Cheeseheads Tackled Stadium Renovation the Wrong Way
February 19, 2003
In its push to gain the necessary funds to renovate venerable Lambeau Field, the National Football League's (NFL) Green Bay Packers turned to the usual source: government. But the team could have raised sufficient revenue to cover the renovation without resorting to government largesse.
The Packers could have sold personal seat licenses (PSLs) -- that is, the rights for fans to buy tickets for certain seats -- at a price that reflects market demand rather than the pittance that the team actually charges. The potential value of PSLs can be calculated:
- If the initial profit from a ticket to all 10 games equals $400 -- a conservative estimate -- and the team will guarantee the PSL holder rights for 25 years, then the sale of PSLs would generate roughly $280 million, which is approximately the cost of the stadium renovation.
- If PSLs were priced correctly and the sale structured optimally, for instance, using a seven percent interest rate and an annual profit per ticket per game of $100 over the 25 years, then the amount of revenue generated from such a sale would be about $850 million.
- Also, selling game tickets to PSL holders for $1 would transfer ticket revenues -- which are taxed by the National Football League (NFL) at 40 percent -- to the untaxed PSLs, generating as much as $1.7 billion.
The team did not fully exploit the value of the PSLs. However, thanks to the Internet and the increasing ease of online auctions, an entrepreneurial owner who fully exploits the value of PSLs could generate revenue dwarfing what the Packers received from the PSL sales.
Source: Michael F. Gorman and Ike Brannon, "How the Packers Lost Out," Regulation, Winter 2002-2003, Vol. 25, No. 4, Cato Institute.
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