Simple question. But in the wake of yesterday's MLS teleconference, in which Garber was questioned a lot about the subject, perhaps it's worthwhile (or will at least kill some time as we await the end-of-the-season, self-imposed MLS expansion announcement deadline) to gauge how we feel in here about MLS' expansion prospects. A lot of people on BS seem to think that 2005 expansion is a lock. It isn't, of course. And it doesn't require one to be overly cynical in order to come to that conclusion. All one needs to do is read what Garber said yesterday (and a general knowledge of MLS's underwhelming performance in this arena doesn't hurt, either): Yesterday, Garber refered to expansion as the league's "fourth priority." I'm not sure how to count the priorities in Garber's presentation, but those listed ahead of expansion were "the continued connection with our teams and the local soccer community in their markets," “stadium development," (for existing clubs), "player development" and "television." So whether it's fourth or fifth, expansion isn't the league's top priority. In discussing expansion, Garber says, "By the end of our season we will announce what we hope will be two finalists that will secure MLS franchises to launch in 2005 and we're making progress in a handful of those different stadiums." The words "what we hope" mean that nothing's guaranteed. In the section called "GARBER ON THE CITIES IN THE RUNNING FOR EXPANSION" he blurts out the usual suspects as expansion candidates: OKC, Tulsa, MSP, Seattle, Cleveland, Houston, Philly, Toronto and Rochester. Lot's of cities, but few real details and very little to get excited about. Places like MSP, Cleveland and Toronto appear to have extra double secret investors who are interested in building SSSs in their cities ... someday. One wonders how this could possibly happen by 2005, however (I mean, the Burn wouldn't move in their Frisco stadium until 2005 and they're just a couple of votes shy of starting construction). In "GARBER ON SEATTLE'S BID FOR AN EXPANSION TEAM" Don appears to be giving us some hints of what to expect. Then again, maybe he was just rambling, speaking off the cuff when he said "Seattle, like Philly and Houston, is part of a dual strategy, if you will, that we have to expand our League first in markets that have soccer specific stadiums and are potentially in smaller markets. The second is larger markets that are targeting football team owners that own or control a stadium, that can downsize that stadium and integrate their internal resources..." So he actually says that MLS is looking to expand "first in markets that have soccer specific stadiums and are potentially in smaller markets." Wonder if that's what he meant to say. Anyway, of the nine cities mentioned, I can't for the life of me imagine how three of them (MSP, Cleveland, Toronto) could possibly be ready by 2005. Philly, Houston and Seattle constitute the second tier: big, soccer-friendly (if not specific) NFL stadia that "could" host an MLS expansion team, but only if MLS is succesful in "targeting football team owners that own or control" those stadia. In other words, expansion in those cities seems to rely upon the interest in MLS of three men: Lurie (Philly), McNair (Houston) and Allen (Seattle). Seattle fans couldn't have been too excited to hear Garber say "The challenge is that we have yet to secure an investor in that market that's expressed any interest. And until we were able to do that, it's difficult for us to be optimistic about timing for expansion in that city.” Just my reading of the "facts," of course. But the way I see things, of those nine cities: - two cancel each other out; OKC and Tulsa can't both get into MLS. So the total expansion possibilities are really eight. - four are expansion strawmen. MSP, Cleveland, Toronto and Seattle can't work as 2005 expansion sites (maybe MSP could work, if there was a stealth SSS in the serious planning stages and the expansion team played it's first season or two in Blaine -- but that's a stretch). - Rochester expansion hinges on them getting that stadium built and, maybe, on proving that they can afford to buy into MLS. - Houston and Philly could join MLS tomorrow if McNair and Lurie decided they wanted to invest in MLS (i.e., NOT just rent their stadium's out to an MLS tenant). But so far neither have done so. So I'd put an MLS 2005 two team expansion at being a 50-50 proposition at best. One of the OK cities could probably do it. But would MLS expand by only one team? But, in trying to identify that elusive second expansion city, I can't help but wonder: Will Rochester's stadium be ready in time? Will McNair and/or Lurie decide to jump on board at MLS investor/operators? There's not much room for error. Otherwise, in the Fall, Garber will be giving us the old line about expansion only taking place when three prerequisites are met. That, unfortunately, this didn't happen in time for 2005 expansion, but that the league's optimstic about 2006.
I voted yes -- but not because I read it on the internet. It just seems to make sense to me. I agree with writing off Seattle (no investor interest), Toronto (stated not ready to 2006), one of Tulsa or OKC (can't have both). So that drops the number to 6 possibles (counting Tulsa & OKC together as 1 possible). It looks to me like Rochester is going to make it. So I'd say right now, the STRONG front runners are Rochester and one of the OK sites. However, I don't agree with writing off Minneapolis and Cleveland. I don't know anything about Minneapolis, but it has been fairly credibly reported that there is a strong interest in an investor in Cleveland. If you have a strong investor interested, it is my opinion that you could get a stadium done in time to play in 2005. Particularly if it is largely privately financed and with the cost of these soccer stadia running in the $20 million range it is feasable for these mega billionaires to finance their own stadium. If there was a strong secret investor in Minneapolis, the same thing could happen. As for Phily & Houston -- it appears that they're second tier applicants anyway according to Garber. But since they ALREADY have the stadia, it doesn't take much for one or both of those owners to decide to move ahead. So I'd say that Rochester, OKC/Tulsa, Cleveland, Minneapolis, Philadephia and Houston are all possibilities for 2005 teams. In my opinion, Rochester & one of the OK sites are the front runners but a $30 to $35 million dollar check from someone in Cleveland or Minneapolis would instantly vault them to the top. Likewise, a $10 million dollar check from Lurie or McNair would put them at the top (or just behind the bigger check from Cleveland or Minneapolis). It is also possible that Lurie & McNair haven't expressed strong interest just as a bargaining chip. They may be waiting until the end of this season to see what shakes out with the other bids. If there's nothing concrete from any of the other bids, then Lurie and McNair could position themselves and say -- "Look, we'd love to join in 2005 so you can expand, but the up front cash has to be $3 mill or $5 mill or something much less than $10 million."
just filling in more of the picture Just for the record - McNair has a right of first refusal on MLS in Reliant through the end of 2005. (If you want to read the actual legal language, I have the relevent provisions of the relevant legal doc quoted fully in the Houston thread in this forum.) That means that an investor other than McNair could put a team in Reliant, but only after obtaining a waiver on the right of first refusal from McNair or after McNair passes. As a practical matter, the right of first refusal means that McNair has no reason to hurry. Note - I'm not arguing here that McNair or anyone else in Houston necessarily wants to put an MLS team in Reliant - just filling in a bit re the time frame and McNair's legal leverage. Make of it what you will. But I will add that a right of first refusal isn't something that the other side gives you for free - you need to give up something else somewhere else in the deal. So, McNair thought enough of the possibility of MLS in Reliant back in May of 2001 to negotiate with the sports authority for that right of first refusal. Of course, he may have reached a different conclusion since then.
Lots of good analysis, but I think you're over looking the possibility that an expansion team could start play in '05 at a high school football field, or something, and then move into their SSS a year or two later. If MLS found a city with a strong ownership group that had all the paperwork for a new stadium done I think they'd go ahead with the expansion even if it wasn't built by opening day.
I think the big news in all of this is that the price of entry officially dropped. The original price of investment was probably already regarded as gone amongst the monied, so this could be simply confirmation to us. It may very well open the floodgates for potential investors, however. Here's the thing... Oklahoma City and Rochester are all but there, have public funding likely involved, and probably won't sweat $10 million. If MLS chooses this pair now, they may as well announce now- that's there for the taking, and that's why 2005 WILL happen. Obviously, MLS is still trying to draw interest in a larger market in order to sweeten the TV pot. May as well try.
The only problem I have with OKC/Tulsa & Rochester is they don't adequately expand the national footprint. After all, OK is a suburb of Texas - and a small population base, to boot. Upstate New York does have a pretty big population base - I'll bet the combined population of Buffalo to Albany is bigger than other areas under consideration. But face it, Rochester has zero panache. While I'm not at all excited about 3/4 empty NFL stadiums, Seattle & Philly (with Houston #3) are the clear calls.
Reading the tea leaves: Rochester has been pursuing MLS. Oklahoma City has been pursuing MLS. MLS has been pursuing Paul Allen, Jeff Lurie, and Bob McNair. There's more than a subtle difference in terms of will and possibilities. My first instinct is to go with the people who have the will to go after this, as anything else will certainly become a second-class operation. The fee drop might be what Allen's looking for, however. Also to note: I and many others think Portland is a better market, but Oklahoma is slightly more populated than Oregon, and OKC is more centrally located. I can think of 3-4 factors to mitigate the Oklahoma advantage, but this all goes back to the will issue... Portland's off chasing a baseball dream. Sadly, end of subject. All that being said, since the TV monster HAS to be fed, my guess at the strategy works like this: Oklahoma City is introduced with, oh, Philly in '05. Rochester is introduced with Seattle in '07 or '08. Houston is either fallback for a teetering current club, or #15 in a decade. You can interchange cities in the timeline easily, I'm making assumptions slightly randomly and slightly with a west-east balance. Just thinking about this, maybe the scenario is 11 and 12 in '05, then go from 12 to 16 in the '09-'12 timeframe. It's slightly more logical, anyway.
If you think Oklahoma is a suburb of Texas, then you're sadly mistaken. Amazingly, yes, we are different and if given the opportunity we'd like to kick Texas' ass in whatever sports we can. I would love nothing more then to take down the Burn.
Interestingly, while I'm bullish and optomistic on MLS in general, I really don't see expansion for at least a couple of more years. The news recently has been terrific: New HDC Stadium and move to 27k capacity; Agreement to build another SSS in Dallas for the Burn; Season Ticket sales up throughout the League; New TV contract with FSW;Continued improvement in quality of play. However, the bottom line is MLS is still losing money. There is work to be done in shoring up ALL ten clubs. I think the League still needs to focus on the MetroStars getting Harrison to in the works, address the continuing poor everything (except the team and core fans) at San Jose, work for a DC United stadium, improve TV ratings and ensure In Stadium attendance continues to increase. Frankly, I would rather see focus and progress on these fronts over the next two years before I would look to expansion. If the Leagues continues to get stronger and San Jose doesn't start to improve, you have to start wondering when MLS will pull the plug.
i think that expansin is a good thing, but as the post above, i really think that MLS must concentrate too in MLS's actual teams, specially with NJ and DC....
As for the strengthen the base argument... Going from 10 to 12 to 10 was exciting, excruciating, and somewhat alarming at the end, but it's not as bad as going from 10 to 8 or 9. MLS already had Chicago in its sights, so the fallback plan was there when the original expansion was spun up. Now, if nothing else, having Oklahoma City and Rochester 'ready' helps if San Jose does go bottoms up. MLS does have to perform a "smart" expansion, but for the good of the whole, expansion done right will help the base. A growing concern trying to finish Harrison and DC is far more likely to be effective than a static concern doing the same. MLS probably wasn't ready in '98, and the key to expansion now is to expand the pool of ownership... as long as that happens, its all good.
I would love to see some serious investors come in and buy a team or two from AEG. As much as I appreciate all that he's done, I think its too risky to have one man/group running so many of the teams.
Expansion Stadia In terms of stadia being ready for a team remember that there is nearly 18 months between announcement (Nov '03) to kick-off(Apr '05). If I remember correctly Crew Stadium was built in less time than that. So if a expansion candidate has land lined up for it, the stadium would not be a problem.
Re: Expansion Stadia I can't really agree with you on that one. Yeah, it only took 10-11 months to build Crew Stadium. But it took something like a year or two to get to the point where they could break ground. Similarly, it took many months for AEG to settle on the Carson, CA site for the new Galaxy stadium. Then it took months to nail down the details with the university that owns the land on which the stadium (and other facilities) is being built. That was concluded in late July 2001. Then construction was delayed for 6 months while the project fought off a couple of legal challenges. To the best of my knowledge, most expansion "candidates" that need stadiums - MSP, Cleveland, Toronto - are no where near beginning construction. There have been no financing packages discussed, no sites determined, no stadium drawings circulated. Nothing. All of that would need to happen this Summer or Fall in order for construction to begin in the Fall/Spring (none of these cities could break ground in Winter) in order to meet a spring '05 completion date. I just can't see it happening. Rochester could make such a deadline because, knock on wood, they are hoping to start construction this spring (a site's been identified, there is cash in place to start construction, political obstacles have been removed). The OK cities seem to be well-along in the planning stages, too. But I haven't really followed the Tulsa/OKC threads too closely. Bottom line: starting after an MLS Cup announcement is too late, much too late to get this done. If expansion is to happen, we'll need to start hearing some juicy rumors this summer (like that at least one of Lurie, Allen or McNair is showing interest in MLS; one of the OK cities is completing a financing package and gearing up to break ground; or the Rochester stadium has been started). If we're still in a holding pattern in October, it'll be too late to expand in 2005.
I think they will expand by 2 in 2005. They have said it so much at this point that it must be a go. I think Garber has kind of hinted at it and reading Rob Stone's chat the strategy seems to be one big market(Philly, Houston, Seattle) and one small(OK or Rochester). My gut instinct tells me the big will be Philly and the small will be OKC. I really think OKC has it because they have a stadium and ownership in place. I think Philly because it is the biggest market without an mls team. I could see Houston in their place but I doubt MLS would want to put 2 new teams in the same geographic area.
There was an article about this in Soccer America... ...Ridge Mahoney talked to Garber and he explained the two business plans for teams and said MLS plans on being a 16-18 team league by 2010, then leveling off for awhile. It was short, but gave some good information. Garber was more open than usual about the subject.
Even 16 teams by 2010 seems to be a stretch. The only thing I can imagine is that this season is huge due to last years WC. This would obviously get sponsor money to increase. maybe if you added 2 teams in 2005, 2007, and 2009 or something like that... but still seems overeager.
They need to get teams in the big cities: Philly, Atlanta, Detroit, Houston, Minneapolis, Phoenix, etc. I'm sure I missed a few.
Wrong, they need to get SOME teams into big SOCCER TV markets. Key word there is soccer. Being in a big city does us no good unless it's a big TV market and being a big TV market does us no good unless it's got a big SOCCER watching market. But, that doesn't mean that ALL of the teams need to be in these markets. It's been proven that a big TV market does not necessarily mean the team will be successful. Where we have committed ownership, going into smaller market also makes sense because if they are committed to the product, they'll do a good job promoting it. If we go into one of these highly desirable Soccer TV markets but with less than 100% committed investors, it could have the opposite effect of TURNING OFF a large segment of the almighty TV audience. Isn't this part of what happened with Miami?
If the new franchise fee is now being set at $10 million, you'd think that it would have to be awfully tempting for someone like Lurie in Philly or McNair in Houston. $10 million and a share of MLS losses (which aren't too large anymore and, anyway, Anschutz is stuck with most of that bill) gets you a team with approx. 20 more home dates in your stadium. Plus, cozying up to MLS will make it that much easier to land things like USMNT WC quals when they start next year not to mention the no-brainer freebies like the MLS All-Star Game and MLS Cup Final. As I recall, MLS changed its rules a year ago to allow clubs to retain a higher percentage of their internal revenue. So even having to pay a percentage of total MLS losses doesn't necessarily mean that an owner with but one club can't make a profit. One could imagine that allowing Lurie, McNair and Allen (who doesn't seem at all interested in MLS) to get a candid peak at the Krafts books in Foxboro should help convince them that buying into MLS can work as a business venture (unless Kraft is losing money hand over fist with the Revs, that is). I'd feel a whole lot more confident about expansion if we were to hear something positive coming from Lurie and/or McNair. Finally, I wonder just how much of an obstacle to expansion is the Metros continued inability to get their own stadium built. That one club is the biggest reason why MLS is still a money losing venture, and their hellish lease at Giants Stadium seems to be the main reason why the club has that reputation. Until the Metros get that Harrison stadium built, their losses will hold this league back financially. And that will be a disincentive for the Luries, Allens and McNairs of the world to take the MLS plunge.
expectations management We need to have a more reasonable set of expectations than many of us would like. It’s still a little early for NFL owners who have just opened or will soon open new facilities (and perhaps also an NFL expansion team) to have delved very far into serious due diligence for a major project like acquiring and operating an MLS expansion team. It’s unreasonable to think that these NFL owners’ organizations have been conducting any meaningful due diligence on MLS in their spare time. But it’s probably more reasonable to think that they could be starting those processes now. We know that Garber and others have met recently with various potential ownership groups. And as mentioned above, the Krafts and Hunts can present actuals (not projected financials, but actuals) for Gillette and Arrowhead that should prove very helpful for other NFL owners considering MLS. While those actuals would probably be tremendously valuable, the NFL owners’ organizations would still need time and effort to review them and determine how to apply that information in the context of their own stadium agreements. The point is that these discussions and analyses take time - even with the advantage of helpful NFL/MLS actuals - and we need to be patient. (Btw, the MLS LLC agreement could be amended without much fuss to permit a different profit/loss allocation scheme. LLC members don't have to share all losses from all markets at all times in the same ways. They can negotiate different arrangements within the LLC. The LLC form allows you to be creative about these things.) It’s also worth keeping in mind that most sensible business people don’t go around making early public proclamations of their possible investment interests. They don’t make public statements until the deal is well under way and the appropriate time and effort has been spent on at least some key pieces of prelim due diligence (like say, the actuals from Gillette and/or Arrowhead). The sort of non-committal comments we’ve seen in Houston, for example, from people like Jamey Rootes and Steve Patterson is exactly what we should expect at this point. In any event, it’s unreasonable to think that NFL owners or their reps are going to tell reporters at event announcements, hold press conferences, or issue press releases about whether they’re interested in MLS (or any potential deal that’s not far along). Making us feel better about expansion just isn’t important. I'm not arguing that we should assume that these NFL owners secretly yearn for MLS but don't want to let anyone know about it yet. Rather, I'm just suggesting that we need to moderate our expectations about what we can expect to see in public at this stage.