Green Bay Packers Stock Offering: Packers 12, Shareholders 0
Cost of a Green Bay Packers jersey on NFLShop.com: $109.99.
Ticket to see the 12-0 Packers take on Oakland at Lambeau Field this Sunday: $115 (and up).
The cost of owning a winning franchise: priceless.
Good news, Packers fans. This week only, you actually can own a piece of the Pack for the low, low price of just $250. As announced on its website Tuesday morning, for the first time in more than a decade the Pack is opening itself up to public ownership. In order to raise funds to add seats and "new amenities" at Lambeau Field, the team is offering interested parties the chance to buy part-ownership of the Packers in the form of "shares" sold on its website. The cost: $250 apiece (200 shares max), plus $25 shipping and handling.
That's what it will cost you to own a piece of the dream. But what will you actually get for your $275 to $50,025 "investment" in the Green Bay Packers? Ah, that's the real question. And I've just leafed through the firm's 20-page virtual "prospectus" and can give you some answers.
You Are Invited ... to a Meeting
Here's the Packers' sales pitch in a nutshell, straight from the word processor of Team President and CEO Mark H. Murphy:
I encourage you to buy shares of stock in the Packers. We need your help. As an owner, you will be invited to shareholder meetings and have voting privileges. Ownership will also provide you with significant bragging rights. You will become an owner of the defending world champions, a team that has won more world championships than any other team in the NFL.
Offering to sell 250,000 shares initially, and up to 880,000 shares total if that's what the market will bear, the Packers stand to make anywhere from $62.5 million to $220 million off this share issuance. In exchange, they're offering to give you:
Bragging rights
The right to sit in a meeting
And ... that's it.
Where Are the Perks?
The prospectus goes out of its way to point out that "a purchaser of [GB] Stock in the Offering will not receive any special benefits, such as access to tickets to Packers games, preferential seating for Packers games or discounts on Packers merchandise."
Sounds like a raw deal. So what about the "return" on this investment?
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Since its third public offering in 1950, when shares sold for a split-adjusted price of $0.025 per share, the price of a GB share has increased 10,000 times. For comparison, that's about 200 times better than the price appreciation for an ounce of gold -- or the Dow Jones Industrial Average. It's a comparable return to the one Apple (AAPL) investors saw since 1984, Ford (F) since 1977, or IBM (IBM) since 1963 (the longest periods for which data is readily available). It's actually on par with the performance that Berkshire Hathaway (BRK-A) (BRK-B) shareholders have enjoyed under Warren Buffett's tenure since 1965.
And yet, despite these stellar "paper profits," GB's stock prospectus makes clear that the stock GB is offering today "does not constitute an investment in 'stock' in the common sense of the term." The stock's astronomical historical returns notwithstanding, purchasers today "should not purchase [GB] stock with the purpose of making a profit."
Looks Good on Paper. And That's It.
Indeed, "in light of the transfer restrictions and redemption rights" attached to the shares, "it is virtually impossible for anyone to realize a profit on a purchase of [GB] stock or even to recoup the amount initially paid to acquire such common stock." (Emphasis added.)
Why is that? Because technically speaking, the Green Bay Packers is a nonprofit corporation. As such, it does not earn "profits" or pay dividends. And unlike with a for-profit corporation, investors cannot resell their shares for a profit if the team does well. As the prospectus clearly states: "the Corporation has a right of first refusal to repurchase [GB] Stock at a price of $0.025 per share if any shareholder proposes to transfer his or her [GB] Stock to a third party."
Translation: Those shares you just paid $250 apiece for? The moment you put 'em in your pocket, they lost 99.99% of their resale value.
It almost goes without saying that such a lousy deal for "investors" is not endorsed by the Securities and Exchange Commission. For that matter, the SEC hasn't even "approved" the offering. Nor has the offering been registered under the Securities Act of 1933. Nor does the offeror believe investors can depend on any "federal, state or international securities laws" to protect their investment in the "offering."
You Make the Call
So what's my read on the Green Bay Packers offering? With tens of millions of dollars being raised to improve the quality of their facilities and permit charging higher ticket prices to their fans, management's going to make out like bandits from this offering. Players will make money, too.
But the "shareholders"? All they get for their $250 is exactly what the prospectus promises: The right to attend a shareholders meeting and the right to brag about it. Or basically, the same things you can get for the price of a jersey and a ticket to Sunday's game ... for $25.01 cheaper.
Seems to me, somebody's playing the Packers fans for chumps.
Motley Fool contributor Rich Smith does not own shares of any companies named above. The Motley Fool owns shares of International Business Machines, Apple, Ford Motor, and Berkshire Hathaway. Motley Fool newsletter services have recommended buying shares of Ford Motor, Apple, and Berkshire Hathaway. Motley Fool newsletter services have recommended creating a bull call spread position in Apple.
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