Sacramento mulling public subsidies for MLS stadium so that rich owner can stay rich

If there’s been one given in the insane world of MLS expansion, it’s been that the Sacramento bidders were promising to come up with private money to pay for the entire cost of a $245 million stadium. Except that Sacramento didn’t win a expansion franchise last month as had been anticipated, reportedly because the league was worried that the prospective owners couldn’t afford a stadium on top of a $150 million expansion fee, and you know where this is headed, right?

Sacramento city leaders and the local ownership group seeking an expansion spot in Major League Soccer are discussing public contributions to a new $250 million soccer stadium planned for the downtown railyard – conversations that eventually may include a request for a direct public subsidy to the project’s construction.

(DEEP SIGH)

This was probably inevitable given the way MLS was running its expansion bidding: Setting expansion fees as high as possible, then picking winners based less on what’s the best soccer market than on which was offering the biggest guaranteed subsidies. (While two expansion teams were supposed to be announced last month, only Nashville got the nod, and it can’t be coincidence that Nashville was the only city among the finalists that had approved $75 million in public cash.) For a while it looked like Sacramento would sneak through on the basis of having a new stadium even if the owners were paying out of their own pockets, but MLS’s determination that “No, we want a team that can afford to pay us $150 million so we can keep funding our league by selling rights to more teams for big bucks, and yet still have lots of money left over for team profits, which isn’t going to happen if you’re on the hook for all stadium costs” put a fork in that, so now it’s back to the subsidy drawing board.

What that subsidy could look like is anyone’s guess: Mayor Darrell Steinberg mentioned reduced building fees and free land for a training facility as possibilities, which don’t sound too bad until you remember that Steinberg was formerly the California state senator who wrote a bill to fast-track the Kings arena by exempting it from environmental challenges, so he doesn’t exactly have a great track record in protecting the public interest. Steinberg also said, “I’m confident we can get Major League Soccer without a major public construction or operating subsidy,” and if you’re concerned by that qualifier “major,” you’re not the only one.

As for prospective team owner Kevin Nagle, who sold his prescription-drug-benefit company two years ago for $2 billion and estimated his net worth in the hundreds of millions, the Sacramento Bee reported this:

Asked if he would request a direct construction subsidy from the city, Republic FC CEO and Chairman Kevin Nagle said the team remains “incredibly appreciative to Mayor Steinberg and the City Council for their support and are committed to continuing to work with them to explore any and all paths that will help win this for Sacramento.”

No, you’re right, that’s not an answer at all. California’s tough laws allowing referendums to block sports stadium spending may be an obstacle to any team subsidy demands here, but it might be a good idea for Sacramento residents to put one hand on their wallets, just as a precaution.


33 comments on “Sacramento mulling public subsidies for MLS stadium so that rich owner can stay rich

  1. This is one of the reasons the upcoming United States Soccer Federation’s election for president has become such a storm. The feeling is that the outgoing president, Sunil Gulati has too strong a tie to MLS and it’s marketing arm SUM, which is backing this whole expansion scam. The alternative, a promotion and relegation system, as is used in most of the rest of the soccer world, is being promoted by candidate Eric Wynalda and advocated by numerous lower level teams as a financially sane alternative (to say nothing as a means of actually improving the game in the US, a big concern since losing out on the 2018 World Cup for the first time since 1986).
    Since it is such a sensible and thrift idea I absolutely expect it to die a quick death since it doesn’t obscenely financially benefit MLS and SUM.

    • The Wynalda campaign is being funded by NASL ? = Puppet ! All those clubs had 150 years to incorporate promotion & regulation along with growth. Now that MLS is gaining traction lets take them down before we are left on the outside looking in.

      • There is zero chance for relegation in US soccer. It survives in Europe only because there are more teams with real history than there are first league slots. Big teams hate it.

        100 years ago owners weren’t fronting tens of millions of dollars in franchise fees. The income drop is just too steep and is devastating to teams. Look what happened in UEFA where the big teams have made it all but impossible to not make it.

  2. The “leaders” of the city of Sacramento are constantly telling residents about their poverty:

    We will have a $40 – $50 million deficit next year unless you approve another tax.

    No, we can’t fix the roads unless you approve another tax.

    No, we can’t solve the homeless problem unless you approve another tax.

    No, we can’t provide police and fire protection unless you extend a tax that is expiring.

    No, we can’t do anything for the arts unless you approve another tax.

    No, we can’t open the library doors unless you approve another tax.

    However, when any sport comes to the city with an open hand, suddenly there is money available. I hope everyone remembers this when they have their ballot in hand.

  3. It’s MLS’s way of saying, “we know you have strong fan support, and would sell out almost every game, but you’re Sacramento. And you’re not that sexy, so you have to pay a cover charge.”

    • The problem in Sacramento have more to do with ownership issues. First it was a bid devoid of the original USL owner and the latest had two investors pull out at last minute.

      • If they’re concerned about the ownership group, why would public stadium funding make any difference?

        (Also, Nagle really does seem to have plenty of money, though obviously he’d have less of it after paying the expansion fee and stadium costs.)

        • MLS doesn’t care about stadium funding details, as long as an SSS in a decent location is in place. Although as we’ve seen in Columbus zero political and corporate support is a receipt for failure. Yes I agree Nagle APPEARS to have enough money but the MLS lawyers seem to be aware of facts not being made public.

          • BTW, the last billionaire part Beckham had Todd Brothly had plenty of money but MLS lawyers we’re very nervous about the way he drew up the ownership structure. There are red flags that sometimes pop up in ownership agreement that can lead to franchise failure.

          • Indeed, I once was trying to start a business with a partner who claimed to have the money, but when it came down to brass tacks, the money was actually from his wealthy father who was not part of the ownership structure.

            The financiers (and myself frankly) were not a big fan of that plan AT ALL.

  4. I’m pretty sure I insisted this would happen, starting about a year ago.

    MLS would prefer local governments to pay for facilities. That’s the only way it works financially.

    There’s a sucker born every minute, which is why Sacramento has mayoral candidates.

  5. It’s funny that for a long time NBA players would dread being traded to the Kings, then they would come here and see that it is actually quite nice even if the team is losing.

    A lot of logical sense is to have David Beckham join the Sacramento group with his expansion in tow. I think he would find this City to be quite charming.

    • Sacramento is very sexy to MLS. The Republic brand is appealing. Now that Beckham has local Cuban politically connected partners, the Heat owner will find it difficult to continue to block and hate on MLS.

    • Man, that’s not how I remember it at all. I’ve lived here since 1964. It’s a nice, quiet town. That’s about it.

      If you’re 25 and looking for a lot of excitement, you’re probably going to live somewhere else.

  6. I have an idea. Let’s expand the parking meters to include every address in City limits. No more residential permits; everyone gets a meter.

    I think it’d work.

  7. Why are we assuming that MLS is demanding public money for a stadium? They didn’t in Orlando or Atlanta or LA or Miami.

    My guess is that MLS gave soft approval for a Sacramento team, then told the team owner that he could pretend that a team wasn’t approved as a way to squeeze a few subsidies out of the city.

  8. Don’t we all remember how getting an MLS team on the back of a horrendous publicly funded stadium deal helped put Philadelphia on the map?

    I mean, ok, the taxpayers who paid for it didn’t get the team… some finance slug did. But the taxpayers got to pay for it. And some times they get 100 or more people to pay to watch!

    Man, I bet Philadelphia has just never been happier…

    • Only reason that stadium deal happened is because the location allowed the governor to solidify support for the next election. The stadium was just an excuse to throw money in an area where there is zero private investment. BTW the team as bad as they are average at least 16-17k a game to a part of the metro area most people avoid.

  9. Since 1999 the state of Pennsylvania has subsidized 52 sports complex. 32 have been pro sports projects. Of the 32 most have been baseball parks and only one a soccer park. Of the 32 projects only one has been located in a African American area, the soccer stadium. Is Philly happy, probably not. However when compared to the billions on baseball parks, perhaps they’re not too depressed.

    • “MLS: We Burn Through Relatively Less Public Money Than Other Sports, That’s Gotta Be Good For Something, Right?”

  10. In the case of Sacramento, Cincy a big No ! Fact is if you insist on a private business to set up in a undesirable part of town, incentives need to be part of deal. The fact that other businesses haven’t followed says it all.

    • If you’re looking for ways to improve an “undesirable” part of town or benefit the people who live there, giving incentives for a business to move there is about the worst bang for your buck that you can get. And sports facilities are about the worst cases of business incentives, in cost per job created.

  11. Agree on sports. In Chicago Property taxes get funnel to condo developers and Whole foods to give the appearance of gentrification.

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