Thursday, August 28, 2008

In New York -- the ticket law of supply and demand

If I can make it there
I'll make it anywhere
It's up to you, New York, New York.


Call it the law. It’s the most basic rule when it comes to selling tickets to sports events – (or any event) make sure the demand for tickets is greater than the supply of tickets. According to the latest census information estimated population of 21,961,994 as of 2007 for what is often referred to as the New York metropolitan area, often referred to as the Tri-State Area, is the most populous metropolitan area in the United States and is also one of the most populous in the world. There are two National Football League franchises located within the region. The two teams – the New York Giants and the New York Jets play their home games in New Jersey.

The two teams are scheduled to open the 2010 NFL season in new stadium that will have seating for 82,500 fans, including 10,000 club seats and approximately 200 luxury suites. It will be the second-largest stadium in the NFL, after FedExField outside Washington, D.C., currently the largest stadium in the league with a capacity of 91,704. However, the New Cowboys Stadium located in Arlington, Texas, which plans to have a capacity of 80,000, is planned to be expandable to 100,000 with additional end zone seating.

Before anyone gets too upset – the new stadium is going to cost at least $1.6 billion. Each team is expected to generate $170 million from the sale of their respective PSL seat allotment.

Tuesday the Jets announced how they plan on handling season ticket sales. The Jets August 26 announcement followed the Giants announcement made on June 26.

A cornerstone of both plans – personal seat licenses, great if you can sell them, even better if you have a finite number of tickets in a market as big as the Giants and Jets are trying to sell their tickets too.

And for those who want to understand what a PSL is (OK it’s really a cash grab) here’s how the Giants “tried” to tell their fans on how and what PSL’s are: A PSL is a Personal Seat License. A Personal Seat License is a one-time payment for permanent control of a Giants home game seat. The purchase guarantees the owner’s right to purchase a season ticket as long as the Giants play in the new stadium. It also provides the purchaser with control of successorship of the tickets, a benefit now only available for direct family members. The PSL stays active on the condition that the season tickets are purchased annually.

You don’t have to read between the lines to appreciate how the Giants handled their late June PSL ticket drive announcement: Giants Stadium LLC on June 26 unveiled some details of the Personal Seat License program for New York Giants season ticket holders in the new stadium that opens in 2010. The so-called PSLs, are one-time payments that guarantee the purchaser associated rights to purchase Giants season tickets, will be part of the purchase price for every stadium seat in the new building. PSL prices range from $1,000 to $20,000. Ninety percent of the seats in the upper bowl will have $1,000 PSLs. Fewer than 5,000 seats, in a building which will have a capacity of 82,500, will be at the highest price. The Giants have attached a PSL price to every seat in they have in their ticket inventory.

John Mara said the decision to employ PSLs came after an exhaustive examination of all the financing options for the $1.6 billion stadium, now under construction in New Jersey.

“We have spent months exploring our various options regarding the financing of the construction of the new stadium,” said Mara, “Given construction costs and NFL and lender requirements for paying down our debt, and after much thought and analysis, we decided this PSL program is necessary. All the net proceeds from the sale of PSLs will be used to fund construction of the new stadium.”

Steve Tisch also acknowledged the difficulty of the PSL decision.

“It’s both an emotional and complicated process to establish the price structure in a new building that has an evolving manifest,” said Tisch.

The Jets made their PSL announcement Tuesday and while it could still be found on the teams’ website Wednesday – you needed a compass to do so. Funny how less than 24 hours after making the announcement – the Jets did their best to hide the news. And yes the Giants have long played hide and seek with their June 26 announcement.

New York Jets chairman and CEO Woody Johnson at a news conference Tuesday unveiled seating options for New Jets Stadium opening in 2010. The plan includes no Personal Seat Licenses (PSLs) on all 27,000 seats in the upper bowl, an auction that will give every fan the opportunity to bid on membership in the Coaches Club for access to the 2,000 best seats in the house, and the option for all PSL owners to finance their purchase over five years.

"Our goal with the New Jets Stadium is to create the best home field in football and provide a range of seating options," Johnson said at the news conference, held in the New Stadium Suites Sales Center located in the 50 Club at the Meadowlands.

"We listened to our fans in designing this plan. That is why we decided to have no PSLs in the entire upper bowl — including those on the 50-yard line."

The 2,000 Coaches Club seats, located between the 40-yard lines behind the Jets bench, will be sold exclusively through an auction to be held this fall. The auction will be open first to current season ticket holders, then to waitlist members, depending on availability.

"A seat in the Coaches Club," Johnson said, "is the closest thing to having a spot on the roster."

Of the remaining seats, those in the lower bowl and the mezzanine will have PSLs varying in price from $4,000 to $20,000, and those seats in the East and West Clubs and the Great Hall Club will have PSLs ranging from $5,000 to $25,000.

The Jets have also developed an optional financing plan. After a 20 percent deposit due upon purchase, PSL owners may pay in installments over five years.

Each seating option has its benefits according to the Jets release:

Upper Bowl — Clear view of high-definition scoreboards; wider concourses; cupholders at every seat; more concession stands; more restrooms.

Lower Bowl/Mezzanine — Reserved parking; more legroom; cupholders at every seat; wider tread area between rows for easier seat access and more comfortable viewing; option of purchasing tickets to certain other events and concerts (subject to terms and availability)

East/West Clubs and Great Hall Club — Reserved parking

with dedicated access; private member-only entry into the stadium; private, enclosed, heated concourse; upscale cuisine offerings; exclusive access to one of two luxurious climate-controlled lounges with comfortable seating and flat-panel TVs; wider, cushioned seats with cupholders; seats designed by premier restaurant and hotel architect David Rockwell.

Coaches Club — All of the above club amenities plus on-field patio behind the home bench for exclusive field access; 20,000-square-foot football lounge; all food and non-alcoholic beverages included in season-ticket price; guaranteed right to purchase two seats per account for a Jets Super Bowl game; live viewing access of the head coach's postgame news conference; view of Jets players' hallway through a glass-enclosed hallway.

Aside from the auction, the sale of seats in the new stadium of the other Club Member PSLs will follow in the winter. The remainder of the seats, including the seats with no PSLs, will be available in the spring of 2009.

The 2,000 Coaches Club seats, located between the 40-yard lines behind the Jets bench, will be sold exclusively through an auction to be held this fall. The auction will be open first to current season ticket holders, then to waitlist members, depending on availability.

Of the remaining seats, those in the lower bowl and the mezzanine will have PSLs varying in price from $4,000 to $20,000, and those seats in the East and West Clubs and the Great Hall Club will have PSLs ranging from $5,000 to $25,000.

The Jets have also developed an optional financing plan. After a 20 percent deposit due upon purchase, PSL owners may pay in installments over five years.

Each seating option has its benefits:

Upper Bowl — Clear view of high-definition scoreboards; wider concourses; cupholders at every seat; more concession stands; more restrooms.

Lower Bowl/Mezzanine — Reserved parking; more legroom; cupholders at every seat; wider tread area between rows for easier seat access and more comfortable viewing; option of purchasing tickets to certain other events and concerts (subject to terms and availability)

East/West Clubs and Great Hall Club — Reserved parking will use a priority system based first on seniority, according to Jets box office records, then on seat location. "That way," Johnson said, "our most loyal fans will always be at the front of the line."

Waitlist members will have the opportunity to purchase seats after season tickets holders. Depending on availability, season ticket holders will be able to upgrade to a Club Member PSL or to a PSL in the lower bowl or mezzanine end zone, or may purchase a seat that requires no PSL in the best available location.

The Jets' owner, who was accompanied at the news conference by club executive vice presidents Matt Higgins and Thad Sheely, also emphasized the other benefits available to all fans attending games, such as a new rail line to the stadium, wider traffic lanes, better tailgating and concerts on the plaza.

But Johnson's highest priorities have been to bring all Jets fans a new home stadium — the first in franchise history — and designed with them in mind according to the Jets release, and to give every current season ticket holder who wants to purchase seats in the new stadium the opportunity to do so.

"My goal with the New Jets Stadium is to create the best home field in football," he said. "In 2010 that goal will be realized when all Jets fans can say, 'Finally, we're the home team.' "

Following the Coaches Club PSL auction in the fall, the sale of the other Club Member PSLs will follow in the winter. The remainder of the seats, including the seats with no PSLs, will be available in the spring of 2009.

There is one major difference between the two plans and a unique twist to the Jets plan and will create a buzz in the sports industry.

The Giants will charge a fee for every seat in the new stadium. The Jets won’t be levying a fee on the 27,000 seats in the stadium’s upper level. The Giants have priced PSL’s at $1,000 each for upper level seats for their home games.

The Jets are taking 2,000 seats and are calling them “Coaches Club” seats. Asked what these seats will represent to Jets fans, Johnson suggested "A seat in the Coaches Club, is the closest thing to having a spot on the roster."

The Jets “Coaches Club” seats are located between the 40 yard lines, will offer parking, unlimited food and beverage and….field access directly behind the Jets bench. How will these seats be sold – via an auction. A one time price as the high as the auction forces the price to go up too.

Does this make sense – YES!! There are a finite number of tickets available for Jets and Giants fans. There is a population in excess of 22 million in the Greater New York area. 22 million people, 82,000 available tickets – it makes perfect sense to auction off a limited number of the tickets.

Needles to say – not everyone in the region is thrilled with the PSL plan. There is nothing like charging sports fans for the right to buy tickets that upsets voters more and when voters are upset – politicians’ sense there’s an opportunity.

"What the Jets are doing is different than the Giants," New Jersey Assemblyman Anthony Chiappone told the Associated Press. "They are leaving 27,000 seats PSL-free. A large portion of the stadium fan base will be able to buy seats without having to purchase a PSL."

Fan’s needless to say wasn’t greeted with welcome arms by football fans in the tri-state area.

"Unfortunately, I won't be able to stay in section 228 because it looks like it will be $7,500 for the PSL and $400 for the game," Dr. Michael Stein told New York Newsday, a pediatrician from Hauppauge. "I think that's unreasonable for anybody. I don't care who you are. So I'll just move to the upper deck so I can keep my seven seats."

But Dr. Stein was quick to add: "My reaction was happiness that there was actually an option without PSLs," he said.

Ira Lieberfarb of Staten Island agreed. "Overall, I think it was the fairest thing possible," said Lieberfarb, whose family has owned season tickets since 1972.

Steve Kern of Boonton Township, N.J., who organized a rally Saturday at the Meadowlands protesting the introduction of PSLs, said Tuesday's announcement was a mixed bag.

"The good news was that there are no PSLs in the upper deck," Kern said. "Supposedly the revenue they're generating [$370 million in PSLs] is the same as the Giants, which means that the remaining PSLs are all increased in cost to make up for not having PSLs in the upper deck."

As far as Jets owner Woody Johnson is concerned – he’s offering football fans an opportunity that can’t be passed up – the right to pay to buy tickets.

"I don't think there's anything, including Super Bowl III, that matches what the impact that this has," he said. "With the team, with in Florham Park, you've done everything you can do to put a winning team on the field. We want to go as far as we can go. In many ways, this is a once-in-a-lifetime opportunity to buy these seats."

The New York Times Richard Sandomir pointed out: one aspect of the Jets’ plan is clearly superior to the Giants’. The Jets said that they would do their own P.S.L. financing and hold interest rates (for terms of up to five years) to the high single digits. The Giants are routing fans looking for financing to Wachovia, where the interest rate will be based on individual creditworthiness. The Giants never intended to absorb some of the interest costs to assist their fans. But John Mara, the Giants’ co-owner, said recently of the bank, “We’ve hammered at them to be reasonable.”

Let’s clear up a few issues – is it ethical for sport franchises to sell PSL’s. Not only is it reasonable – its good business

What choice do longtime Giant and Jets fans really have? None, it’s spend the money or spend your Sunday’s watching games on TV (where yours truly will be). The only really unhappy sports fans are team owners who can’t sell PSL’s.

Remember there are a finite number of tickets and more people interested in buying tickets than there are available tickets. It is the law of supply and demand, Big Apple style and as the Chairman of the Board once sang:

If I can make it there
I'll make it anywhere
It's up to you, New York, New York.


For Sports Business News this is Howard Bloom. Sources cited and used in this Insider Report: The New York Times, New York Newsday and the Associated Press

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