Field of Schemes
sports stadium news and analysis

February 01, 2008

Philly, St. Louis neighbors promise soccer stadiums

For anyone tempted to think that public stadium funding is on the wane, consider that this week has brought news of two different cities clamoring to build soccer stadiums for teams that don't even exist yet. In Collinsville, Illinois, just across the Mississippi River from St. Louis, the city council on Monday approved using tax increment financing (where any new tax revenues are kicked back to the developers of the project) for an 18,500-seat soccer stadium; this was followed by yesterday's announcement by Pennsylvania Gov. Ed Rendell of $47 million in state funding towards a project that would include a 18,500-seat soccer stadium in Chester, just down the Delaware River from Philadelphia.

And who will play in these stadiums? MLS has said it wants to add a 16th team, but likely not until 2010 - and it can't play in both St. Louis and Philadelphia. (Well, it probably can't, anyway.) This means the two cities will be left in a bidding war to see who can offer the sweetest deal to the league to win the expansion franchise - possibly what league president Mark Abbott was referring to when he told the Philadelphia Inquirer there was still more work to do before a decision can be made. Doesn't anybody ever learn the lesson about building on spec?

—Neil deMause

COMMENTS

How about that PAETEC soccer stadium mess in Rochester, New York? One of the top minor league sports towns in the US and it is all falling apart and guess who paid for it all? The lawsuits are piling up and the soccer team isn't even in the MLS!

Posted by bomp on February 1, 2008 10:40 AM

MLS isn't turning down either city if a stadium gets built. The stadium gets $25m of the $47m in Philly, so your statement " $47 million in state funding for am 18,500-seat soccer stadium" is inaccurate. Overall this will supposedly result in a $400m+ development, so the taxpayers aren't on the hook for the bulk of the cost.

MLS is willing to add another team in 2009. MLS would actually prefer to add a team in 2009 to pair with Seattle for a balanced schedule (otherwise bye games every weekend is an issue). It's just that neither city will have their stadium ready by then. It won't get built overnight. The "more work" is getting final approval in Philly (including the iStar owner finalizing his expansion fee) or St Louis getting a bigger ownership group.

Posted by L Dykstra on February 1, 2008 11:37 AM

So, what, if both cities build stadiums they'll add a 17th team? How likely is that?

And you're leaving out the $30 million in county money and free city land the project is getting. It's always hard to determine how much is subsidizing what in these "everything-but-the-kitchen-sink" development projects, but clearly there's a significant chunk of public money involved here.

Posted by Neil on February 1, 2008 11:47 AM

If both St. Louis and Philly build stadiums, and both ownership groups pay the expansion team fee, then they will both get in. Simple as that. Those are 2 markets that MLS has been dying to get into since 1996.

Posted by Mark from NYC on February 1, 2008 11:52 AM

Significant public contribution yes, but that's no excuse for mislabelling the sources and the destination of the funding. Yes they'll add a 17th. Then Montreal, Vancouver, Miami, or New York will get the 18th team. Whenever the stadium and ownership are ready. There's a huge world market for players and any of these markets managed right are suitable for MLS.

Posted by L Dykstra on February 1, 2008 12:03 PM

Mid-level sports leagues are always a dodgy prospect in economic down times, so forgive me my grain of salt.

Meanwhile, I'll edit the piece to clarify what the $47m is going to. Happy?

Posted by Neil on February 1, 2008 12:25 PM

With which mid-level sports league are you comparing MLS? To make that generalization shouldn't there be some track record of use? I can't figure a valid comparison.

Posted by Dykstra on February 1, 2008 06:59 PM

There aren't any direct analogues for the MLS, but most of the leagues smaller than the Big Four (WNBA, WUSA, AFL, minor-league basketball and hockey) had a rough time of it once the '90s boom ended. That's not a dig at soccer - it's just that if baseball or football goes through a rough patch, they have the resources to weather it, whereas a smaller league starts seeing teams fold.

The MLS is doing a great job right now, but I don't think there's any reason to assume that any league can just continue to expand indefinitely without running out of market.

Posted by Neil on February 1, 2008 10:40 PM

And all of those sports are US minor leagues, women leagues, or attempts to change the setup(indoor football).

MLS owners have the resources. The majority are billionaires. Considering MLS was at 10 teams 4 years ago and aren't in a dozen or so big markets, I don't see the league reaching it's limit anytime soon. It's not like they have to dilute the talent pool (there are dozens of South Americans that'll come over for a decent price) or worry about overlapping markets (not many in Philly are diehards for another team).

It's certainly reasonable to have concerns. But comparing the league to minor leagues, women's leagues, or sports without broad appeal doesn't mean much to me.

Posted by Dykstra on February 1, 2008 11:13 PM

It's not a question of resources, it's a question of how strong the market is: If fans, advertisers, etc., decide that they need to cut back on their sports spending, which is going to go first, baseball or soccer? The answer might be "baseball" someday, but we're not there yet.

Anyway, my point isn't that the MLS doesn't have promise, but that it's always dangerous to bet solely on the upside of anything, especially when if it doesn't pan out, you're going to be left with a big empty bowl anchoring the "revitalization" of your city.

Posted by Neil on February 1, 2008 11:35 PM

But 16 isn't the limit. The St. Louis vs Philly argument is for the -next- expansion team only. Nobody expects to see MLS suddenly decide to play catch-up and get to 30/32 teams in the next few years (over-expansion is part of what killed the NASL), but I fully expect to see MLS expand by two teams every 3-4 years for foreseeable future.


The cities that are going to get the (build us a stadium or we'll kill this puppy) squeeze are going to be the ones further down the line.


In 2000/2001 MLS was in deep trouble, but the January 2002 contraction of Miami and Tampa Bay gave them the breathing room to put the league's business plan on solid footing. In 2002, three men, Phil Anschutz (6), Lamar Hunt (3), and Robert Kraft (1) owned all ten teams. With Seattle coming on board in 2009, there are now 13 seperate ownership groups for the fifteen franchises.


MLS really has seperated itself from the "mid-level" sports. However, it is nowhere near the "majors". In fact, MLS is probably the third most popular soccer league in the United States - behind the top leagues in Mexico and England.

But it is the league's stability, form the post-contraction focus on stadium revenue control, that has led to it showing up here. Many MLS owners have teams in the big four. They know how the game is played, and they're using the same methods, language and techniques to get public subsidies that the big four team sports use. Even NASCAR track owners are getting in on the act (see the recent Lowe's Motor Speedway threats).

In 2002/03 I'd agree with you Neil that MLS was riskier than the big leagues, but I don't see that today. At least compared to NHL and NBA franchises. I'm not seeing empty white elephants in the next decade or so for any stadiums built for MLS. That's not to say that it would be a good or smart investment. I'm just saying the risk of having an unused stadium is no longer more than that of cities building arenas for NBA/NHL teams.

I'm not condoning public funds for rich boys' toys. I'm just saying that MLS has reached a level of parity of risk.

Posted by Andy on February 2, 2008 03:08 PM

Let me ask you guys this, then: Do you think that MLS is so invested in regular expansion that it wouldn't withhold teams to secure better lease terms? Because that's certainly something the Big Four have done - especially football - in recent years. I can totally see where MLS would decide it's more of a priority to get lots of soccer-only stadiums built than to get sweetheart leases (I seem to remember the Bridgeport lease was pretty fair to the city, right?), but I wonder how long that lasts.

Posted by Neil on February 2, 2008 03:28 PM

MLS needs to expand to:

1) Prevent any startups entering good markets
2) Get started on building history. Soccer fans are big on tradition
3) Cover all the big media markets to gain leverage for TV deals
4) Spread risk to boost other markets (single entity)
5) Get started on pro development of youth across the country
6) Create more rivalries

I could go on. My point is that expansion is huge. There's a long way to go before MLS starts running out of good markets (like say MLB and the NFL save LA).

MLS doesn't have that much leverage to withold teams. It's pretty obvious to hardcore fans that anyone with a decent stadium and ownership group can get it. The timing as far as 2009 vs 2011 is a bit of leverage for MLS. But there's almost no chance they'll pass up a team in a good market if everything is in place. Once we get to 20 teams, then maybe they'll worry about having too many teams. I doubt it'll be an issue until 22 at the least.

The major league model has pushed the big 4 to all having around 30 teams minimum. If Salt Lake and Columbus can mantain a team, there are enough markets. Past 22 teams, you're looking at more than 42 games to play everyone else home and away. Ultimately it probably won't be a dealbreaker, but we're pretty far off from that issue anyways.

Posted by Dykstra on February 2, 2008 04:56 PM

Eventually MLS will buy the USL and establish a MLS 2nd Division. Promotion and relegation may or may not be a part of the future. But the upside of MLS certainly outweighs the negatives at this point in time.

Posted by Mark from NYC on February 3, 2008 09:26 AM

"Eventually MLS will buy the USL and establish a MLS 2nd Division. Promotion and relegation may or may not be a part of the future. But the upside of MLS certainly outweighs the negatives at this point in time."

Not gonna happen.

MLS and USL are essentially competing against each other in terms of markets. Already, one market (Seattle) is making the jump from USL to MLS, and rumor has it Montreal and Vancouver are looking at doing the same.

The top teams in USL will jump ship, the USL will become smaller, and MLS will collect expansion fees as opposed to buying the league.

Posted by Mike on February 3, 2008 08:39 PM

A few years ago, FIFA proposed that the first division leagues (MLS, Premier League, Bundesliga, Serie A, Primera Liga, etc.) cap the number of teams in their leagues at 18-20 teams.

What wasn't made clear: if the leagues would expand past that number, what penalties or ramifications would incur.


Also, I pulled the following Statute from FIFA's Web site:

Article 18 Status of Leagues and other groups of clubs

1. Leagues or any other groups affiliated to a Member of FIFA shall be subordinate to and recognised by that Member. The Member's
statutes shall define the scope of authority and the rights and duties of these groups. The statutes and regulations of these groups shall
be approved by the Member.


Member here is the US Soccer Federation. So is US Soccer the one holding the cards whether there will be any expansion beyond 20 teams?

Posted by Roberto on February 5, 2008 05:00 AM

I surprised to see so much "fan-based" optimistic thinking about the MLS here. I personally love soccer and think soccer will grow in popularity. I just don't think glossing over the economic realities and confusing the issues over facilities is helping this discussion.

The issue is about the public subsidy of facilities in Collinsville and Philadelphia. In order to understand whether those facilities will be a good investment for those communities involves thinking about the best public investments for a community. It is on those terms, and those terms alone, that the decision has to be made. To some degree the success of the league and its stability comes into play but its largely moot. The net benefit of building these facilities are just not that large and any investment in basic community services creates a higher return.

Obviously, if a private entity wants to build their own facility more power to them. St. Louis is obviously a soccer rich area--its just that sports owners/developers see the public sphere as a source of revenue rather than a true partner.

Bob Kraft is seeking public subsidy to build a facility in the Boston area. He has already made many political donations to local politicians which he has no other interest in. This is not about what's good for the community, the Revs, or even soccer.

Posted by Floormaster Squeeze on February 5, 2008 10:27 AM

"The net benefit of building these facilities are just not that large"

The people wanting a soccer team disagree. Very few spending items have majority support by themself.

Basically it comes down to what is the tax burden of stadiums? Museums? Etc. It's not ridiculous that a stadium/team is in some ways good for the community and thus worth considering tax breaks. Also, are these projects worthy of government help in getting low interest loans. Neither city are fully funding a stadium here and/or not taking a part of future revenues. That's for the NFL/MLB sections of this blog.

Posted by Dykstra on February 5, 2008 04:49 PM

I'm not sure comparisons between privately owned and operated sports franchises (whose values have generally increased over time, enriching owners) and municipally owned museums (whose "market values" are not really growing) are completely valid.

In the former case, tax breaks are transfers of wealth from the community to an ownership group; in the latter, it's the community to itself.

Even in that latter case, it's still a good idea to debate whether or not the money is best used subsidizing the museum. In the case of a sports franchise (or any private enterprise), not asking that question should be criminal.

Posted by Coker on February 12, 2008 03:41 PM

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