Press Box Article

Send Out the Punt Team for NFL's High-Risk Real Estate
The Wall Street Journal
Liam Denning
Saturday December 5, 2009
Owning your own little piece of real estate in Pittsburg has been a great investment over the past decade or so. That is, when the real estate is a seat at the Pittsburgh Steelers’ Heinz Field.
The average personal-seat license, or PSL, at the stadium, which confers the right to buy season tickets, sold initially for $1,067 in 1998, says STR Marketplace, which runs exchanges for trading PSLs. This year, Steelers’ PSLs have changed hands for an average of $10,488, a rise of 883%. In contrast, average house prices in Pennsylvania’s Allegheny County, where Pittsburg is located, have risen only 29% since 1998, according to West Penn Multi-List, a real-estate-services firm.

As an investment class, PSLs are high-risk. As you can only trade PSLs for 11 professional football teams, out of a total of 32, there is a paucity of data with which to analyze overall market trends. (The New York Giants and Jets are issuing PSLs for their new stadium, which opens in 2010.) Also, turnover in the PSL market is low: About 2% of seats change hands in any given year.

Still, this is a world that somehow has an appetite for leveraged exchange-traded funds.

And PSLs show some degree of moving independently of the broader economy. Houston enjoyed a 29% increase in normal gross domestic product from 2005 to 2008, but the average price of a Houston Texans’ PSL dropped 14%. Why? Even an oil boom couldn’t fire up the Texans’ play.

The National Football League’s draft system for allocating players every season also, in theory, provides some rationale for buying on a team’s “dips” in the hope of a cyclical recovery.

Still, there are drawbacks. For starters, if you want to enjoy the use of that seat, you need to spend extra money buying season tickets every year.

And however heroic on the field move the price, there is no escaping the economy’s effects entirely: Teams such as the Steelers and the Chicago Bears saw PSL prices slip this year, after having peaked, like much else, in 2008.

Indeed, the biggest gains largely have accrued to those who bought PSLs at the start. That makes sense. Like a company selling stock in an initial public offering, teams issuing PSLs want to maximize subscriptions so they can sell more tickets and merchandise. That makes for low initial selling prices and a high chance of future gains.

Realizing a project on your PSL rests to a large degree on finding a greater fool, or fan, to sell to. Still, you could say that about a lot of mainstream asset classes, too.