Best Seats in the House

By | December 22, 2008

A client asked me an interesting equipment financing question the other day. He asked me if we’d finance PSL’s for his company.

For those who don’t know the term, PSL’s are the acronym for Personal Seat License,  and are a fairly new charge imposed by sports team owners to season ticket holders (most notably in the NFL).

Generally, it’s not enough to just buy season tickets every year- with new stadiums, you buy the right to buy season tickets. Hence, you pay a one-time fee for the PSL (sometimes up to 50k), and that gives you the right to buy season tickets for the seats you now own. Sounds pretty straightforward, right?

Now, the interesting part is this: although it’s an intangible thing, the PSL is definitely an asset there’s only one for each block of seats, and whoever owns the PSL can buy season tickets for those seats. And not only is it an asset, it’s one that can increase in value, and can also be sold. For a large company, a PSL can be a definite tool of the marketing and sales department for example, what better way to show big clients a good time than seats at the 50-yard line?

Now, this brings up the question of why PSL’s? Why didn’t this question come up with financing season tickets? That’s because the use of the season tickets is finite once the season is over (usually around week 4 for my team), they are worthless. Not so for the PSL,  it’s good year after year after year. And it can be sold.

I actually had to think about this somewhat, because of the asset nature of the PSL. Although we’re equipment financiers, and this really isn’t equipment, it does fall into that gray area.

In the end, however, my answer was not generally. I say not generally because we WILL finance a PSL for a good client who is looking to finance them for tax reasons. But the general rule here is if the company can’t afford to buy them outright, it’s probably not something an equipment financing company will handle.

Just something that crossed my mind as I watched us go down in defeat (again).