Irving, Williams Put on a Show for Cleveland
March 25, 2011Tribe Talk: The Three Keys
March 25, 2011
The NFL thought they were so smart when they decided to start selling personal seating licenses. Never mind that the licenses have become bullets in the gun of critics. The NFL found a way to charge fans a one-time licensing fee so that they could have exclusive rights to certain seats for their favorite team. Of course they had to pay for those seats on a per-game basis even with an up-front financial commitment. Now, one Cleveland fan is turning this business practice against the NFL with the looming threat that there will be no games this season.
The Cleveland Plain Dealer reports that Cleveland Browns fan (and attempted politician) Ken Lanci is seeking $75,000 in damages. Ultimately those damages aren’t the real story here. The story for me is that one of the league’s most egregious money-grabbing techniques is now being used against it.
On the one hand, I understand PSLs. NFL owners aren’t dumb. They want to maximize revenue and profits. As it has turned out through the 90s and 2000s, they have created a game that is so in demand that they have been able to get away with many tactics that have fans shaking their head every year. Charging full price for pre-season games comes to mind. Even that didn’t create a contract directly between the owners and the fans.
Personal seating licenses did that. Here is the language from the suit.
Implied in every contract in Ohio is a duty of the parties thereto to act in good faith and fair dealing towards one another. The duty of good faith and fair dealing involves refraining from actions that would destroy the value of the contract to the other party.
By participating in the lockout of players, the Browns have affirmatively acted to destroy the value of the PSL Agreement as it relates to Lanci.
Now that fans can buy and sell their licenses, they own an asset that is dependent upon the NFL playing their games. In exchange for that up-front cash, NFL owners have now opened themselves up to these types of lawsuits and potentially real liabilities.
No, I don’t expect them to actually have to pay money to this fan or any others. At the same time, I don’t think it is totally out of the realm of possibility that a court will find this case has some merit. If the case has merit then it is another added bit of pressure on the owners.
I know a lot of you will find this to be just another fan like Dawg Pound Mike who wants to be the center of attention. I don’t know Ken Lanci other than what I read about him today. Maybe he is the kind of guy who wants some attention for himself. At the same time, when it comes down to the actual issue of PSLs and NFL teams, I find the suit to be at least thought-provoking as this NFL labor struggle continues to unfold.
28 Comments
A class action suit on the same grounds would have been better – and the amount of damages requested could have been enormous. That would have really gotten the NFL’s attention (but could have seriously hurt the Browns). I’ll bet that the Browns/NFL argue that the claim is not yet ripe, as no injury or alleged breach of contract has yet occurred – and won’t until the first game is cancelled. If so, then the whole purpose of the suit (to ensure that the 2011 season is played) would be moot. In the end, I think that this case goes nowhere, but it is definitely interesting.
Hope this guy wins, pSLs are a complete ripoff. You have to pay us, just to able to pay us again for the tickets. doesn’t make any sense. But I do understand why it happens (fans will buy anything with NFL name on it)
@Garry… I was thinking the same thing that there was no injury yet, but check this out.
If the PSL is a marketable asset that can change hands, then even in this period of time the NFL has taken something that fans have invested their money in and basically brought its value to zero. Lanci argues they have done so in bad faith. Even if just temporarily from a timing perspective, you could potentially argue that is a damage.
Lyon,
That’s why I never got into a country club.
Wait, I have to pay you a whole bunch of money just for the right to pay you a whole bunch of money to play golf on your course and eat dinner at your restaurant?
@4 — but if my country club just shut down without membership voting there would be a problem.
i think this guy’s lawsuit has legs.
amazing also is that, with 1000 sports talking heads and 10,000 bloggers… no one else ever raised this question. i bet you the nfl is having an “oh eff me” moment right now.
I think it goes a little deeper than “not missing any games yet.”
If Judge O’Donnell decides the case has teeth, this could open the doors to players being able to receive treatment from the teams, which is a huge issue right now.
Part of this stuck out here:
“These players should get on their knees and be grateful they can play a game for that kind of money when so many others in this city and country are hurting financially.””
Truly spoken like a millionaire with political aspirations.
@ #6 – to finish my thought, the quality of play will be affected by the lockout going on this very moment. They could argue that the lockout is causing injury right now.
I was not aware PSLs could be transfered through a private transaction. If that’s the case, then it would seem to me this lawsuit could go somewhere.
Of course, IANAL, maybe we can get Frowns to weigh in.
If it were me, I’d seek to make this a class action suit.
@8.. yep, chris. frowns has a bucket of cold water to throw on this. follow this link.
“…if you read the TERMS AND CONDITIONS section of the contract between Lanci and the Browns for his PSL (attached to Lanci’s complaint), it contains the following clause (in part):
STRIKES, DAMAGES, DESTRUCTION, ETC. In the event of: (a) any strike or other labor disturbance which results in the cancellation of any Browns Games at the Stadium, … the License/Ticket Fee payable under the Agreement shall … be abated during the period of time that the Club Seats are unusable. Any such abatement of the License/Ticket Fee shall be computed for each NFL Season by dividing the number of Browns Games for which the Club Seats were unusable by the total number of Browns Games that would have been played in the Stadium during the applicable NFL Season were it not for such strike, labor disturbance, damage or destruction.”
that seems pretty solid. dang.
Yeah, he has no chance on his contract claim, and to win on the tort claim or the claim for breach of duty of good faith and fair dealing, Lanci would basically have to prove that the Browns, the league, and the rest of the teams were staging the labor dispute intentionally to spite fans and season ticket holders. Either that or convince the Judge to write some caselaw establishing a constitutional or common law right to Cleveland Browns football that the teams and league have violated by their conduct in the labor dispute.
I’m as optimistic as the next guy is, but as noted at Frowns, I’m thinking of Todd Philcox dropping back to pass on 4th and 57 here.
nick skorich used to punt on 3rd down.
That contract clause regarding strikes and labor disputes is not airtight. I’m sure that Lanci will argue that the owners’ decision to initiate a lock out was a unilateral action that constitutes bad faith toward PSL holders, irrespective of the clause. A strike is essentially a “force majeure” out of the control of the owners – which is the nature of that clause. Not so with a lock out.
@ Craig: Intersting point. I have not considered the details of this. I’m sure that Lanci has, and that the suit must have legs of some sort. I still question the damages issue, but I’ll bet a reasonable claim exists. It’s probably something on the order of what you suggest. Very interesting.
seeeeeeeize the moment (moment)
Don Strock is probably only 60 or so. He could still get under center.
“Bernie, Bernie,” anyone?
I dunno, Mr. Owen. Seems pretty airtight to me. “Other labor disturbance” is plain enough, and your argument assumes that the owners would contract away — to season ticketholders? — their right to take a hard line in labor negotiations with the players. An uphill battle in the extreme.
Ken Dorsey?
I’ll defer to the lawyers on this one, I guess. I still found the concept interesting. It also strikes me as a more productive conversation than just blanketing the world with “owners are greedy” rhetoric.
@ Frowns,
Just making an argument. You’re probably right; but to further the argument, there will certainly have to be some interpretation of the term “other labor disturbance.” It’s not insignificant (I don’t really believe this) that the clause specifically lists “strike” but does not list “lock out.” I’m sure that it will, at the end of the day, but the argument exists that the owners did not have to pursue the route that they chose, and thus pursued it at their own risk. Granted, it is definitely far less airtight than the clause, but it still exists. Not sure I would make it (and contracts was never my forte), but someone (Lanci) might.
Ken Dorsey is the “smart” choice. He’s smart. He knows the game. Smart, smart, smart.
I’m not a lawyer, and if I’m not mistaken, Frowns is, so I hesitate to disagree about this. I’m under the impression, though, that disclaimers don’t necessarily work all the time. When you go to any amusement center, you have to sign a waiver, but almost anything that injures you can be traced to negligence. Why wouldn’t that apply here? Especially if the players can use this as an example of how, as with the TV contracts, the owners are sheltered by a source of revenue that is not contingent on actually having a product.
Hey that’s the thing about going to court. No matter how right the party is, they can still lose.
I don’t understand why people have such a problem with PSLs.
On the surface, they seem like the NFL owners are money-grubbing. Grabbing a bunch of up-front cash from fans in order to control the seats.
However, in most instances, they end up being solid long-term or even short-term financial investments. How many people’s PSLs have gone down in value the past 10 years? Now, how about your stock portfolios?
It’s money the fans put in now, that they expect to get more back at some future date. They were going to buy the season tickets anyway, so the owners are sort of gifting them some long term money here.
No, the NFL didn’t pay me for this post, but I wish they did 🙂
Mgbode – the reason people don’t like it is because you’re buing something that doesn’t exist. It’s never a good investment, but if it were, it would still be a product that doesn’t exist.
@Roosevelt – you mean like stocks? or federal bonds? those only hold intrinsic values to the holder as well.
a PSL is a product. it is the right to the seat in the stadium which holds an intrinsic value. noone else can buy that seat ahead of you.
saying it is never a good investment is folly. in 1999 people bought PSLs from $250 – $1000. Now, they are worth $500 – 10000 (that high number is extreme. most are worth in the 2500 range at the top end). Still, a 2.5X increase in net worth over 12 years where we had a huge recession.
Here’s one site that lists PSL sales:
http://www.seasonticketrights.com/TeamSalesData.aspx?lid=19
I’m with mgbode on that one.
I sell advertising that magically travels through the air. So technically, I sell nothing, but it has value.
If you want to go “sophomore year philosophy” on this subject, technically money has no value whatsoever other than the faith in the US economy relative to other economies, OR DID I JUST BLOW YOUR MIND!?!?!?!?!?!?
Well if we’re going to go all “if society collapsed tomorrow”, the only things that have any real value are food, medicine, clothing, weapons, and tools. Perhaps labor as well.
As long as society doesn’t collapse, we can assign arbitrary value to all sorts of goods and services. I peddle in 1s and 0s in the form of computer code. Does that have some intrinsic value to it? No… do I do contribute something of worth to society? I think so.
Maybe I didn’t explain it right. The point is that a PSL is just the owners creating a product out of thin air, a product that has no value save for the owner’s willingness to sell you a ticket – which, while noble, is something they used to do for free with your payment of face value for the ticket.
The reasoning in the filed paper sounds mighty faulty to me (a non-lawyer).
Having the right to buy tickets does not guarantee that there will be tickets.
Essentially, it’s hiking ticket prices using the same supply/demand leverage as always, but it sacrifices a little in the long term in favor of more security in the face of a lockout. Rather than getting 15 percent more per ticket indefinitely while the teams play, they take a huge lump sum once. Another advantage is that they can still raise prices as much as they like and when the tickets are not worth face anymore, your PSL is worthless. And when you can’t sell it, it goes back to the team who can then play this game all over again.
@Roosevelt – yes, it’s definitely a “rigged” system where the teams can’t really lose. they get upfront money where all the risk lies in the holder of the PSL.
however, you missed on a couple points:
1. You don’t have to sell your tickets for ‘face’ you have to sell them for what you bought them for which depends on your season ticket package but is never the ‘face’ value. also, you could perhaps go to those games 🙂
2. even if the tickets are worth less than face, the PSLs are far from worthless. your season ticket package is what takes a hit in that case. for instance, Browns tickets late in the year last year might have gone for less than face value. however, the PSLs behind them are still at the value I listed above.
3. like any investment, there is a risk. a risk that you won’t be able to sell the PSL and you lose out on the $$$ you put into it (like a company going bankrupt when you own stock in them). however, the PSLs as an investment have been remarkably stable. perhaps this changes (we saw the housing market change obviously), but at this moment if you own a PSL you can likely sell it.