Looks like they're drinking Monkey Knife Fight? Not my favorite local beer, but decent enough, and it's an appropriate name for the situation. Knave, on the other hand, might prefer to drink Panic! I'm just hoping our bid has gotten a much-needed Blood Transfusion. Sacramento really should be a Heavy Cruiser in the expansion fight.
Say what you will about Steinberg, but I'm glad he jumped in on this. I'm afraid to think how long this might have dragged out.
Still don't trust that smarmy MF'er. KJ would have had it solved before the shit hit the fan. Politics is much like consulting - if you can't provide a solution, then there's much to be made from prolonging the problem.
Sacramento News & Review weighs in: https://www.newsreview.com/sacramento/threat-to-the-republic/content?oid=23644536 Not a lot to be learned here except multiple, unnamed sources putting WS's initial asking price at $50M. Nagle expected less than $10M.
That's a pretty big gap to bridge. I wonder what the final number was and what perks and such if any.
Any idea how either of those amounts compare to other D2 clubs? Are there any data on what current teams might be worth?
I saw $21M published somewhere recently. I suspect there is a lot of variance club-to-club and this number seems to be several times more than pre-Republic days. Have to keep in mind that Smith and Wagoner sank a lot of money into the operation, including a full academy staffed with professional coaches. If a substantial part of that cash was theirs and if they're not going to be part of the long-term ownership group, they may expect a bigger than average payout.
If I remember reports correctly, and if they were accurate reports in the first place, FTL Strikers had a buyer in place for pretty close to nothing. NASL owners rejected the bid because they felt it would devalue NASL franchises, which were something like $5m.
I was thinking about this today. I wonder if this could be resolved (or is being resolved) by giving Smith a larger percentage of the eventual MLS team. Smith wants to recoup the value of the brand he started. Well, there are ways to do that other than cash up front.
Considering most of the gains from investing in Sports franchises appears to be in the growth of the franchise value rather than in the operating profit, it wouldn't surprise me if both parties prefer to have more equity than cash, which could be part of the roadblock here.
Yes, but that value only appears when you sell those assets. Owning x% of a future MLS team won't help Warren Smith pay his bills over the next few years. Who knows how old the guy is but I'd imagine he will be enjoying retirement soon. Not that he couldn't make more money down the road, just saying that money isn't "real" until you sell it to someone else.
Fair point - I suppose any team worth selling should probably be worth more than the current expansion fee.
So what if he's old, he can always sell his share at some point? If he goes from 10% of $150 million (the expansion fee for teams 25-26 in 2020) to 10% of $200 million (the expansion fee for teams 26-27 in 2021-22), how much would he get for that 10% for in 2025? Neagle probably doesn't want the USL people fattening their wallets as the value of his team grows over the years, he'll want to keep their ownership percentage as low as possible.
While most people don't get into major league ownership to lose money, they also generally don't look at it as a financial investment. They're ego projects. Sporting Kansas City will never break even on Childrens Mercy Park. The owners chose to build the most awesomest yard in the league. Because they wanted the shiniest toy. Not because it made financial sense.
For billionaires like Arthur Blank, not for guys who own USL teams like Warren Smith. Didn't they get a bunch of public money for the stadium? Didn't their owners brag about how cheap they could be in MLS? If they were really unconcerned with losing money on an ego project, why are their recent DPs guys like Graham Zusi (2 goals 4-5 assists per year), Matt Besler (often benched), and Roger Espinoza?
This article is behind a paywall. Anyone have access? http://www.bizjournals.com/sacramento/news/2017/03/03/can-sacramento-republic-fc-make-the-save.html
Here are excerpts of the full article that was posted over on Reddit: The list of reasons for the recent hesitancy include strides other cities have made in putting together their own expansion bids and mixed messages from the league about what it wants. And then there’s a factor closer to home: an unexpected dispute among the local soccer investors. Though talks are ongoing, there isn’t a final deal yet... ...while the fracture between Nagle and Smith may not doom Sacramento’s chances, it doesn’t help either. “No sports league wants controversy,” said David Carter, a professor of sports business with University of Southern California’s Marshall School of Business.... Although it’s been thought that valuation of the team’s brand was at least part of the reason for the dispute, those familiar with the situation said there were other issues as well. More than $1 billion at stake ...an economic development nonprofit...commissioned a report in fall 2015 projecting that an MLS team would bring $1.24 billion in economic benefit to the region over 30 years. Those benefits would be derived largely from an MLS team needing a stadium with a capacity of about 22,000... ...Having a stadium plan ready to go may be Sacramento’s trump card in the MLS selection process. Paul Kennedy, editor of newsletter Soccer America, said locals have done more on that front than any other contender. “...There’s no reason I’ve heard to suggest they’re still not a leading candidate.” In fact, some observers suggest that Sacramento may be investing too much in its MLS bid to achieve an adequate return. John Vrooman, a professor of sports economics at Vanderbilt University, said he’s skeptical of the $150 million expansion fee MLS is charging cities in this round of expansion. That, combined with stadium costs, makes it a bad financial bet, he said in an email. “The external net economic impact of MLS soccer-specific stadiums on the local economy is zero-sum at best because the economic architecture of most venues is designed to capture all economic gains within the stadium,” he said. Vrooman said he believes Sacramento and St. Louis are the top contenders in the current expansion discussion. But Sacramento’s stadium financing model does not require a direct public subsidy... St. Louis has to get a local referendum passed to finance its stadium. Cincinnati...questions, however, about its stadium plan, with no guarantee that its USL team’s current home, a stadium at the University of Cincinnati, would meet MLS’s standards. “My read of the situation is that the other cities have so much work to do,” Kennedy said. But the situation can change, he said. If the off-field intrigue sours fans on attending... And if MLS picks two other cities later this year as the next expansion teams, relegating Sacramento to hoping to be one of the next two at an undefined future date, that gives competing cities more time to get their stadium plans...in order and catch up with Sacramento. Sacramento’s moment? Victor Matheson, an economics professor at the College of the Holy Cross in Worcester, Massachusetts, said MLS’s recent expansion choices present another potential concern for Sacramento. In earlier rounds of expansion, the league opted for cities where there were few top-level pro sports teams, and particularly no Major League Baseball teams, as baseball season overlaps with soccer season. That’s why cities like Columbus, Ohio; Portland, Oregon; and Salt Lake City got teams, Matheson said. “In that mix, Sacramento fits perfectly,” Matheson said, with only the NBA’s Sacramento Kings as top-level competition. But in more recent expansion rounds, MLS picked cities such as Minneapolis and Atlanta, and has given repeated chances to a bid from Miami despite numerous delays there in developing a definitive stadium plan... suggesting MLS brass feel their product can compete in a bigger market and be successful... Carter, with USC, said MLS will look at the size of market, media access and potential corporate partners. “It always comes back to money,” he said. “You just have to make sure you can put the venue together, and it’s the right one for your market, and that you can build a brand.”
Seems like a sheer speculation story. No one quoted is close to the situation. However, there are a lot of good bids out there from strong cities, and the LAFC/Atlanta/Minn/Miami expansion choices troubling me. Also, that our asset that separates our bid from the others - a shovel ready stadium plan - seems to be less of an advantage with the league's January criteria. I'm still cautiously optimistic, but preparing for the worst. We need to be 25 or 26, though.
If our trump card is that Sacramento has "prepared" more for MLS than other bid cities, then anything other than 25 or 26 will sink it. Moving Sacramento to consideration for 27 or 28 gives a lot of time for other cities' bids to catch up, negating the trump card.
...while at the same time making those other cities have to up their games in the bid process. That's absolutely what happened with MUFC, and (I suspect) was happening with Miami. "There's always Sacramento" is a very powerful card for MLS to play.