The Mecklenburg County commission voted 5-3 on Wednesday to hand over the site of 83-year-old Memorial Stadium to the city of Charlotte for a new soccer stadium for a potential MLS team — but no money for building it, which is what the ownership group had been hoping for. Commissioners said they wanted to see a soccer stadium built, but, you know, by the city, not them:
“They manage stadiums and they have a division in the city that deals with pro sports teams,” [Commissioner Jim] Puckett said. “They have a dedicated tax revenue stream that’s for entertainment and can be used for pro sports. They have the expertise and funding stream to deal with that.”
The team’s original plan was for a $175 million stadium where $101.25 million of the costs would be paid off by the county, with the team repaying the public via $4.25 million a year in rent payments. (Note to readers who can do math: No, $4.25 million a year is not enough to repay $101.25 million in bonds unless you get a 1.5% interest rate, which I know they’re low but get serious.) Now they’ll instead have to try to hit up the city of Charlotte alone, which has already indicated that its maximum contribution is $30 million.
That would leave the team to shoulder $145 million of the cost, plus MLS’s nutso $150 million expansion fee, which is a hefty chunk of change. On the other hand, the team wouldn’t have to make those rent payments, so maybe it could just go to a bank and borrow the cash, and make mortgage payments instead? Or maybe the rich NASCAR track heir who wants to launch the MLS team would rather have somebody else on the hook for loan payments if his team, or MLS as a whole, went belly-up at some point as a result of its pyramid-scam spree of handing out expansion franchises like candy to anyone who wants to pay $150 million for candy? Yeah, probably that.
If you’re keeping score, the MLS expansion candidates are now:
- Charlotte: Can build a stadium, but needs to do it mostly on its own dime.
- Cincinnati: Has perfectly good old stadium that draws record-breaking crowds, wants $100 million for new stadium anyway, may or may not get it.
- Detroit: Rube Goldberg scheme involving $300 million in public funding and tearing down a half-built jail while building a stadium there plus a new jail elsewhere.
- Indianapolis: Has perfectly good stadium, wants public money for new stadium anyway, state legislature keeps laughing at them.
- Nashville: City considering selling $150 million in bonds to fund a stadium, to be repaid via we’ll get back to you on that.
- Phoenix: Ownership group swears up and down it can build a “climate-controlled” stadium without public subsidies, details TBD.
- Raleigh/Durham: Rube Goldberg scheme involving $91 million in state land and tearing down the state office buildings on it and building new state office buildings and somebody charging somebody rent or something.
- Sacramento: They have a site and a bunch of construction equipment ready to go, and say they can come up with $245 million for stadium construction out of their own pockets.
- San Antonio: Spurs owners cut a deal in 2015 to have the city and county buy them a minor-league soccer stadium, then if they get an MLS franchise, hold a countywide vote on providing money for upgrading it to big-league standards.
- San Diego: Rube Goldberg scheme involving getting $240 million worth of downtown land and infrastructure for $10,000 and then building lots of stuff on it including a soccer stadium, with a public referendum on this slated for November.
- St. Louis: Had its stadium-subsidy referendum already. It didn’t go well for the team owners.
- Tampa/St. Petersburg: Tampa Bay Rowdies owner Bill Edwards offering to pay $80 million to expand Al Lang Stadium, lease terms with city of St. Pete still to be determined.
That’s a whole mishmash of stuff indeed, and I don’t envy the job of the MLS officials tasked with having to pick two winners this fall (and two more next fall, because they can’t cash those $150 million expansion-fee checks fast enough). You have to wonder if commissioner Don Garber doesn’t think to himself sometimes, maybe it’d be easier just to stick the expansion franchises on eBay and take the highest bids. It would mean giving up on the pretense that they’re actually selecting the best soccer cities or something, but get real, nobody believes that anyway.
My God, you’ve outdone yourself with the ill-informed anti-MLS rhetoric this time, Neil.
Is an expansion fee (or any fee) crazy if people will pay it? Expansion fees are not a pyramid scheme, they are a one-time offset against the dilution of collective revenues in a single-entity system. (An additional team reduces everyone else’s slices of the pie in perpetuity, this mitigates that.) They also tend to keep under- financed people out, something that was a bit of a problem in, you know, every soccer league before this one.
MLS has added 13 teams in the last 13 years. Yes, that’s a breakneck pace. And if they are not selecting the “best cities” (whatever THAT means), please point out to me the expansion teams that are not doing well. Philadelphia? Look at their choices of markets since 2007 and tell me where they have gone wrong.
You have a blind spot on this subject, Neil. It’s your site, you can do what you want. But you obscure basic facts with uninformed rhetoric from the early 2000s. Old people just cannot get their heads around the fact that soccer’s not going away like they all thought it would.
I actually just spent a good bit of time the last week or two reaearching this, KT, and I have a throng of economists who’d like a word with you.
(And as I’ve noted before, I actually like MLS, though I seldom watch it because there’s so much international soccer on. Sinking $150m into a franchise right now is an hugely risky gamble, though.)
Siding with Neil on this one. If it were about the best soccer markets, St Louis and San Diego would be at the front of the line, having vacuums where the NFL left. Both are long shots now, perhaps because voters and govt are more cynical of team loyalty.
While MLS has made great strides, their profitability has always been a question mark, with teams failing to get jersey sponsors, attracting small tv contracts (and viewers) and growing payroll conservatively. The franchise fee is ridiculous and too tempting, accelerating expansion.
“While MLS has made great strides, their profitability has always been a question mark, with teams failing to get jersey sponsors, attracting small tv contracts (and viewers) and growing payroll conservatively. The franchise fee is ridiculous and too tempting, accelerating expansion.”
Yeah, that. I don’t exactly blame the existing MLS owners for taking the money and running, but as viable business plans go, I have several bridges to sell you.
A week ago MLS turned down a 4 billion TV rights deal. On Wednesday Adidas gave MLS a new sponsor deal worth almost as much as Nike gives the NBA !!! I believe every team in league has a jersey deal. What kind of TV ratings did football & basketball their first 40 years when there was no competition and they were placed on a pedestal by the Xenophobic American sports media of the last century.
Well, they didn’t really “turn down a $4B TV rights deal.” They turned down an offer of $4B for TV rights, once those become available (the current deal still has a few years yet to run), if the league agreed to promotion and relegation, made by a company run by a USL team owner.
The TV ratings for MLS are pretty abysmal. The NBA was its first 15 years or so, too (until Russell and Wilt showed up), but most of that time it was a loss leader to fill dates for the owners of hockey arenas.
Even so it just shows that the next deal will be much higher. Also without doing the research I will argue that the NBA even while promoted as the winter sport by the media and no real competition still didn’t accomplish jack until the Bird & Magic. Took both sports 50 years while being put on a pedestal. They never had the organized effort to keep them from success the MLS has had to endure.
Touching on your point about Bird and Magic… How do you see MLS overcoming their poor depth of talent as a seemingly never-ending string of expansion teams comes in? Because that is a huge hurdle with no apparent solution. Their entire profitability currently rests on them paying peanuts (their entire league pays less in salary right now than the average English Premier League team) so they won’t be breaking the bank to bring big names from overseas. The play is pretty poor right now. Adding 10+ teams is going to present huge problems on that front.
Back to the NBA comparison you made–those Lakers and Celtics teams were stacked with talent in a league filled with other stars and strong teams. The NBA, NFL, NHL… all those draw the best players in the world. If there was the equivalent of a Bird or Magic in MLS right now it’d be just one great player in a sea of guys who’d be lucky to be on second or third tier teams abroad.
Hit me with two or three questions at a time and I will school you. Level of play has gone up with every expansion round. Since Tam money introduced depth of rosters has increased and Tam will be increased again this winter. Team salary’s are actually much higher than reported due to Tam and Beckham rule. Level of play is actually pretty good and improving. But if you want to compare to super clubs that field teams better then most World Cup champions then no. Its easy to have the best players in world when no one in the world plays NFL or hockey ! Only 2 million people play football & hockey. There are at least 265 million people playing soccer in the world. Based on NHL & NFL math only 1.5 % of current players in NHL & NFL would remain in the league if those sports had the same participation rates as soccer. You just got schooled !
BTW Joe if you want to compare oranges to oranges. You ask your rambling question in 30 years when MLS has the 50 years it took the NBA to become successful.
“Old people”
Seriously?
We used to wear onions on our belts, which was the style at the time.
And nickels had pictures of bees on them. Give me 5 bees for a quarter you’d say
The San Diego bid wants to pay market. Its SDSU that wants at 10k and blocked the deal. You can pay 500 million for a Vegas franchise in another sport with no growth. You can pay 1.5 billion for a team in Miami where the average age of TV viewer is 57 . You can pay 2 billion for a franchise in a sport that kills and injures kids for life. Or you can pay 150 million for a top sporting product ever invented !
If this city council offered 30 million , they must have thought the request was made by the NBA.
Is there any specific reason some of the cities in this list are bolded but others aren’t? Just wondering if there is some kind of common thread linking them that I am missing.
HTML code meltdown. Will fix now.
The MLS pyramid scheme is designed by their major sponsors Herbalife and Advocare. Red Bull, Chivas, now Man City have all lost big time investing in MLS.
Chivas bought at 5million and sold at 70 million. MLS turned around and sold it at 150. Any chance you have numbers to back up your ManCity or Redbullchit.
Everyone can read about the MLS ponzi scheme at Deadspin. MLS.com is pushing the article.
America’s real estate portal?
Lol..my bad
How is Sacramento part of your “mishmash”? They are on track with a privately financed stadium and have everything else in place.
As always, this site privileges dogma and lazy journalism over inconvenient facts.
Thank you for your interest and support!
KT- I personally find Neils banter and comments accurate and informed. On the few occasions there are inaccuracies he is quick to provide corrections.
On the Detroit front….
I find it interesting that a mortgage company owner (Quicken) is asking to build the city a $300m jail (gaol). The jail will be built on an alternative site so that the mortgage company owner will be awarded a first-divison soccer team. The soccer team will occupy a currently half built jail site. The new jail will be cheaper than finishing construction on the partially completed facility and will be “better?” Also, the mortgage company owner will provide better facilities than existing companies such as specialized jail construction organizations for less money.
Make money in real estate with no money down. On a side note the mortgage company is rife with accusations of predatory lending and sub-prime rates.
I’m not sure if these are the same government employees that were involved in the Flint, MI water crisis or not. Maybe I’m missing something, but I think I could build a better jail for $299M. Or $298M. Give me $300m and I’ll build the best jail the world has ever seen. It will be a floating jail that will look look lot like a yacht. I’ll park it off St. Tropez.
This year Target has dropped NASCAR sponsorship to devote sports dollars to soccer. Same will happen with TV deals. Money will be taken away from sports that can only deliver Viagra buyers to MLS that can deliver families & millennials. Its really just marketing 101.
Wasn’t too long back NASCAR was screaming from the rooftops about how they were the fastest growing sport. Much like how some are shouting the same about MLS now. Hmm…
NASCAR never had participation numbers and NASCAR never proved itself as the greatest and most profitable sport ever invented on this planet !
I found this from Triplet1 a lawyer with an economic investigative back ground from Big Soccer. This should be required reading for guys like Neil and Szmanski. He is clear to the point with many of his facts backed up with evidence to show Szmanski is likely wrong with his opinions on MLS. I have never read anything remotely close to proving him wrong until Triplet1 decided to spend weeks with his work. This thing should be published elsewhere beside Bigsoccer.com http://www.bigsoccer.com/threads/the-szymanski-rebuttal.2019698/
Thanks, that’s a very useful analysis. It still seems like the debate is over whether MLS is losing a small amount of money or making a small amount — either way, $150 million seems like an awful lot of money to pay for an ever-shrinking share of a not-all-that-big-to-begin-with pie. But the clearer a picture we can draw of the pie, considering that MLS won’t let it out of the pie box so we can see it, the better.
Is there any chance that MLS will just expand itself to the point where it will become a closed, two-division league with it’s own promotion and relegation? That would certainly allow the current league to keep generating expansion fees to build to a point where fans get what they want in regard to pro/rel (all while leaving NASL/USL teams and owners out of the party
Pro-Rel is a dead letter as far as MLS is concerned.
No potential franchise owner is going to take a chance of plunking down $150MM on a team that, if it plays poorly enough, will be taking on Bethlehem Steel or OC Blues or Harrisburg City Islanders on a weekly basis instead of Sounders, Timbers, FC Dallas, etc.
If you wanted to kill the franchise fee price – and thus trash overall franchise values – Pro-Rel is a dandy way to do it.
Agreed entirely on pro/rel and the franchise fee price. But I also wonder how much longer people will continue to cough up $150m for an ever-diminishing slice of a thin-to-begin-with pie.
MLS is the fastest growing American sports league in terms of gate attendance, where the bulk of MLS’s profit comes from. Soccer is also the fastest growing sport in America and one of the few whose overall following (attendance + viewership) is actually increasing.
I just laugh at the negative bias against the MLS these days. I don’t bother with arguing with them. Nothing I say will change their minds. The market for MLS expansion is there, whether people want to accept it or not.
F*** soccer.
Real objective Neil
If you’re referring to my deletion of your comment that contained a personal attack on another commenter: Yep, that actually was objective. According to the rules of this site, it’s okay to say “F*** soccer,” but not to say “F*** you.” (Which wasn’t what you said, but what you said transgressed the same rule.)
If you want to discuss this further, Steven, I’m happy to do so via email. I’m only posting this here 1) because you brought it up and 2) as a reminder to all concerned that it’s okay to hate on what people say, but not on the people who are saying it. It may seem like an arbitrary rule, but it’s worked for almost 20 years to keep discussion here relatively civil compared to the rest of the interwebs, and I’m sticking with it.
Interesting article.I am a long-time reader, so thanks for this for a wonderful site.
Soccer and MLS fan enjoying a huge resurgence of my Chicago Fire this year. I think a lot of us soccer heads here in the USofA really WANT MLS to succeed, especially those of us who are old enough to remember a time when there simply was no top-flight soccer league in the US.
That shouldn’t color our proverbial glasses, though, when viewing what MLS is doing. I also have some concerns about the recent, obvious pivot from “slow growth” to “expand everywhere!” One can certainly see why a casual observer could get the impression that it’s some kind of pyramid scheme.***
That said, recently MLS has been slightly better than a couple of other leagues about having owners pony up to cover the expenses of their own damned stadiums – that’s a good thing. (proposed Miami, proposed Tampa/St. Pete, Portland upgrade, Orlando, – somewhat better situation in Twin Cities, ?LAFC?). Yes they have also been guilty of trying to bilk localities just like everyone else, through much of the early 2000’s – my own Chicago Fire, who have practically bankrupted the little town of Bridgeview, Illinois – included. Yes that has complicated my fandom somewhat.
Regardless, MLS has been instrumental in helping the world’s game make ENORMOUS strides in this country. No MLS is not going to be the EPL any time soon – please recall that if Don Garber doesn’t going around saying otherwise, he should probably be fired. But for those of us interested in actually attending a match, rather than just watching one on TV, MLS has done some pretty good things.
(F*** Deadspin, however, with regards to the notion that any of this “news.” Szymanski’s critique came out two years ago. Several of their writers clearly hate MLS, and possibly believe that an EPL or Spanish-style league superleague, with international blockbusters like Barcelona or Man United, can be dreamed up overnight in the USA & Canada, if we just institute promotion/relegation . . . which is insane.)