You'll have to loan the Warriors thousands of dollars to buy season tickets at their new arena

The Golden State Warriors are paying $1 billion to build a new privately financed arena that will open in San Francisco in 2019. How, exactly, does the team plan to fund such a massive project?

Mostly by continuing to win, and by continuing to be immensely profitable as a result of that winning.

But the franchise must design other ways to make up the money as well. One of those other ways: Forcing fans to essentially loan the team thousands of dollars just for the right to buy season tickets.

The Warriors are instituting their own version of a personal seat license (PSL), the season-ticket payment program that has been popularized by many NFL franchises and criticized by many NFL fans. The Warriors reportedly will become the first team to bring a full-fledged PSL plan to the NBA.

How does the PSL plan work?

To buy Warriors season tickets at the Chase Center, a plush new arena opening across the Bay in 2019, fans must put down a one-time payment ahead of time. The fee will depend on seat location, amenities and such, but multiple reports indicated roughly half the PSLs will cost more than $15,000.

The payment is essentially a membership fee. According to Warriors president Rick Welts, via the San Francisco Chronicle, the Warriors plan to sell 11,000 or 12,000 of these memberships. The four- or five-figure payment is not the price of season tickets; it reserves a given seat for a given fan, and gives that fan the opportunity to then purchase season tickets every season over the next three decades.

But here’s the catch — and here’s where the Warriors’ plan differs from NFL personal seat license programs: The deposit Warriors fans will be making is less a one-time payment and more an interest-free loan.

How is the Warriors’ scheme different than those introduced by NFL teams?

Many NFL franchises allow fans to essentially buy a seat and subsequently maintain ownership of that seat. They can either purchase season tickets year after year or sell the PSL to other fans wishing to buy season tickets. If the value of the season-ticket membership increases over time — as seen in NFL cities such as Pittsburgh, Baltimore and Chicago — fans can make significant profits. But if the value decreases — like it has in Dallas, New York and San Francisco — they’ll suffer losses on the investment.

The Warriors, however, won’t allow secondary market buying and selling of their personal seat licenses. They’ll control all resales, meaning fans won’t be able to make a profit or a loss. And, most importantly, the Warriors are promising to refund the full value of the deposit after 30 years. So, if a given membership costs $15,000, the Warriors will repay the fan $15,000 30 years after their purchase.

Plus, to ensure fans don’t suffer losses on the investment, as many 49ers fans have in the years since Levi’s Stadium opened in Santa Clara, the Warriors have also promised to repay fans if they are unable to sell their license for what it is worth. For example: If a fan buys a personal seat license for $15,000 and uses it to then buy season tickets for 15 seasons, but then decides to sell ahead of the 16th season, the fan can do so through the team. But, say the Warriors are a perennial last-place team in the 2030s, and other fans are only willing to pay $10,000. If that’s the case, the Warriors would pay the original buyer $5,000 after 30 years from his or her initial purchase. So, the Warriors would make up the difference between the original price and the actual resale price at the end of the 30 years.

Why does the membership last 30 years?

Welts, the team president, answered that question for the Chronicle, and there’s some science to it: “Right or wrong, that’s about the life cycle of an arena,” he said. “It’s the average span.”

Why are the memberships so expensive?

They’re actually not that expensive compared to the price many NFL fans have to pay. But they’re a reflection of the demand for Warriors season tickets, which is through the roof. They have a season ticket waiting list of more than 40,000 people, and a place on that waiting list requires a $100 deposit. The team should have no trouble selling their personal seat licenses. In fact, the Warriors told the San Francisco Chronicle that they might have to increase the number of PSLs they are selling if most Oracle Arena season-ticket holders want to follow the team from Oakland to San Francisco.

And fans won’t have to pay the entire fee up front. They’ll be able to pay in installments, though the Warriors haven’t yet finalized exactly what that plan will be.

Still, isn’t this just a cold-hearted attempt to suck more money out of fans?

Kind of. But in the end, it’s not terribly different from a slight bump in season-ticket prices over the next 30 years, with the promise that those prices will then decrease by the same amount after the 30 years are up. As Roger Noll, a professor emeritus of economics at Stanford University, told the Chronicle: “This is a form of a ticket-price increase to be there the first few years of the new arena. This is an attempt to capitalize on the huge excess demand for the Warriors now, and spread it over a long period of time. It’s a good business strategy.”

And as Vice’s Aaron Gordon pointed out in an article on personal seat licenses in 2015, this is a much, much more fair funding strategy than the public one used for most pro sports stadiums nowadays:

“PSLs may have a nasty place in many fans’ hearts, but they are a far more honest revenue-generating tool than public subsidies, which disperse the cost of a stadium to every taxpayer, whether they use the stadium or not,” he wrote. “With PSLs, the people who use the stadium the most pay the most.”

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