How does an organization outperform the Dow Jones Industrial Average by selling stock that offers no possible way to earn a return on invesment?
It sells to Packers fans.
As the only publicy-traded team in the NFL, the Green Bay Packers announced a new round of stock offerings last week that will raise money for renovations to Lambeau field. It's the sixth offering in the team's history, and a brilliant idea: Selling stock raises capital without requiring any tax revenue from the community.
The only odd part is that the “stock” isn’t really stock at all--as the Packers make clear in the stock purchase agreement:
COMMON STOCK DOES NOT CONSTITUTE AN INVESTMENT IN “STOCK” IN THE COMMON SENSE OF THE TERM...it is virtually impossible for anyone to recoup the amount initially paid to acquire Common Stock...
...Although shareholders will not receive any economic profit or benefits, shareholders will receive an invitation to the Corporation’s annual meeting and have the opportunity to purchase exclusive shareholder merchandise.
In other words, buying stock in the Packers is basically a nice donation dressed up in fancy clothes. For $250 plus a $25 processing fee, it does come with a few perks: in addition to those noted above, shareholders receive a certificate, which the team CEO and President says will look nice "framed on Packers fans’ walls across the country.”
Not surprisingly, one writer dubbed the stock the "Worst Investment Ever." But is it really?
In psychology, fandom has been termed “an affiliation in which a great deal of emotional significance and value are derived from group membership.” One primary value of fandom is the sense of belonging it offers, whether that's deriving a sense of identity in your team, or just the thrill of being in the crowd when a receiver catches a long pass in the end zone.
As you would expect, people like to be affiliated with success--and the Packers' record number of championship wins and winning streak this season warrants association. When teams win, it provokes fans to “bask in reflected glory" (another psych term), or publicize their connection with a team's success, despite not really contributing to that success. This likely accounts for the popularity of team memorabilia, t-shirts…and Packers stock.
As a financial investment, Packers stock isn't a remotely decent use of cash. But seen as an investment in the team, Packers stock offers fans a great deal of emotional utility (the benefit from consuming something, in economics).
ESPN asked Packers fans why they bought the stock, and the collected answers illustrate this utility:
- Evan of St. Louis: It's hard to put into words the reason why I bought Packer stock, but I guess it's the idea of actually being able to own a piece of your team. It shows a devotion to the team that goes beyond simply purchasing season tickets or merchandise. It's the fulfillment of a dream, and it's something that I can pass down to my children, and on down the line. … I guess it's hard to understand unless you have that passion for your team.
- Chris of Elgin, Ill.: Being a shareholder is the ultimate show of support for the team and a tribute to those first shareholders who truly saved the team from folding. And when Lambeau Field is repeatedly voted as the best stadium in sports, I feel pride that I was a small part of helping to make that happen. … We are a unique, special, and awesome group that has played an important role in the most storied franchise in sports.
- Jessica of Iowa: I jumped at this opportunity because I feel it is a way to show my loyalty. I'm not able to get to many games, so this is my way of showing support. You may not get anything "solid" in return for buying stock, but pride will work just fine for me.
The utility of team "ownership" is easily worth $250 to many fans--which explains the 185,000 shares sold within the first 48 hours (that's $46.25 million in revenue). The Packers are making a killing simply by giving fans a sense of greater group membership, at little cost to the organization.
What things are you willing to spend on for utility that might not be so obvious to outsiders?
--Jane
Photos taken from these photostreams and used with permission of a Creative Commons license.
I bought stock as a Packers fan and could be happier. It is a sense of ownership that no other sports fan can understand. While some teams will charge $100 or so for a brick in a walk way at the stadium, but what I own means so much more.
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