Charlotte has 5th down (payment) PRO FOOTBALL Seat fee seen as investment

June 08, 1993|By Jon Morgan | Jon Morgan,Staff Writer

The stock market is looking risky. Treasury bills, certificates of deposit and money market funds are paying next to nothing. So how about investing in Charlotte football?

Under the plan announced last week, fans in North Carolina will be asked to pay one-time, non-refundable fees of $600 to $5,400 before they can buy season tickets for the city's proposed NFL team. The fee gets a fan a "permanent seat license" that will be used to defray the costs of the $160 million stadium.

Organizers of the plan, which will be tested in a trial sales drive this summer, hope it will prove they have the financial ability and fan enthusiasm to support an NFL team. Charlotte is competing with Baltimore, St. Louis, Memphis, Tenn., and Jacksonville, Fla., for two expansion teams the league will award in October.

Similar plans conducted elsewhere, such as the Dallas Cowboys' Texas Stadium, involved interest-bearing bonds. Under those plans, season-ticket holders first bought bonds, essentially lending the money to build the stadium.

The Charlotte plan, however, pays no interest. But backers say if everything goes as expected, the rights themselves might grow in value, in essence become an investment.

"They will react very much to supply and demand," said Max Muhleman, a consultant who helped devise the plan.

He notes that "charter rights" were given to people who bought season tickets to the Charlotte Hornets NBA team during its first season, 1988-89. No one has kept track of their value, but newspaper ads occasionally offer the rights for sale at as much as $5,000, he said.

Clayton Smith, director of ticket operations for the Hornets, said the record paid for the rights is believed to be $97,500 for 10 of them -- or $9,750 each. The team, which sold out its 21,800-ticket allotment of season tickets, keeps a registry of rights holders and transfers of rights. Very few have traded hands, he said.

Season tickets for the Hornets, who made it to the conference semifinals this year, sell for $344 to $2,838 for 43 games. The first season went for $287 to $2,050.

There are also brokers who trade in the rights.

John Petersen, a public financing expert and president of the Government Finance Group in Alexandria, Va., warns, however, that the investment value is speculative.

For one thing, fans have no guarantee that ticket prices won't rise significantly after the first year, something that could depress the value of a seat right.

"Ultimately, if a fan has a right to purchase and finds the price too steep, they can sell the option. But if the price is too steep, it will reduce the value of the option. It could be the fan against the team," Petersen said.

Overall, he said, the plan is an innovative one that will be closely watched by other communities interested in building sports facilities.

"It's a fascinating concept," he said.

To work, fans will have to gobble up about 60,000 of the rights fees at an average cost of $2,500. That doesn't include the season ticket, which will push the cost of attending a first-year game to $1,460 for the cheapest seats and $6,000 for the most expensive.

Organizers have offered a few incentives to help the program along. Charter ticket buyers, for example, will have their names imprinted on bricks laid in a walkway around the stadium, dubbed the Walk of Fame. And ticket applications are being distributed at 2,000 banks, restaurants and other businesses in addition to being printed in the newspaper. A post office box has been set up to receive them.

A group of Carolina-based banks is offering to finance the fees. They are unsecured personal loans with interest rates similar to car loans and terms of up to 48 months, Muhleman said.

And some employers are offering to buy the rights for workers and recoup the money interest-free through payroll deduction.

Rick Jackson, general manager of WBT, a news-talk radio station in Charlotte, said the plan has dominated the station's sports talk show since it was announced Thursday.

"We spent a lot of time explaining how it works. People are rabid about being involved. There was some rumbling about the price, but I don't think there's any question they will sell out," Jackson said.

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