."

But there's more to a PSL than tailgating and watching Favre or Eli Manning throw touchdown passes. In the NFL, a PSL is an investment. Because the Giants want to sell all of their PSLs, they have priced them below market value, Burks said. So, a Giants PSL holder could expect to sell at a hefty profit, especially within the first five to 10 years.

The Chicago Bears PSL market is the one most similar to the Giants, Burks said, "and if you can find a lower-level midfield seat for under $40,000 in Chicago, you're doing pretty well."

The Jets' Coaches Club PSLs, because they'll be sold at auction, will be priced closer to current market values, so they are likely to appreciate less. But if the NFL remains strong, so should the value of the licenses.

"PSLs go up and down from year to year, but we haven't seen any drop over the long run," Burks said. "It's just the opposite. Almost all have appreciated from their original prices.

"A PSL is like most commodities. If it's priced right, it can sell within a day or a few days. There are brokers out there looking for deals, and they know the market value. They'll scoop up any PSL at below market. If you price at the market, it'll sell in about a week."

 

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