The cost of constructing a modern facility has significantly increased in the past decade. Intercollegiate athletic programs have increasingly relied on expensive features like luxury boxes, personal seat licenses, and club seating to generate as much money as possible. Luxury seating includes corporate-purchased skyboxes at premium prices and pricier club seats that offer better views, preferred parking, indoor/outdoor options, and high-quality food and beverage service with wait staff. Among revenue sources for sports franchises, luxury seating ranks second only to television revenues. A widely discussed revenue stream is the personal seat license (PSL), which is a relatively new way to generate funds. PSL grants fans the right to purchase season tickets or specialty seating like club seats and offers various amenities and benefits. PSL holders can also transfer their long-term season-ticket rights, often at a profit.
Stadium revenues play a crucial role in the success of both professional and collegiate sports teams. Owners understand the significance of income generated from special seating and other stadium sources, as it helps sustain older venues. Despite seat licenses being potentially misleading, they provide teams with the opportunity to quickly generate significant cash. Usually, this money is used for improving or constructing stadiums. Professional sports have successfully implemented this strategy, which is now also being embraced by intercollegiate athletics. Lately, collegiate athletic departments have been increasingly adopting PSLs.
PSLs, or personal seat licenses, typically have prices ranging from $250 to $5,000 per seat, with an average cost of over $1,000. The most expensive and cheapest seats are the ones that sell out first. To continue using this concept in the future, teams will need to offer more innovative amenities and marketing programs to attract fans.
An example of PSLs is seen at Ohio State’s Schottenstein Center. At this venue, 4,500 licenses were sold at three different price levels: $15,000, $7,500, and $4,000. These licenses give holders the right to buy a season ticket for their seat for 40 years and come with special perks like preferred parking and access to hospitality areas.
Moreover, PSL buyers must also pay an annual fee that ranges from $150 to $2,000 per seat as support for athletic scholarships. Some license holders may also be required to pay a maintenance fee worth $1,000 after 10 years, followed by subsequent fees every five years. Club seating is another way through which wealthy fans and corporations contribute towards stadium funding.
Club seats are typically situated in sought-after areas close to a lounge that has amenities like TV monitors, comfortable seating, upscale finishes, climate control, upgraded concessions, and services. Unlike PSLs, club seats can be acquired on a yearly basis but long-term leasing options might be accessible.
Texas Tech University decided to build the United Spirit Arena, a modern 15,000-seat facility, due to various factors such as timing, need, and support. The university’s basketball teams grew to be nationally recognized and outgrew the old Lubbock Municipal Coliseum. Texas Tech showcased its ability to compete in the Big 12 Conference by consistently selling out games. To develop the personal seat license plan, a committee contacted several universities with newly constructed basketball facilities. The PSL program plays a crucial role in financing the $51 million construction costs for the United Spirit Arena, alongside donations, luxury suite rentals, and student general use fees. Through the PSL program, fans can purchase and own a specific seat for either men’s or women’s basketball games at Texas Tech for a period of ten years. Out of the 15,200 seats in the arena, 4,043 or 26.5 percent are eligible for the PSL program.The number of seats available for women’s basketball games is 6,500, while for men’s games it is 3,300 due to a specific seating area reserved for Lady Raider games. A PSL, which stands for seat option, is a new term used by the school. The cost of the PSL only includes the license to sit in a specific spot, so holders are required to purchase season tickets each year. Texas Tech’s PSLs require basketball fans to commit financially for 10 years with prices ranging from $1,250 to $4,000 in order to secure a seat in the university’s new basketball facility opening in January 1999. This PSL plan replaces the previous seat options and encompasses 26.5 percent of the seats in United Spirit Arena. Tech officials view purchasing a PSL as an opportunity for fans to not only claim prime seats but also feel like stakeholders in the construction of United Spirit Arena.
Priority ticket status and first seat selection rights are advantages enjoyed by PSL holders at the arena. They also receive priority status for purchasing prime reserved parking, not just for basketball events, but also for other events such as NCAA tournament games. Committing to a PSL early enough ensures these benefits.
Tech provides the option to transfer ownership when purchasing a PSL, with the intention of making it transferrable. If you decide to transfer, Tech advises that the PSL payments cannot be deducted for tax purposes. Conversely, if you decline, Tech suggests that 80% of the PSL payments may be eligible for deduction. However, it is advisable to consult a tax advisor. Should you opt to transfer ownership of your PSL within the 10-year period, Tech will levy a “reasonable” fee for the transfer. In case the owner passes away before fulfilling the 10-year commitment, their next of kin will inherit the PSL as an asset.
According to Texas Tech officials, any unsold seats in the PSL program will be sold individually on a per-game basis during the week of the game. These individual tickets will be priced higher than what PSL holders are paying. The officials also project that PSLs are selling steadily and anticipate them being sold out before the stadium opens.
Overall Assessment – Upon reviewing the research on the personal seat license program, I realize that it can greatly enhance revenue. However, every business transaction has its pros and cons. Thus, before implementing this proposal, colleges and universities must address a crucial question: can they successfully sell the seat licenses? College officials should evaluate the performance of their teams, whether they are currently winning or losing. A losing team makes it challenging to attract spectators. Consequently, it becomes pointless to build a new facility without a solid fan base. If there is any uncertainty, it would be wise to abandon the idea altogether.
