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Paying For The Right To Pay Again

Mercedes Benz Stadium, which was funded in part with personal seat licenses.
Mercedes-Benz Stadium, home of the Atlanta Falcons. Photo by Birmingham Photographer J.g. on Flickr.

Football season is underway, and for many die-hard fans, that means reuniting with other season ticket holders to cheer on their team. But joining their ranks has become harder, and more expensive, for fans of many teams with shiny new stadiums.

This is because before buying season tickets, fans must first buy the right to buy season tickets in the form of a personal seat license.

The license, sometimes called a permanent seat license and often abbreviated PSL, entitles the holder to buy season tickets to a particular seat (or set of seats) in a stadium. Teams often use them as a way to fund the construction of new venues, and the licenses generally last as long as a team stays in a particular arena. Teams pitch them as a convenient way for fans to keep their seats from season to season, or even generation to generation. Opponents say it is simply a way to shift stadium costs from teams to fans, by making them pay for the opportunity to buy something else. This arrangement is most prevalent in the NFL, though a handful of NBA, MLB and NHL teams also offer these licenses.

It works like this: If your team uses personal seat licenses, you pay to get the rights to a particular seat in the stadium. Once you have the license, you then have the right to buy season tickets for that seat. Some PSLs give license holders the first chance to buy tickets to other events at the stadium, such as concerts; others restrict the license to the team’s home games only. Either way, the license isn’t a ticket in and of itself. It merely provides permission to buy the tickets.

The “permanent” part of a PSL is only partially accurate. You keep the license as long as you keep renewing your season tickets. If you don’t want to use the license anymore, you can sell or give it to someone else. But if you – or whoever you sell or give the license to – fail to buy season tickets for the year, the license reverts back to the team. In that case, you get no refund of any kind. This year thousands of Atlanta Falcons fans let their licenses lapse, although Falcons chief operating officer Greg Beadles noted that it’s fairly normal to see such attrition, especially among the cheaper licenses. Licenses for the Falcons started at $500, and the team reports having little problem re-selling lapsed licenses to new fans.

Should you get a personal seat license? It’s up to you. If you are a hardcore NFL fan, you may not be able to buy season tickets without one. In fact you may be hard-pressed to buy any tickets, at least directly from the team; the Falcons are among the NFL teams that don’t sell single tickets to fans directly at all. If you don’t get a seat license and season tickets, you may need to turn to resellers like StubHub for seats.

Ultimately, the questions are the same as they would be for any big-ticket entertainment purchase: Can you afford it and do you want it at the price? If you can budget for a license, as well as the season tickets themselves, there is no reason not to proceed as long as you bear the license’s limitations in mind.

Some fans may run into trouble, however, if they view a personal seat license as an investment. While there is not a lot of public data available on how seat licenses have performed, the value of some teams’ seat licenses has skyrocketed since they were first issued. The Bleacher Report noted that for Heinz Field, the home of the Pittsburgh Steelers, the cost of PSLs increased by more than 700% between 2001 and 2011. Over the past 15 years or so, Chicago Bears PSLs have gained more than 130% in value, and Baltimore Ravens licenses are up by an average of 240%.

These figures, however, are largely an artifact of the licenses’ history. In the 1980s and ‘90s, teams sold personal seat license for as little as $250, and even the more expensive licenses were a few thousand dollars. By the early 2010s, the picture had changed drastically. Today, licenses can easily run into the tens or hundreds of thousands of dollars for the most desirable seats with top-tier teams. If a fan has stayed current with a license from 1995 that originally cost $250, the license could sell for thousands of dollars today. In that way, it’s true that some individual license holders have seen large gains. But even as far back as six or seven years ago, it was already common for PSLs to sell at a loss, especially for luxury seats.

Personal seat licenses are only worth what a buyer decides they’re worth. This can sometimes work in a seller’s favor, but not always. In the meantime, the license holder is exposed to all kinds of risks. For example, the team could become terrible, tanking demand for your license. You may have to choose between continuing to buy season tickets you don’t want and surrendering your license for nothing because you can’t find a buyer. A few marketplaces, including PSL Source and Season Ticket Rights Marketplace, have sprung up to serve as middlemen between PSL buyers and sellers, and in some cases you can sell your license directly to these brokers – but at a significant discount. Getting 40% of your license’s value is better than nothing, but it is certainly not a best-case outcome.

There is also the fact that licenses are only as permanent as the stadium itself. Max Muhleman, the sports marketing consultant who invented the PSL, envisioned it as an asset that could last generations. “It didn’t even cross my mind that anybody we were talking to – or even their children – would ever have to worry about the [Carolina] Panthers moving out of that stadium,” Muhleman told The Charlotte Observer in 2018. But the reality is that teams regularly replace stadiums even when they don’t actually need to. Teams can also move, whether to a different part of town or another city altogether. The Atlanta Braves decamped to suburban Cobb County a few years ago; if Turner Field near downtown Atlanta had sold PSLs, they would have been suddenly worthless.

You should also bear in mind that it is not free to hold onto your seat license until you spot a good deal on the resale market. You have to keep committing to season tickets, year in and year out, to keep the license from reverting to the team. While you may be able to recoup some or all of this money reselling tickets on the secondary market, the same risks apply to individual ticket sales. Even if your team is doing well and tickets are in demand, you will be out a large sum upfront.

The shortcomings of PSLs as investments become clear when you consider a pair of recent lawsuits centering on the licenses. New York Jets fans filed a class-action lawsuit last year when the team announced that it would sell tickets in a previously PSL-only section without a license in order to boost ticket sales. This change effectively wiped out the value of existing licenses, since fans could now buy tickets directly from the team without them. The suit was ultimately rejected, driving home the fact that PSL holders hold no equity in the stadium. The year prior, in 2017, fans sued the Rams after the team’s move from St. Louis to Los Angeles, arguing that they were due refunds for their now worthless licenses. That case was resolved with a settlement, in which fans could file to secure a refund of 30% of their original purchase price. Both cases illustrate how quickly a team’s decision can reduce or eliminate a license’s resale value.

While I understand why teams love this revenue source, I can’t imagine ever actually paying for a license myself. I’m perfectly happy to go to a few games a year and watch the rest on TV in the comfort of my home. Personal seat licenses are a way for a different kind of fan to support their team. There is nothing wrong with that, as long as everyone involved keeps a realistic view of the transaction.

Managing Vice President Paul Jacobs, of our Atlanta office, is among the authors of our firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. He wrote Chapter 12, "Retirement Plans"; Chapter 15, "Investment Approaches And Philosophy"; and Chapter 19, "A Second Act: Starting A New Venture." He also contributed to the firm’s book The High Achiever’s Guide To Wealth.

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