Steffy: Cheeseheads may have stadium financing right

Laugh not at the cheeseheads.
Last week, the Green Bay Packers began selling shares in their team for $250 each. In return, buyers get almost nothing.
As an investment, buying a piece of the Pack isn’t a smart move, but as a means for financing stadiums, the team may be on to something. Taxpayers in Houston, who have underwritten about $1 billion worth of sports facility bonds, may want to take note.
The Harris County-Houston Sports Authority services the debt on Reliant Stadium, Minute Maid Park and the Toyota Center. It has faced a cash squeeze since 2009, when the firm that insured the bonds got downgraded. Ballooning debt payments and a one-time drawdown earlier this year have eaten into the authority’s reserve account, and some of the bonds were in technical default.
While an actual default is unlikely anytime soon, revenue to pay the debt is tied to hotel and rental car taxes, which have slowed because of the recession.
Even the new Dynamo stadium, which the team will pay for, comes with city and county commitments for infrastructure upgrades.
By comparison, the Packers’ “stock offering” is really a voluntary stadium tax paid at the discretion of fans. The team wants to finance a $143 million expansion of the iconic Lambeau Field, but Green Bay, a city of only about 100,000, lacks the tax base to fund a Reliant-style sports palace.
As the Motley Fool pointed out, the Packers, the only publicly owned team in U.S. professional sports, isn’t a bad investment on paper. Its first public offering in 1950 had a split-adjusted price of 2.5 cents a share. Based on the latest offering price of $250, Packers stock would have generated a return 200 times better than gold, and better than buying Apple in 1984 or Ford in 1977.
Except you’ll never realize that return. The Packers are nonprofit, so there are no earnings and no dividends paid to investors. Under the terms of the offering, the shares can never be sold or transferred except to an immediate family member. If the team catches you trying to sell, it can buy the shares back at the 1950 price of 2.5 cents.
No leg up at all
What’s more, your investment bears no privileges typically associated with ownership – no premium seating, no ticket discounts, not even a chance to jump ahead on the legendary season ticket waiting list, now several lifetimes long. You get a stock certificate and an invite to the team’s annual meeting.
So it isn’t really a stock offering at all, which may be why the Securities and Exchange Commission had nothing to do with it, and, as the prospectus points out, no “federal, state or international securities laws” govern it.
The Packers timed the offering well, selling more than $46 million worth of stock in the first two days, capitalizing on last season’s Super Bowl victory and this year’s as-yet-undefeated season. The team may sell as many as 880,000 shares, raising as much as $220 million.
A few differences
The Houston Texans are, of course, not the Green Bay Packers. This year is the franchise’s most promising, but these days coach Gary Kubiak is hoping his squad can make it to the playoffs before even the water boy winds up on injured reserve.
Also unlike the Packers, the Texans are owned by a consortium of wealthy businessmen who believe they shouldn’t have to pay for things like stadiums.
They convinced elected officials, as team owners in many other cities have done, that taxpayers should foot, or at least guarantee, the bill.
By comparison, the Green Bay approach seems more simple and more fair. Let those who love the sport pay for the facility. Call it a user fee, call it a voluntary tax or call it a “stock offering.”
In the end, the cheeseheads may have the last laugh.
Loren Steffy is the Chronicle’s business columnist. His commentary appears Sundays, Wednesdays and Fridays. Contact him at loren.steffy@chron.com. His blog is at http://blogs.chron.com/lorensteffy. Follow him on his Facebook fan page and on Twitter at twitter.com/lsteffy.

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