The Wall Street Journal has published a fascinating article about a new way for fans to buy tickets to sporting events while also helping to fund stadium construction.
The University of Kansas and the University of California recently approved something called “equity seat rights,” in which fans can buy seats just like a mortgage, paying for them over a long period of time. They would actually own the seats as if they were a condominium.
From the WSJ:
“Though the idea may seem preposterous—and even repellent—given the state of the economy, proponents say the plan is actually a boon for serious fans because it allows them to circumvent the annual pain of rising ticket prices. “If you get a letter from your team that they are increasing season ticket prices 10%, it wouldn’t make you real happy,” said Lou Weisbach, chief executive of the Stadium Capital Financing Group, the Chicago-based subsidiary of Morgan Stanley that’s financing these instruments. “If you own an equity seat right for that team, you’re thrilled.”
Teams and schools would benefit under this arrangement because they get a huge amount of money up front allowing them to fund stadium contruction or pay down debt. At Kansas, a club seat for 30 years would cost $105,000 per seat. If Kansas sells 1,000 of those, they have $105 million.
What this essentially means is that a team would be shifting its debt to its fans, which is a concept that seems a little creepy on the surface. But fans do gain ownership of the seats and would be entitled to sell them at any point. And if the money is used to pay for stadium construction, that could make public financing unnecessary. So why not have the people who use the stadium contribute to the construction rather than taxpayers who might not care?
One obvious question here is what happens if a fan is forced to “foreclose” on a seat? Well, in that instance, the team could simply take the seat back and then sell it to another fan. The most popular teams could probably re-sell the seats with no problem, but that might be a challenge for teams who don’t have a massive waiting list for tickets.