A Unique Ownership Structure

Watching the Packers this afternoon reminded me that they have a very interesting ownership structure.  The packers are the only major US sports team which is owned by a large collection of share holders.  According to wikipedia (of course the most reputable source on these matters) these shareholders have very limited rights

Shares of stock include voting rights, but the redemption price is minimal, no dividends are ever paid, the stock cannot appreciate in value – though private sales often exceed the face value of the stock, and stock ownership brings no season ticket privileges. No shareholder may own over 200,000 shares, a safeguard to ensure that no individual can assume control of the club. To run the corporation, a board of directors is elected by the stockholders. The board of directors in turn elect a seven-member Executive Committee (officers) of the corporation, consisting of a president, vice president, treasurer, secretary and three members-at-large. The president is the only officer to draw compensation; the rest of the committee is sitting “gratis.”

This means that there are over 100k people who paid at least $200 each to own a part of the packers.   Yet unlike a normal investment which is made for financial gain, the packers shares really have no financial value.  Shares have been sold 4 times in the ~80 year history of the Packers, but shares can not be resold and no dividends are paid.  It seems to me that it’s really similar to  taxpayers financing stadium upgrades in other cities.  In both cases it’s a composition of outsiders (rather than a single for profit group) raising money.

From an individual investors perspective it’s strange to me that people would want to make this kind of investment.  Sure its pretty cool to say you own part of an NFL team and you might get a vote for some executive committee, but beyond that the investor doesn’t get much.

Yet if we think about this from a microeconomics perspective, the plan seems like a pretty efficient use of funds.  Rather than tax payers funding the profits of a single owner, it’s really the people who will be benefiting from the services that are funding the new investment.  It’s almost like some sort of prepaid usage tax.  Think of it like the government paying for roads.  If the government pays for roads using income tax revenue then everyone who makes money is paying for a portion road improvements.  Compare this with improving roads through tolls or gas taxes where only people using the roads are funding their maintenance.  If we assume that only people who are interested in the packers are he ones buying the shares, then it seems like a good/ efficient way to raise funds for the team.

I’m not sure if this would work in larger cities like LA or New York, where there are multiple sports teams, but it seems to work well in Green Bay.