Last November, the Green Bay Packers did something for the sixth time in the last 100 years: It offered shares of common stock for purchase by members of the public. More specifically, the Green Bay Packers, Inc. (the “Packers”), a Wisconsin corporation which happens to operate an NFL team, is offering members of the public an ownership interest in an NFL team, consisting of a limited number of shares of common stock, which come with an asterisk or two. The offering provides an opportunity to learn a little about what makes the Packers organization unique in professional football and an opportunity to learn a bit about corporate governance documents.
The Green Bay Packers organization was formed in 1923 as a Wisconsin corporation, and later reorganized in 1935 as a Wisconsin stock corporation. The Packers are not a charitable organization under the federal Internal Revenue Code – shareholders cannot receive a charitable tax deduction for the purchase of common stock. However, purchasers of common stock in the Packers corporation are prohibited from personally profiting from the common stock under the terms of the Packers’ Restated Articles of Incorporation (the “Articles of Incorporation”). The Articles of Incorporation is a document filed by the persons forming a corporation with the state of incorporation, which addresses the purposes of a corporation, the number of shares of stock the corporation is authorized to issue, and any restrictions on the ownership rights or transfer of this stock. Article VI of the Packers’ Articles of Incorporation states as follows:
The corporation shall be non-profit sharing and its purpose shall be exclusively for charitable purposes and that its profit shall be donated to the Green Bay Packers Foundation, but that the Green Bay Packers, Inc. can make contributions to any local charitable institutions; that no stockholder shall receive any dividend, pecuniary profit or emolument by virtue of his being a stockholder.
That should there be a dissolution of the Green Bay Packers, Inc., the players shall be subject to the National Football League Rules, but that the undivided profits and assets of the Green Bay Packers, Inc. shall go to the Green Bay Packers Foundation for distribution to community programs, charitable causes, and such other similar cause to which the Foundation deems appropriate.
The purchase of shares of common stock in the Packers is not for investment purposes – it will pay no dividends and will never increase in value. In addition, the Articles of Incorporation establish a nominal redemption price for the corporation to buy back any common stock. Common stock in the Packers corporation offers a very limited set of benefits to the shareholders. A shareholder will not receive dividends, cannot sell the stock for a profit, is limited in the number of shares the individual can purchase, and is restricted from transferring their shares to anyone other than a member of their immediate family by gift.
While individuals who own common stock in the Green Bay Packers possess limited rights, people are nonetheless willing to purchase it. Why? As stated in the Green Bay Packers Common Stock Offering Document: “Purchasers of Common Stock will … become a part of the Packers’ great tradition and legacy as a community- owned team, one that is unique in professional sports.” The value of owning common stock in the Packers is not economic. And, in large measure, the numerous restrictions on the rights of the shareholders of the common stock give the common stock its value.
In Washington, the requirements and optional provisions for a corporation’s Articles of Incorporation are set forth in RCW 23B.02.020 . Do you have questions about the governing documents for your corporation? If so, please let us know. We’d be happy to help.
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