Way back in 2017, University of Michigan economist and Soccernomics co-author Stefan Szymanski said to me of MLS’s ever-increasing expansion fees, “Why would you buy something for $150 million which is basically giving you a share of losing $100 million a year?” Since then, the fee per team has gone up to $200 million, which does not make the math any better, but still lots of rich people have been lining up to pay the price without balking at the cost.
Until now, that is:
Sacramento’s roller coaster journey to join Major League Soccer has taken a dramatic downward arc, with Mayor Darrell Steinberg announcing Friday that billionaire and lead investor Ron Burkle is no longer part of the bid…
Major League Soccer issued a statement after Steinberg’s confirming Burkle’s withdrawal, stating Burkle said issues with Covid-19 and the project prompted him to withdraw. Several media reports suggested costs involved with expansion, including the price tag for the stadium of $252 million and an expansion fee to MLS of $200 million, were factors in Burkle’s decision.
That always did sound like a terrible deal for Burkle, and apparently uncertainty about how he was going to earn back his money in a post-Covid world was enough to make him bail on the expansion plan, even if the team wasn’t set to take the pitch until 2022, by which time we should actually be back to full stadiums. (Or at least, as full as they get in MLS.) And apparently Burkle is free to do that despite Sacramento Republic F.C. having been formally awarded an expansion slot in November 2019, because Burkle never actually signed a final expansion agreement, whoopsie.
Anyway, with Burkle back to just co-owning the Pittsburgh Penguins and whatever else billionaire investors own, MLS is now going to have to figure out whether to find another moneybags eager to plunk down close to half a billion dollars for a Sacramento team and stadium, or to find a replacement expansion franchise. At last count, there were roughly 10,000 owners in other cities looking to get in on the totally-not-a-Ponzi-scheme, so MLS presumably has options, though you have to wonder if there’s something that spooked Burkle — maybe those 2022 league TV contract renewals weren’t going to be as lucrative as had been hoped? — that could give other owners pause as well.
For now, it’s officially still full speed ahead in Sacramento, but clearly this situation bears watching: Among other things, will the collapse of Burkle’s ownership group lead to fewer big-money stadiums being planned, or just to more demands that the money come from someone other than the new owners saddled with expansion fee expenses? (Three guesses.) If nothing else, it’s likely that whatever strange things the clip-art entourage were going to get up to at a new Sacramento stadium will have to put off for a while.