Did you know that the Green Bay Packers, one of the most storied franchises in NFL history, is a public corporation? I didn’t. And then today, I saw that the Packers are planning its fourth stock offering in franchise history. Turns out, the Packers have 112,158 shareholders, owning 4,750,937 shares. As part of the upcoming offering (the full details of which have not been fully divulged), the Packers plan to offer shares for $200 a share, and plan to use the money to partially finance a stadium renovation. Finding out the Packers have outstanding stock led me to two questions: (1) what type of offering is it; and (2) what type of investment is it.

The Offering:

Securities regulations require that every sale of stock must be either registered or exempt. According to the SEC’s website, the Green Bay Packers have not registered any of their stock offerings. If that is the case, the offering must be exempt. However, I am not aware of any exemption which would apply to the upcoming offering (or past offerings for that matter). As it seems the shares are available to anyone, it seems impossible that the offering is a § 4.2 Private Placement. Seeing how the Packers expect to raise roughly $20m through the offering, neither an offering under Reg. A, nor an offering under Rules 504 and 505 of Reg. D, are available. Rule 506 of Reg. D, while imposing no dollar requirement, seems unavailable because it allows a maximum of only 35 unaccredited investors, and does not allow for public solicitation. Since investors across America participate in the offering, it cannot be a § 3.a.11 Intrastate offering. Clearly, the offering cannot be exempt under Rule 701, which exempts securities issued as part of an employer/employee stock purchase, option, or benefit plan, nor can the offering be exempt under Reg. S, which exempts offshore transactions from registration.

Maybe it’s been too long since I took Securities Regulation, but that’s all the exemptions I know, and none of them apply. If you know which exemption applies to the Packers offering, please leave a comment.

The Investment:

“It is virtually impossible for anyone to realize a profit on a purchase of common stock or even to recoup the amount initially paid to acquire such common stock” (front page of the 1997 offering document). Shares do not appreciate in value, no dividends are paid, no charitable tax deduction applies, and the shares cannot be resold or transferred, other than back to the Packers for 2.5 cents a share. Who would invest in this?

It turns out, buying a share of Packers stock is not an investment at all. The “investment” acts more as a tariff–that is, money is paid by people who appreciate the Packers, and who wish to continue to be able to appreciate them. Buying stock then acts as a tax, only the tax base is solely those who have an interest in the Packers’ continuity. Similar strategies are employed by virtually every sports franchise, where the tax base is the entire community surrounding the sports team, on the presumption that fans coming to the area will act as a boon to the taxpayers, whether or not the taxpayer is a fan of the sports team.

Is that the answer to the exemption question? That the function of the “investment,” as opposed to the form, is what matters? Unlikely. Regardless, I’m thinking about buying a share.

– Andrew Harline

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5 Responses to Own an NFL Franchise for $200

  1. Andrew Harline says:

    Interesting article about Manchester United, an English soccer team, possibly doing an IPO in Singapore:


  2. Caitlyn says:

    I’m more inclined to interpret media articles as indicators that somthing is happening and less as an accurate description of what is happening. The context of those two comments depends on who the writer spoke to over at the Packers corporate office and how the Packers have structured themselves financially speaking.
    Personally, both comments sound like the team’s marketing department’s excuse to not start talking about the “offering” until they’re ready to launch their campaign. I’d be interested in seeing what sort of public records are out there about this corporation and their financial structre. There’s a plethora of innovative ways to skirt the law!

  3. Wildcat Offense says:

    Yeah the fact that all of the news stories are calling this “stock” is pretty misleading. From the SI article: “Each share would likely cost about $200 and include voting rights, though the value wouldn’t appreciate and there would be no dividends.”

    That sounds a lot more like a donation than a stock purchase to me.

  4. Andrew Harline says:

    I thought they might be relying on the Howey test, too. To me that seems like the best answer. However, if they are relying on the fact that what they are selling is not a “security,” then that leaves me with two more questions… One of the articles said the Packers can’t currently comment because it is “in the equivalent” of a pre-IPO “quiet period.” Another article said that the details won’t be fully divulged until regulatory review is complete. Any way to reconcile those with the Howey test? Or maybe its not safe to rely on the ESPN writer’s legal analysis?

  5. Caitlyn says:

    Perhaps they are relying on the “stock” not being a security based on the Howey test since there is no expectation of profit? E.g. United Housing Foundation v. Forman, 421 US 837 (1979)