By Jordan Kobritz
The New York Jets, who have struggled to compete against NFL teams, find themselves in a battle with a group of their disgruntled fans. The team is a defendant in a class-action lawsuit brought by James Gengo, a season ticket holder. Gengo says the team is selling season tickets to purchasers who do not have personal seat licenses (PSLs), a practice Gengo alleges in his complaint renders current PSL holders’ licenses “entirely or substantially worthless.”
In order to raise their portion of the cost of building MetLife Stadium, which the teams shares with the New York Giants, the Jets sold PSLs for approximately two-thirds of the seats in the new stadium. Purchasing a PSL was a pre-requisite to purchasing season tickets for Jets’ games. The PSLs originally sold for as much as $25,000 in choice seating areas, although Gengo paid only $8,000 in 2010 for two seats in the mezzanine or 200-level of the stadium. However, the value of those PSLs has fallen precipitously, in lock step with the Jets’ record which includes only one winning season in the past seven. According to NorthJersey.com, some areas in the stadium have seen PSL values decline from $25,000 in 2009-10 to $4,500 today.
The Jets’ model was typical of a PSL: It gives the holder the right to buy season tickets for a particular seat. Most teams allow fans who no longer wish to purchase season tickets to sell their license on the open market, where prices are dependent in large part on the fortunes of the team.
When the Jets announced in January they were “updating” their policy regarding the requirement to purchase PSLs in order to purchase season tickets in the 200-level, they emphasized that those who held PSLs would continue to receive “special access and discounts to exclusive events that the team runs.” If those words were intended to convince PSL holders they were still getting benefits that new season ticket holders who weren’t required to purchase PSLs didn’t have, Gengo and others weren’t impressed.
In an effort to further mollify PSL owners, the Jets also told them they could upgrade to lower level season tickets for “no additional fee,” although the seats themselves are more expensive than those in the mezzanine section of the stadium.
PSLs have been around for more than three decades. Max Muhleman, a Charlotte, NC sports marketing agent, is generally credited with inventing the concept, although his original idea was the complete opposite of what PSLs quickly became, thanks to him. In 1987 Muhleman suggested the owners of the NBA expansion Charlotte Hornets use PSLs, which he referred to as “Charter Seat Rights,” as a gift to reward those who originally supported the team by purchasing season tickets. However, when the NFL expanded to Charlotte in the 1990’s, Muhleman convinced the team to use PSLs to help finance the cost of the team’s stadium. The concept quickly found favor in both professional and amateur sports.
The biggest beneficiary has been the NFL where 19 of the 32 teams have used some version of a PSL. The cost of PSLs reflects the popularity of the team and its market, with prices ranging from a low of $250 in the early years of use to a high of $225,000 for premium seats in the L.A. Rams’ $2.6 billion stadium currently under construction. In addition to the NFL, at least five MLB teams, four NBA teams, and two NHL teams have used PSLs to raise money for stadium construction or renovation.
Gengo’s complaint contains three counts, one for breach of an implied covenant of good faith and fair dealing, which he claims is contained in the PSL agreement the parties signed; one for violation of the New Jersey Consumer Fraud Act (NJCFA), where he alleges the Jets’ actions constitute an “unconscionable commercial practice;” and count three, where he says the Jets violated the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act.
Deadspin.com, among others, says PSLs are a “racket,” a characterization difficult to dispute. They’re a fee teams extort from their fans for the mere “privilege” of spending additional money to purchase season tickets. Fans are forced to choose between paying the exorbitant fee or risk being frozen out of tickets on game days. That, says Muhleman today, leaves fans feeling “more like customers, which erodes their loyalty and (perhaps, in the long run), the franchise’s profitability.”
Jets’ fans who elect to continue holding onto their PSLs could see their value rebound, although that scenario seems unlikely, at least until the team acquires an NFL-caliber quarterback. Gengo has apparently given up hope that day will come. He is seeking a refund of the cost of his PSLs, treble damages under the NJCFA, rescission of the PSL Agreement (Gengo purchased the PSLs on an installment basis and is still paying for them), along with interest and attorneys’ fees. If fans around the league elect to join him, it could be a sign that the PSL money grab may have run its course.
The author is a former attorney, CPA, Minor League Baseball team owner and current investor in MiLB teams. He is a Professor in and Chair of the Sport Management Department at SUNY Cortland and maintains the blog: http://sportsbeyondthelines.com. The opinions contained in this column are the author’s. Jordan can be reached at jordan.kobritz@cortland.edu
Lawsuit against the Jets can be found here: https://www.courthousenews.com/wp-content/uploads/2018/03/JetsPSL.pdf
