Serious About Soccer

Talking about all things Soccer. Its Soccer, its serious… but not always.

Franchise Fever

James Keep
May 12th 2013

An announcement is expected in a few weeks’ time, most likely on or around May 25th, to officially announce MLS’ 20th team. This team is all but certain to be New York’s second franchise (Or first, depending how you feel about the Red Bulls- Just because you put New York in the title doesn’t change the fact you’re actually in New Jersey). You could call it the worst kept secret in Soccer but it’s not really a secret at all. Everyone who works for Major League Soccer has been pretty open and forthright about their desire for the 20th franchise to be based in New York, no matter how much noise Orlando have started to make.

Franchise mapA map showing all the current and potential MLS sides by location.

Fear not though, because the party doesn’t have to stop at 20 teams. MLS is a league without Promotion or relegation and operates a single entity system designed to promote sustainability. As such, MLS can realistically have as many teams as it wants. In a recent Q & A on Twitter, MLS Commissioner Don Garber stated that, while 30 teams was probably too many, he felt MLS could operate comfortably with 24. This means there are 4 further spots, as well as 1 potential relocation, up for grabs at some point down the line. In this article we’ll look at what it takes to win a franchise, why New York is the best choice for team 20 and which cities could become future homes to Major League Soccer.
So, what would it take to have your own MLS franchise? The most important thing, somewhat obviously, is money. Lots and lots of money. Firstly you have to pay a franchise fee. This is you basically buying the right to operate a team which will still be centrally owned by MLS. For Montreal Impact (the 19th team) this fee was $40m, for Vancouver & Portland, who entered the league at the same time, it was $35m. However, for NYC2, the fee is projected to cost $100m. This is something of a special case as the team will be based in New York with a potential audience of over 8m people. The league has also done all the hard work of securing the land for the stadium. For future teams in other, smaller markets this fee would, realistically, be more in the region of $50m. Having the finance to pay this fee goes a long way to showing you’ll be able to afford the day to day operations of an MLS club.

MLS NY 2One of the leaked images of what the new NY stadium might look like. Though MLS have stated this was merely concept art for research purposes.

The next thing you’re going to need is a stadium. MLS launched in 1996 and opened its first soccer specific stadium in 1999 (Crew Stadium in Columbus, Ohio). While over the years it has been acceptable for teams to play in multi-use, usually half empty NFL stadiums only 4 teams now remain that do not have their own stadiums. A soccer specific venue is now very much a requirement for entry into MLS. NYC2 will have theirs located in the heart of Queens, just a stone’s throw from Flushing Meadows while Orlando city have purchased a large area of land to build their stadium next to the citrus bowl in downtown Orlando.

The price of these stadiums can vary depending on what you want. Using the recent examples of the last 5 years though, you’re looking at paying anywhere between $50m-$250m. When Portland joined MLS it was a $35m renovation job to turn Jeld-Wen field into the stadium it is now. Montreal’s Saputo Stadium was opened in 2008 and expanded for MLS in 2012 at a total cost of $40m while San Jose’ new stadium is due to open next year and projected to cost $60m. These are down the cheaper end of the scale. Up the other end Houston Dynamo opened their new stadium for $110m in 2012, Salt Lake City and Philadelphia both spent $115 on theirs. Kansas City’s stadium was opened in 2011 and cost $200m but the most expensive one to date belongs to the New York Red Bulls. Their top of the line facility cost $220m when it was opened in 2010. Expect NYC2 to cost more. The land they need to build on is currently parkland so they not only need to purchase that prime New York real estate but also replace the parkland as well. The total project will likely run somewhere in the region of $500m. If the New York Cosmos can ever turn their pretty concept art into a reality that will also be particularly expensive.

Cosmo stadiumNew York Cosmos Stadium concept art

The good news is that after that, costs are a lot more minimal. As already mentioned, MLS operates a single entity system whereby each team is centrally owned by the league. This means the league owns players contracts and is responsible for paying their wages. As such they enforce a salary cap on how much each team can spend (with certain exceptions) and take a large kickback on each teams ticket sales in order to fund this. Any profit each club makes after this is theirs to keep and MLS encourages/requires each team to have shirt/stadium sponsors and acquire a local TV rights deal in order to help make themselves profitable. For many teams this system allows them to operate without fear of bankruptcy. You will however need to show that you have the funds to cover day to day operations, such as travel expenses, stadium maintenance and other staffing requirements. If it seems unlikely a single investor or small group can cover these costs, MLS may either dismiss your bid or suggest you come back once you have found extra investors.

If however everything is fine so far, the next thing you’ll need to prove is that there is a desire for Soccer in your chosen market. MLS has no desire to place a team in a city that will generate another loss for the league because the people there don’t care. A simple way many teams have chosen to do this is to establish themselves in another league first. The North American Soccer League or United Soccer League do not carry the same franchise fees as MLS, or operate an SES, allowing owner’s greater autonomy to run the teams the way they see fit. The down side to this freedom is that these leagues don’t have the same lure as MLS and so, without the star power, rewards or facilities, usually fail to attract the same crowds as MLS games. This in itself forces teams to regulate their spending.

Yet 4 of the last 5 expansion teams arrived from the lower divisions and used them to show that they had developed a loyal fan base and that their team was well run. Recent history also shows that teams usually receive a maintainable attendance boost when they join MLS as well. The Seattle Sounders played in the USL before joining MLS in 2009. In their last two seasons they won the USL once and reached the US Open Cup semi-finals both years. All in front of an average crowd of 3,391. Since joining MLS they have won the US Open Cup 3 times and last season had an average attendance of 43,144. Montreal had an average of 11,514 in their one full season in the NASL, before that they averaged 11,698 across 5 years in the USL first division. In their inaugural MLS season they averaged 22,772. The Portland Timbers average attendance in the season before joining MLS was 10,727. The year before it was 9,734. Since joining MLS they have had 40 consecutive sell-outs with attendance currently capped at 20,674.

So, why is New York set to be the 20th team? The most important reason is that it is good for the league. A team in New York City will be highly marketable. This allows MLS to demand the $100m franchise fee which will in turn be divided out and can, in theory, be used to strengthen the other teams. This new team will also attract worldwide media attention, particularly if the owner turns out to be, as widely expected, Mansour Bin Zayed Al Nahyan, owner of Manchester City and deputy prime minister of the United Arab Emirates.

Sheikh mansourMansour Bin Zayed Al Nahyan (Right)

This new team would easily be the richest in the league and just thinking about the designated players they could sign is a mouth-watering prospect. Yet if you look at what Mansour is, slowly, doing with city it isn’t just about star power, there most likely will be a strong emphasis on youth development as well. And seeing local kids getting a chance will also resonate well with locals, just look at the Yankees and Derek Jeter. With their new stadium in queens they could attract NY residents to soccer in a way the New York Red Bulls never quite have. However, having a genuine rival on the scene could also help drive attendance/interest for the Red Bulls. A second New York team to play against is also good news for New England, Philadelphia and DC who can package the game as another rivalry. Looking at attendances, while New York Red Bull home games can be hit and miss they, much like the LA Galaxy, are a big draw on the road. The opportunity to see big star studded teams in action can usually help bring extra fans to the games. The pulling power of a big star laden team can also benefit MLS in another area and this one is perhaps the most important. Their current TV deal is set to end after the World Cup next year. While no-one expects NYC2 to be operational until ’15 or ’16 it could still prove an effective bargaining tool.

With all of the above in mind, what does it mean for the other cities who want a seat at the table? The commissioner has stated that there are no plans to expand beyond 20 teams in the immediate future but there is still potential for one new team to join, maybe sooner rather than later, thanks to Chivas USA. Not only do Chivas have woefully low attendances, averaging around 8,000, they have also failed to secure a local TV deal or make any real effort to find their own stadium. There are no signs of them getting one either and their current deal to share the LA Galaxy’s home ends in 2014. At some point MLS may well have to remove Chivas and award the franchise to another city, for the good of the League.
So who are the most likely candidates for any future franchises, be it relocation or the distant 21-24 spots.
NB: The following information was considered accurate at the time of writing but for a more up to date and expanded list please click here.

Orlando
Orlando City is the odds on favourite to be the next team. They already play in the USL, which they won in 2011, and have a new Brazilian multi-millionaire co-owner. The city has purchased a large chunk of land to build a new soccer specific stadium on and they have a good fan base (average attendance last season was 6,606). Unfortunately a bid to secure funding support for their new stadium was killed in the Florida House of Representatives, presenting a major setback to their chances, yet they remain optimistic they can make it happen. For MLS, the South East is a market they need to get into. They have had no exposure there since they were forced to fold two Florida based clubs back in 2002. While that experience will undoubtedly make the League weary of returning it still seems a logical location for their next team.

garber_rawlinsOne of Orlando city’s principal owners, Phil Rawlins (Left) meeting with MLS Commissioner Don Garber (Right)

Atlanta
Staying in the South West and after Orlando the next nearest option is Atlanta. They currently have a team in the NASL who last season averaged 4,505 fans. Yet while they have expressed no desire in joining MLS there have been rumblings from other parties.
The Atlanta Falcons of the NFL have a new stadium set to open in 2017 and, according to reports, it will be built to accommodate soccer as well. Yet while over 50,000 fans may have turned out to watch recent friendlies in the Georgia dome an average MLS crowd is closer to 15,000 and playing in large empty NFL stadiums is not something the League wants. However, if someone should emerge as a serious candidate, willing to build a soccer specific stadium then Atlanta is certainly a viable option. It is the 8th largest TV market in the country and currently the only one in the top 10 not home to an MLS franchise.

St Louis
St Louis seems a logical place for an MLS franchise and has previously attempted to win a team. However, MLS was not convinced of the finances behind that bid and it subsequently fell apart. Jeff Cooper, the man responsible for the bid, instead chose to launch both men & women’s teams in other leagues but each lasted only one full season before folding.
There is reason to be optimistic now though as there have been some interesting developments in the city. Lodging Hospitality Management, a group owned by Stan Kroenke (of Arsenal FC, the Colorado Rapids and the St Louis Rams) completed a $20m purchase of St Louis Union Station. They plan to return train service, open a transportation museum, renovate the hotel and, most importantly, build a new soccer specific stadium on the site. There is no bid for a team at the moment but if Stan Kroenke becomes involved, as a current MLS owner that particular problem is solved as he has been a proven, reliable owner for the Rapids. The only issue then would be that MLS now prefers each new team to have a unique owner. Still, if they want to bring soccer to St Louis this is something they could work around and having a team in the city would not only be a boost for the area it would also give Kansas city a natural rival and bring the Chicago-St Louis rivalry to a new sport. The only question then would be whether the fan base exists to support soccer in the city. The answer would appear to be yes. Chelsea and Manchester City will play an exhibition game in St Louis on May 23d, just days after the Premier League season ends. Tickets for the game at the St Louis Cardinals 46,861 seat stadium were sold out within minutes of going on sale.

4th Canadian Team
While it should be stated that none of the Canadian teams outside MLS have expressed an interest in joining the league, having one final team from North of the border would be good for Canadian Soccer and MLS in general. The NASL has a rule that only 17% of its teams can be non-American. MLS has no such rule but by chance has kept to a very similar percentage in its current build. If the league were to expand to 24 then adding a fourth team would keep these margins the same. FC Edmonton already competes in the NASL with Ottawa Fury set to join them in 2014 while Calgary have announced their intentions to try and enter the league as well. Of the three Edmonton would be best suited to enter MLS. This would place two Canadian teams in each conference and present a “local” rival for Vancouver. For Ottawa, nestled between Montreal and Toronto, it seems unlikely they will ever be able to join MLS. Again though, none of these teams have suggested they would even want to.

San Antonio
The San Antonio Scorpions are playing the long game when it comes to MLS. Last year they joined the NASL and finished first in the regular season competition. This year they opened their brand new stadium. The official capacity right now is 8,000 but that can be expanded to 18,000 in the future if the need arises (It seemingly already has as last season’s average was 9,176). They have both a shirt and stadium sponsorship deal with Toyota and a large number of other sponsors on board as well. They are growing their franchise slowly and carefully ready for an easy jump to MLS if the opportunity arises.

scorpionsPlans for the gradual development of the Scorpions stadium

Nashville
Music City USA is another name that has popped up from time to time. One of Nashville’s most recent brushes with soccer came in 2011 when 29,059 turned out to watch the US national team lose to Paraguay in an international friendly. The venue was LP field which has also hosted Olympic qualifying competitions and various national team matches for both men and women.
As far as domestic soccer goes the Nashville Metros, one of the longest continuously running teams in the USL’s Premier Development League ceased operations in 2012 which was perhaps not surprising as their average attendance over the last 3 seasons had been 242.

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