The Green Bay Packers want to expand Lambeau Field by
6,700 seats, add new gates and new video boards. To finance the improvements,
the team ownership decided to sell additional stock in the ownership
corporation. Since the Kraft family is unlikely to be selling the Patriots anytime soon, I was willing to part
with some football loyalty and some cash to get my own piece of the NFL pie.
Unlike the rest of the National Football League
franchises, the Green Bay Packers franchise is owned by non-profit,
community-based organization, Green Bay Packers, Inc. The corporation is
required to be nonprofit sharing and that no shareholder may receive any
dividend or pecuniary profit by virtue of being a shareholder in the
corporation. Any increase in value or operating profits and any proceeds upon
liquidation of the corporation will go to community programs, charitable causes
or other similar causes. If you add in limitations in stock ownership and
transfer restrictions, it's virtually impossible for anyone to recoup the
amount initially paid to acquire the stock. That makes it a completely non-economic
Is it a security?
Here is what the offering document says:
Because the Corporation believes Common Stock is not
considered "stock" for securities laws purposes, it believes offerees and
purchasers of Common Stock will not receive the protection of federal, state or
international securities laws with respect to the offering or sale of Common
Stock. In particular, Common Stock will not be registered under the Securities
Act of 1933, as amended, or any state or international securities laws. The
Common Stock will not be approved by the Securities and Exchange Commission or
any state or international regulatory authority nor will the
Securities and Exchange Commission or any state or international regulatory
authority approve the Offering or the terms of the Offering.
Under the Howey definition of an
investment contract, you need (1) a common enterprise and (2) to depend
"solely" for its success on the efforts of others. Certainly, the Packers'
stock meets those two prongs. The third prong is an expectation of profits.
That is not true. However the definition of "security" in the Securities
Exchange Act of 1934 includes "any note, stock, treasury stock..." The interests
in the Packers are clearly stock and seem to fall into the definition of
What do you get?
The certificate is designed in the timeless tradition of
classic stock certificates. The 12 inch by 8 inch certificate is printed on
exquisite paper using a classic engraved steel plate process. It features an
artistic representation of heritage. The record of your ownership will be
secure, and you will be able to display your ownership with pride.
Is this Crowdfunding?
This is the current state of crowdfunding. You can't
offer securities without going through the registration process or finding an
exemption. But you can still raise funds from a large group of people. Just
don't offer a share of the profits or stock. That's how the kickstarter crowdfunding platform works.
You get an over-priced product or a t-shirt or some other token of
appreciation. As a backer, you do not have visions of early retirement because
you just bought a piece of ownership in a multi-million dollar idea.
A Packers' alternative would be to have merely offered a
certificate of appreciation or tufts of grass from Lambeau field. But they
offered the ability to say "I'm an NFL owner."
I'm supporting a multi-million dollar idea. On Any
Given Sunday, any team in the NFL can beat another. A team from tiny Green
Bay, Wisconsin can still generate the revenue to field a competitive team and
win the Super-Bowl.
I still prefer that the Patriots win the Super Bowl.
For additional commentary on developments in
compliance and ethics, visit Compliance Building, a blog hosted by Doug Cornelius.
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