Ravens fans may be perching on windfall Charlotte, N.C. frenzy shows seat owners can resell at inflated price

July 06, 1996|By Bill Atkinson | Bill Atkinson,SUN STAFF

If season ticket holders for the Carolina Panthers are a presage, those who purchase "personal seat licenses" in Baltimore may reap a financial windfall in the years to come.

People in Charlotte, N.C., who purchased seats for their NFL team are seeing a stunning and unexpected explosion in the resale value -- before a single game has been played in the city's new stadium -- and some investment experts and financial planners say the same thing could happen here.

In an attempt to raise millions of dollars, the teams in Charlotte and Baltimore are requiring fans to purchase "personal seat licenses." That entitles the buyer not only to obtain tickets but to sell the seats and keep the money.

And if Charlotte is an example, the Panthers fans invested wisely. Which raises the question: even if you're not a football fan, is plunking down a few thousand dollars for a Ravens seat license a good investment strategy?

Financial planners differ in opinion. But Walker Wells, a Charlotte real estate broker, is sold.

Three years ago, Wells paid $42,000 for 14 seat licenses to Carolina Panthers home games. Today, that investment is worth $71,000 on the secondary, or resale, market. That's a return of 69 percent, which beats the Standard & Poor's 500 stock index for the same period and is just shy of the recent rise in the Dow Jones industrial average.

Consider this: The license for one seat along the 50-yard-line cost Wells $5,400, but on the secondary market it now

commands $9,500. It doesn't stop there. A seat in the section extending from the 30-yard-line to the end zone cost $3,900, but has a resale value of $7,500, and even seats in the upper deck, which originally went for $600, can be resold for $975.

"I just think this is the tip of the iceberg," said Wells. "I know there is definitely a market for these seats, and I know there is a market above the stated resale value."

Financial planners disagree on whether one should acquire seats as a long-term investment.

"It is complete speculation," said Mary A Malgoire, a financial adviser with Bethesda-based Malgoire Drucker Inc. "It is not an investment; it is a hobby."

Linda Polacek, a registered financial planner and president of Columbia-based Human Resources & Benefits Inc., described it as an "atypical investment," but added: "Let's assume the team does well: You could find people making an awful lot of money."

Like any investment, a seat license could have a downside.

"The value of it is really going to be driven by the success of the team," said Lyle K. Benson, a financial planner and president of L.K Benson & Co. in Towson.

"If the after-market disappears, then you've got to hold on to it [the seat]. I hope you like football."

Even the person who is credited with dreaming up the idea for personal license seats is surprised by the unintended run-up in resale value.

"It was mainly done as a legacy idea," said Max Muhleman, a former sportswriter and now president and chief executive of a Charlotte-based sports marketing firm bearing his name. "There was never any intent of anybody making money. We didn't think about that; we were trying to reward fans with value." Muhleman hatched the idea in the 1980s as a way to reward fans who put up money for professional basketball tickets before Charlotte landed an National Basketball Association team.

It didn't take long for the value of those seats to skyrocket.

One day Muhleman saw a classified ad in the newspaper asking $5,000 for the rights to two Charlotte Hornets seats.

"I called about 7: 30 in the morning and I said, 'Is this a joke?' " Muhleman recalled, adding that the seller told him: " 'You are the 20th caller and I sold them to the first guy. I should have asked $10,000.' "

But that was small potatoes. In 1991, a bankruptcy judge auctioned the rights to 10 Hornets seats for $97,500. The bidding started at $500.

"I'm dumbstruck," the bankruptcy trustee told the Charlotte Observer. "I figured we'd be lucky to get $15,000 or $20,000. But this -- it's obscene."

In 1993, Muhleman brought the idea to Jerry Richardson, who needed to about $150 million for Charlotte's football stadium.

"People get carried away with the appreciation story," Muhleman said. "It is not an equity, it is not a stock, it is not a security, it is a license."

Perhaps not. But the resale market has sprouted.

Pub Date: 7/06/96

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