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Dealing With the Devil: Personal Seat Licenses in San Diego

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The primary difference between building a new stadium privately in Los Angeles, and a publicly assisted stadium in San Diego comes down to Personal Seat Licenses.

Qualcomm Stadium, before the final home game of the 2014 season
Qualcomm Stadium, before the final home game of the 2014 season
Donald Miralle/Getty Images

First things first. I hate the idea behind Personal Seat Licenses (PSLs). Edward Moretti laid out many of the reasons why PSLs are unpopular in this fanpost, and I agree with several of them.

For the uninitiated, PSLs are a one-time fee (paid in full or financed over time) who allows the license holder the right to purchase season tickets for the seat they've selected. Thus, PSLs are a way to generate extra revenue out of season ticket holders. The problem is they generally have little-to-no other value.

Many NFL teams immediately terminate a PSL in the event the purchaser fails to make payments, meaning that any money already paid becomes lost. People looking to sell their PSLs often have to sell them for pennies on the dollar when they decide they can't afford (or longer want) season tickets. PSLs confer no extra privileges, other than having the right to purchase season tickets.

All that said, PSLs also provide a crucial revenue stream for the construction of new NFL stadiums. Which means they absolutely need to be part of the conversation for a new stadium in San Diego, whether we use them or not, and whether we like them or not.

How much money do PSLs Raise?

According to this paper written by Erik Bruvold, President of National University System institute for Policy Research, the following cities have used PSLs to help fund their new NFL stadiums. Table 1 pulls data from Appendix 1 of the paper. Please note the PSL total in Column 3 is adjusted for inflation.

Market Population (millions) PSLs $$ (millions) Large Employers High ($100k) Households Avg Household $$$
New York 19.7 $814 1745 2.3 million $96,267
Chicago 9.4 $97 1745 952,100 $83,637
Dallas 6.5 $651 1307 613,363 $58,356
Houston 6.0 $108 1149 151,835 $52,147
Philadelphia 5.9 $86 1084 651,297 $84,726
Seattle 3.5 $28 599 431,607 $88,624
Minnesota 3.3 $125 817 390,909 $85,965
Bay Area 3.1 $671 584 466,130 $114,359
St. Louis 2.7 $129 490 248,249 $73,121
Baltimore 2.7 $106 423 342,578 $90,693
Pittsburgh 2.3 $56 464 198,252 $68,788
Carolina 2.2 $267 405 181,903 $72,886
Cincinnati 2.1 $37 394 185,025 $72,938
Cleveland 2.0 $59 361 164,637 $67,134
Tennessee 1.7 $137 332 133,047 $71,545
Average 4.9 $224.7 793.3 497,368 $78,746
San Diego 3.1 468 316,352 $84,889
Los Angeles 12.9 2083 1.2 million $86,061

Observations:

  • Compared to the markets which have used PSLs for stadium financing, San Diego ranks 9th in population, 11th in amount of large employers, 10th in households making $100,000+, and 7th in average household income.
  • Based on the numbers above, San Diego as a market is probably most similar to Baltimore and St. Louis.

As you can see above, the ideal PSL formula consists of a large population, large companies, a large amount of high-income households, and a brand name with championship history (i.e. the Giants, Cowboys, and 49ers).

Aside: Here's where I'm a little skeptical of the Chargers' claim they can generate $500 million in PSL sales in Los Angeles. Yes, the corporate base is there, and the high-income earners are there, but the Chargers are not a brand name. I think they can reach the high number of PSLs if they share a stadium with the Oakland Raiders, but I'm not sure the Chargers can hit that number by themselves.

What PSLs in San Diego Realistically Generate?

Based on the information above, I think the Chargers could realistically generate anywhere from $100-150 million in PSLs. Table 2 below will layout some possible pricing options. My numbers are based on a stadium with the following assumptions built in.

  • Capacity: 62,000
  • Luxury Box Capacity: 2,000
  • Club Seating: 8,000
  • General Admission - Lower Bowl: 30,000
  • General Admission - Upper Deck: 22,000

PSL Breakdown - All Events Rights + Complimentary Parking Option (if purchasing 4 full PSLs)

Fan Costs Revenue (in millions)
Seat Category # of Seats Total Cost 120 months monthly + 5%int 10Y financed Total 3/4 sold 1/2 sold 1/4 sold
Luxury Suites 2,000 N/A - - - -
1st tier Club Seats 4,000 $12,000 $100 $105 $12,600 $48.0 $36.0 $24.0 $12.0
2nd tier Club Seats 4000 $9,000 $75 $78.75 $9,450 $36.0 $27.0 $18.0 $9.0
Lower Bowl GA Sideline 20,000 $3,000 $25 $26.25 $3,150 $60.0 $45.0 $30.0 $15.0
Lower Bowl GA Endzone 10,000 $2,500 $21 $21.88 $2,625 $25.0 $18.7 $12.5 $6.2
Upper Deck GA Midfield 15,000 $2,000 $17 $17.50 $2,100 $30.0 $22.5 $15.0 $7.5
Upper Deck GA Corners 7,000 $1,500 $13 $13.13 $1,575 $10.5 $7.8 $5.2 $2.6
Totals 62,000 - - - - $209.5 $157.1 $104.7 $52.3

PSL Breakdown - Chargers (20% discount)

Fan Costs Revenue (in millions)
Seat Category # of Seats Total Cost 120 months monthly + 5%int 10Y financed Total 3/4 sold 1/2 sold 1/4 sold
Luxury Suites 2,000 N/A N/A N/A N/A N/A
1st tier Club Seats 4,000 $9,600 $80 $84 $10,080 $38.4 $28.8 $19.2 $9.6
2nd tier Club Seats 4,000 $7,200 $60 $63 $7,560 $28.8 $21.6 $14.4 $7.2
Lower Bowl GA Sideline 20,000 $2,400 $20 $21 $2,520 $48.0 $36.0 $24.0 $12.0
Lower Bowl GA Endzone 10,000 $2,000 $17 $17.50 $2,100 $20.0 $15.0 $10.0 $5.0
Upper Deck GA Midfield 15,000 $1,600 $13 $14 $1,680 $24.0 $18.0 $12.0 $6.0
Upper Deck GA Corners 7,000 $1,200 $10 $10.50 $1,260 $8.4 $6.3 $4.2 $2.1
Totals 62,000 N/A $167.6 $125.7 $83.8 $41.9

PSL Breakdown - SDSU Only (70% discount)

Fan Costs Revenue (in millions)
Seat Category # of Seats Total Cost 120 months monthly + 5%int 10Y financed Total 3/4 sold 1/2 sold 1/4 sold
Luxury Suites 2,000 N/A N/A N/A N/A N/A
1st tier Club Seats 4,000 $3,600 $30 $31.50 $3,780 $14.4 $10.8 $7.2 $3.6
2nd tier Club Seats 4,000 $2,700 $23 $23.63 $2,835 $10.8 $8.1 $5.4 $2.7
Lower Bowl GA Sideline 20,000 $900 $8 $7.88 $945 $18.0 $13.5 $9.0 $4.5
Lower Bowl GA Endzone 10,000 $750 $6 $6.56 $787.50 $7.5 $5.6 $3.7 $1.8
Upper Deck GA Midfield 15,000 $600 $5 $5.25 $630 $9.0 $6.7 $4.5 $2.2
Upper Deck GA Corners 7,000 $450 $4 $3.94 $472.50 $3.1 $2.3 $1.5 $787,500
Totals 62,000 N/A $62.8 $47.1 $31.4 $15.7

PSL Breakdown - All other Events (80% discount)

Fan Costs Revenue (in millions)
Seat Category # of Seats Total Cost 120 months monthly + 5%int 10Y financed Total 3/4 sold 1/2 sold 1/4 sold
Luxury Suites 2,000 N/A N/A N/A N/A N/A
1st tier Club Seats 4,000 $2,400 $20 $21 $2,520 $9.6 $7.2 $4.8 $2.4
2nd tier Club Seats 4,000 $1,800 $15 $15.75 $1,890 $7.2 $5.4 $3.6 $1.8
Lower Bowl GA Sideline 20,000 $600 $5 $5.25 $630 $12.0 $9.0 $6.0 $3.0
Lower Bowl GA Endzone 10,000 $500 $4 $4.38 $525 $5.0 $3.7 $2.5 $1.2
Upper Deck GA Midfield 15,000 $400 $3 $3.50 $420 $6.0 $4.5 $3.0 $1.5
Upper Deck GA Corners 7,000 $300 $3 $2.63 $315 $2.1 $1.5 $1.0 $0.5
Totals 62,000 N/A $41.9 $31.4 $20.9 $10.4

5 Year Parking License Breakdown

Fan Costs Revenue (in millions)
Category # of Spots Total Cost 120 months monthly + 5%int 10Y financed Total 3/4 sold 1/2 sold 1/4 sold
Valet N/A N/A
Tailgating - RV 1,000 $6,000 $50 $6.0 $4.5 $3.0 $1.5
Tailgating - Car 6,000 $3,000 $25 $18.0 $13.5 $9.0 $4.5
Preferred Parking 4,000 $3,000 $25 $12.0 $9.0 $6.0 $3.0
General Parking 4,000 $1,500 $6.0 $4.5 $3.0 $1.5
Totals 15,000 N/A $42.0 $31.5 $21.0 $10.5

Note: Some of the monthly costs plus interest appear less than the monthly payment without interest because the original table rounded the numbers. This will be corrected later today.

Here's some ways to help make PSLs slightly more palatable. PSLs at a new stadium should come with some options:

  • You can purchase a full PSL for all events.
  • 20% discount on PSLs if you only want a PSL for Chargers' games.
  • 70% discount for SDSU and Bowl Games
  • 80% discount for all non-football events.

I'd even be willing to consider half-PSLs, or other PSL splits for people who only wanted to purchase (or could afford) only a limited number of games. For those who want / need to finance them, I also propose a 10 year payment plan at 5% interest to allow more people to purchase PSLs.

Furthermore, I wanted to make sure PSLs were affordable for regular fans, so I priced the General Admission seats much lower than the club seats. Here are the average prices:

  • Club Seats: $10,500
  • General Admission: $2,413.46

I also decided to propose a Parking License, since I expect that parking at the Qualcomm site will be significantly limited in the future. I am well aware many of you will find this idea appalling. To be honest, my take is that people who don't want to pay for parking can use the Trolley, and people who want to tailgate cheaply can do so at home.

That said, all you'd need is for one person to purchase a Parking Tailgate License for a group of 4 fans. Then split the cost evenly among them. That works out to $15 per game for each of those 4 fans over 5 seasons.

Increasing the value of PSLs

In an attempt to push more of the full price PSLs, I also figured you could offer a free Parking License to any person who purchased at least 4 PSLs.

In addition to the ticket and event and parking privileges, I have some other suggestions for adding value to the PSL. Really, the list is limited only by the imagination of the Chargers / Stadium promotional department.

  • Fixed season ticket pricing for the first 5 years.
  • 20% off admission to the Chargers' Hall-of-Fame (if built).
  • 20% off all purchases at the Chargers Team Store.
  • 20% off all food court, restaurant, and beer garden purchases.
  • Priority use and reduced pricing of any meeting / party rooms at the stadium.
  • Invitation only events, such as Fantasy Football Tournaments, Madden Tournaments, Complimentary Coaching Clinics, Draft Parties, etc.
  • One new jersey per season.

Lastly, PSLs carry one very important added value. Many taxpayers will object to any public money used on a stadium, simply because they're not the ones using it. PSLs are a method (not the only method) which allows the citizens with the most interest (i.e. season-ticket holders) in getting a stadium built to invest additional money to make it happen (i.e. put their money where their mouth is).

Just so we're clear, if the team ends up moving to Carson, it's likely that retaining season tickets would come with a much more expensive PSL, more expensive parking, and (for San Diego residents, at least an extra 2,000 miles worth of fuel and vehicle use per year).

In Closing

Like I said above, I personally hate the idea of PSLs. That said, I think we should consider the following bottom line financing information.

A new stadium is expected to cost anywhere from $1 to $1.2 billion. Assuming the Chargers and the NFL are only planning on contributing $400 million combined - although this tweet at least puts a question mark on this number...

That leaves $600 - $800 million left to be financed. Depending on the success of plans like the PSL plan I mentioned above, as well as a Parking License, it's conceivable $200-300 million could be generated over 30 years.

I'm not a math major, but it seems to me that a $300-600 million public investment plays much better than a $800 million public investment.

Furthermore, PSLs can be presented in other creative fashions (such as half-season or quarter-season plans), and could carry additional benefits which make their purchase a better investment.

The question isn't really whether to PSL or not to PSL? The question is whether the Chargers and the community can find a way (beyond the loaded gun) to make it worth the while.