Warriors give PSLs hard look
While Golden State Warriors President Rick Welts insists no final decision has been made, many in the NBA are convinced that the Warriors will be the first NBA team to sell personal seat licenses across the vast majority of their seats, a huge boon to the privately financed, $1 billion Chase Center arena the team will open for the 2019-20 season.
Sources around the league said the Warriors plan to be the first NBA team to sell PSLs for most of the seats in the new 18,000-seat arena and are expected to go to market in May.
But Welts said the team is still studying the bold initiative.
“We really haven’t made the decision yet and if it were to happen, what form it would take,” he said. “There’s still a lot of analysis on it to be done, including how it could be done in a way that would be more advantageous to the consumer. We’ve set a decision deadline for May, but we’re not there yet.”
|PSLs would help Warriors owners recoup some of their investment in the new Chase Center.
The exact number of seats that would be sold as PSLs at the Chase Center isn’t yet known, but one source said it is likely that the team will market up to 90 percent of the season-ticket inventory.
Sources said the Warriors PSL prices would at least match those sold at Levi’s Stadium, which opened in 2014 in Santa Clara, Calif., with PSL prices that initially ranged from $2,000 to $80,000.
The demand is there. The Warriors have a season-ticket waiting list of more than 37,000 fans and the team caps season-ticket sales at 14,500. The Warriors’ current sellout streak at 19,596-seat Oracle Arena began in 2012.
Selling PSLs is common for NFL teams opening new stadiums, but not in the NBA and comes as team owners Joe Lacob and Peter Guber look to offset the cost of the facility while leveraging intense demand for one of the hottest brands in sports.
“In that market, I think Golden State has proven that demand far outstrips supply and this is a way to give fans a way to control their own tickets and future with the franchise,” said Bill Sutton, owner of Bill Sutton & Associates, a sports consulting firm that counts NBA teams as clients. “It is the most unique market in sports. Because of the amount of disposable income and the amount people are willing to pay, there is not a comparable market.”
For many in the league, Golden State PSLs are as likely as the Warriors qualifying for the playoffs.
“It’s a topic of great discussion, but to say a conclusion has been reached would be an exaggeration,” Welts said.
Factors going into the PSL decision, Welts said, are “our overall financing, including the purchase of the 12 acres we will sit upon, which is a nine-figure number by itself, along with our finalization of suite and ticket prices and seeing how those numbers work.”
The league would have to sign off on the Warriors’ plan before they could sell PSLs.
Milwaukee Bucks President Peter Feigin said his team briefly considered PSLs for their new $524 million arena opening in 2018 but opted for a model that offers discounts to early three- to five-year commitments on club seats. Feigin said only Golden State could pull off selling seat licenses.
“That’s a surreal world, when you look at how flush they are in Silicon Valley,” he said. “You look at the demand in the immense corporate base, and the amount of high-net-worth individuals. The market is such an anomaly, these guys were doing a $6 million, $7 million gate for playoff games, and [PSLs] will do so much for them in terms of long-term or permanent financing for that facility.”
The notion that arena seat licenses will become as routine as they are in the NFL was rejected across the industry by those citing Golden State’s market position as unique.
“This just speaks to the unprecedented demand now for the Warriors,” said a senior NBA source, familiar with the Warriors’ plans. “They are always innovating and it makes sense as a privately financed facility to be looking at ways to recoup their investment earlier.”
Air Canada Centre in Toronto sold PSLs, on a much smaller scale, for around 20 percent of its seats before opening in 1999. Early in the process, the expansion NBA Raptors were the arena’s only confirmed tenant.
“We wouldn’t have gotten all the financing we needed at the time, so PSLs played a huge role,” said Brian Cooper, president and CEO of MKTG Canada/S&E Sponsorship Group, Toronto, who was then part of the group that launched the Raptors in what became Maple Leaf Sports & Entertainment. “Those have shown to be solid investments, like you’re buying real estate.”
Premier Partnerships has sold naming rights and other top-shelf marketing inventory across a number of NBA arenas. Premier President Randy Bernstein said the time is right for the Warriors to roll out a PSL program.
“If under these circumstances the Warriors aren’t able to sell seat licenses, then no NBA team will ever be able to,” he said.
But the Warriors also must weigh the risk of alienating fans in moving to a pricey PSL model in a market where the 49ers currently list 1,262 seat licenses for sale at 68,000-seat Levi’s Stadium for a total of 3,139 seats.
“It will generate significant cash to be used to offset the capital costs of the arena, but it changes the mix of the fan who goes to the game,” said sports consultant Marc Ganis, owner of SportsCorp Ltd. “They are likely to see a change in the mix to more corporate and business groups. Will the average fan be priced out?”