MLS Update: Columbus Crew Saved From Relocation Austin FC Moves Forward As Expansion Team

This is an update to an earlier piece on the potential relocation of the Columbus Crew franchise in Major League Soccer (MLS) to Austin, Texas. The whole situation has taken, over the past week, some dramatic twists and turns.

My earlier piece on this topic focused on the politics and business anglings of Crew “principle operator” Anthony Precourt and his company Precourt Sports Ventures (PSV). The article centered upon the process of getting a soccer stadium approved for the McKalla Place vacant plots of land in North Austin.

That measure passed the City Council and the plan was for Precourt to relocate the Crew to Austin and rename the club Austin FC to begin play in 2019. The plan calls for PSV to pay for the construction of the stadium which the city of Austin will take ownership of and then lease back the stadium to the team for games.

However, the Crew relocation is being held up by court litigation in Ohio which has certain laws on the books, one notably known as the “Modell Rule”. This was named for Art Modell, the owner who notoriously and ingloriously moved the Cleveland Browns to Baltimore, where they became the Ravens. It was put in place to have a mechanism to protect professional sports franchises in Ohio from future similar circumstances.

The campaign started by the fans and other interested parties in Columbus was called #SaveTheCrew and it gained traction both in the courts and in the consciousness of the people of Ohio. Then, it gained national recognition because this attempted relocation by PSV of the Crew, which are an original MLS franchise, would have gone down as the most significant violation of fan loyalty in the history of American soccer. It could even be seen as one of the worst moves by an owner in American sports history.

The City of Columbus won the bid for an MLS franchise in the 1990s after being up against Cleveland for the rights to be the league entrant in the region. The tipping point in favor of Columbus at that time was the commitment by the city to build the first soccer specific stadium in the United States at that time.

Unfortunately, Crew Stadium as it was known then (MAPFRE Stadium as it has a corporate sponsored name now) was built on the outskirts of the city limits and has nothing else nearby. It lacks certain amenities for fans and does not have really any luxury boxes or other premium seating which could be used to increase revenue as well as provide a better fan experience.

The #SaveTheCrew movement attracted the attention of Jimmy Haslam, the owner of the Cleveland Browns of the NFL. Haslam assembled a group of investors from his network and they are deep in negotiations to keep the Crew in Columbus. They are actively working with a group called the Columbus Partnership on a new stadium proposal as part of retaining the team in the city.

The new stadium would most likely be located downtown with plenty of accessible public transit options and be close to other points of interest for fans and visitors attending a game. The future use for their current stadium is unknown, but it should be noted that many fans do not like the location of the current stadium.

The news that the Crew are most likely staying put in Ohio led to the inevitable question: what happens to the Austin FC proposal and all the work that people from the league office, Austin officials, and PSV put forth to get a stadium plan for McKalla Place done?
It appears likely that MLS will use an “investor transition” option in this situation. If you recall, in my earlier articles on this topic, I explained that the MLS franchises are not owned by individual men or women or ownership groups like the other sports leagues. MLS is structured as a single-entity meaning that the MLS owns the teams and they have interested investors assigned to each one.

That was the loophole that MLS tried to take with the Ohio lawsuit, arguing that Precourt did not “own” the Crew outright, so they could not sue him. The league is now looking to make the Haslam group the investor for the Columbus Crew, and then they will transition Precourt / PSV to be the investor of a new team in Austin.

That essentially means that Austin FC will still be joining the league in 2019 as an expansion franchise, and that the plans to build a stadium in McKalla Place will move forward as scheduled.

The MLS got what it wanted in the end, it kept an original franchise with a dedicated and established fan base in Columbus and will get a new downtown stadium for the Crew to increase revenue in that market. In addition, they will get access to Austin, the largest U.S. metro area without a major pro sports team, and they will gain that market with no competition for dollars.

In a pure business sense, it was all orchestrated well, but it has an effect on people in both cities as well as in the expansion process. This situation has both winners and losers, like any other situation of the type.

The winners here are MLS, Columbus, and Austin as well as the fans in those cities. The losers are those who are not in favor of building a stadium in that part of Austin, and the other entrants in the expansion process and their fans. The entry of Austin as an expansion team rather than a relocated team, means that only one spot remains in the expansion phase that the league identified to get to 28 teams.

The cities of Phoenix, Sacramento, Charlotte, Raleigh, San Antonio, Indianapolis, Detroit, and Tampa/St. Petersburg are all under consideration for what we all thought was going to be two expansion slots. Those bids each have issues which I have covered in past pieces here on this site.

The Sacramento bid stands out as having the most to lose by Austin now grabbing that other spot. Sacramento was once favored to get a team and is constructing a new stadium downtown but they had some partners leave the investor group. The league has stated that without a big financial investor they will not be awarded an expansion team.

San Antonio also likewise has a doomed bid because the league will never put another team that close to Austin and put a fourth team in Texas. They come out on the losing end due to these developments.

The Tampa/St. Petersburg bid just had an investor change to the group that owns the Tampa Bay Rays of MLB, which is a deeply resourced and financed group. It remains to be seen if that helps their bid for the last seat at the table.

In the end, the precedent set by the team and the league working together to keep the Crew in Columbus is a good one for MLS. The last situation they need as a league is for teams to start moving around the map. They need stability in their franchises. It is great for the fans and the Crew employees and staff to stay in the place they know as home.

The City of Austin gets a shot here to have a big league sports team and the impact that will have on the region and on the expansion process for MLS will be felt for years to come.

(some background courtesy of The Austin Statesman, The Columbus Dispatch, and America Soccer Now, MLS website)

Follow Up: CBS / Viacom Merger News: The Saga Continues

The CBS and Viacom saga continues to loom within the media landscape following the sexual misconduct allegations against former CBS Chief Executive, Les Moonves, which led to him being removed from that post recently. This has caused many within the financial sector to have renewed speculation regarding the potential for a CBS merger deal with Viacom to get back on track.

In a follow up to earlier pieces on this topic, the interplay between CBS, Viacom, and their common parent company, National Amusements (NAI) has been a mess over the past couple of years. The struggle between Moonves and Shari Redstone from NAI and the discord that conflict created within the CBS board has shaped most of the news around this merger over the past several months.

The removal of Mr. Moonves from the equation seems to indicate that the merger will take place at some point between CBS and Viacom. This can be simply because no other external entity has indicated any type of interest level in obtaining CBS at this point.

The potential merger of these once-joined media conglomerates (CBS and Viacom were once under the same roof until they split apart several years ago) would make sense from a financial perspective as Wall Street analysts have stated that the merged CBS-Viacom unit would have a better valuation. Some analysts have estimated that the total valuation would increase in value between 20-30% compared to the two remaining single entities.

While that valuation impact is significant, the most critical issue facing CBS at this point is to find a new CEO. The reports have been centered around the likelihood that this candidate will be hired externally to bring a fresh perspective to the network and the corporation.

In my prior work on this topic, the dynamics between Ms. Redstone, Mr. Moonves, and Viacom head Bob Bakish were explored. The interpersonal issues between all of these figures has been at the center of the saga between CBS, Viacom, and NAI. The reports from multiple media outlets are that the new external CEO of CBS will be the individual in charge of the combined CBS – Viacom and not Mr. Bakish.

This added responsibility increases the importance for CBS to find the right candidate on what is probably a very short list of people who have the requisite skills and background to run such a complex, diversified combined media corporation.

The terms of the settlement in court between NAI and CBS stipulate that NAI cannot initiate any offers to consolidate CBS and Viacom for a period of two years. However, the settlement does not preclude either CBS approaching Viacom or vice versa, with a potential merger bid.

The likelihood of that happening after a new chief executive is named at CBS is seen as highly possible. In my prior work within this merger proposal saga, I have always maintained that Verizon would be the “dark horse” that would come out of the woodwork and purchase CBS for some inconceivable amount of money.

The media landscape has evolved though, and my view is starting to shift in thinking that Verizon may not be interested in CBS at all. They may not be interested in the capital outlay and the organizational changes that would need to take place in order to integrate CBS into the Verizon umbrella.

The other major networks and “old media” companies are out of the mix for CBS for mostly anti-trust reasons. Some have rumored that maybe CBS – Viacom combine and then merge again with a major studio such as Lions Gate or another television outlet such as AMC. In my view, that could happen because both CBS and an outlet like AMC would have to grow larger or else be swallowed up by another conglomerate.

The rumor that a “new media” entity such as Amazon, Apple, Netflix, or Google could snap up CBS seems unlikely at this point too. That sort of consolidation is delivered at a significant cost because of the complexity of the merger, the legal proceedings involved, and the integration of the key business units within CBS into an existing corporate and operational structure.

The content that CBS controls is a tremendous asset, and at the end of the day, content is king. The CBS app called All Access is a subscription-based service that has a robust base of viewers. It will be interesting to see if those variables are a motivating factor toward a “new media” entity taking a shot at consolidating CBS, especially if they would also hold the rights to the Viacom content.

The major shifts in the media industry this year have created a climate where CBS and Viacom both must make some sort of strategic growth move in order to stay relevant. It may become a merger of necessity rather than joining together willingly and with enthusiasm. The combined entity of CBS-Viacom would have certain strengths that would help them compete in an increasingly competitive and margin conscious industry.

The content and streaming app as well as other business units could position CBS – Viacom to better meet the demands of viewers that are changing the way they access media, television, and movies. The timing will all be predicated on how long it takes for CBS to complete their search for a new CEO.

The changes in the media and television industry has already seen some incredible M&A activity during 2018. The future for both CBS and Viacom could highlight the industry merger news in the new year ahead.

(Some background information courtesy of CNBC and AP)

Follow Up: NHL Expansion To Seattle Takes Crucial Step

In a follow up to earlier posts on this topic, the bid by Seattle to become the 32nd franchise in the National Hockey League (NHL) took a crucial step forward on Tuesday.

The Seattle ownership group partners and Mayor Durkan met with a nine-member committee of NHL governors (owners) and other top league executives in New York to make a presentation essentially framing why the NHL should expand into the Seattle market.

The news comes as no real surprise because the Seattle group set records for season ticket commitments and blew away the number that Las Vegas did a couple of years ago in their respective season ticket drive. The region in the Pacific Northwest is untapped in the U.S. by the NHL, and the prospective Seattle team would have a built-in rivalry with the Vancouver Canucks about a two hour drive away to the north.

The committee yesterday voted 9-0 in favor of the Seattle bid moving forward in the expansion process. The financing of the team and the arena renovations to Key Arena at Seattle Center (which was the center of my last article on this topic) were not seen as a deterring factor.

The next step is for the NHL to vote on the formal expansion to Seattle in early December at the league meetings in Georgia. The expansion fee is expected to be (and widely reported) around $650 million. It should also be noted, for those who did not read my earlier coverage, that Seattle is the largest metro area in the United States without a major winter pro sports team.

The city is known for their passionate support of their current teams: the Seahawks in the NFL, the Sounders of MLS, the Mariners of MLB, and the Seattle Storm in the WNBA. The Seattle group used that as part of their pitch to the NHL committee on Tuesday and noted the excitement of the city, as evidenced by the season ticket drive results which were outstanding.

The addition of Seattle (it looks like a mere formality at this point) means that Quebec has no realistic prospect of entering the league unless one of the current teams decides to relocate to their city. The league, once it adds Seattle, will be balanced with 16 teams in each conference for the first time in several years. The NHL will not be looking to expand and “cut the pie” of revenue sharing again for quite some time.

The relocation targets for Quebec of the Carolina Hurricanes or Florida Panthers moving north of the border both look more unlikely. The Carolina team changes owners but the lease agreement on the arena is very friendly to the ownership. The Florida club got better, younger, and they saw their attendance improve somewhat. It seems less likely they will move or that the NHL would allow them to exit the South Florida market.

The last remaining hope is the Arizona Coyotes, but they are looking at a new arena site in The Valley and are also linked to Portland, OR if they were to relocate. I think the NHL, which wants desperately to remain in Phoenix, would more likely approve a move to Portland to keep the conferences balanced before it would vote to move the team to Quebec.

Seattle is going to be an intriguing market for the sport and for visiting teams and their respective fans. The Key Arena renovation is very ambitious and is the mitigating factor on whether the new team begins play in 2020 or 2021. That facility is going to combine the old with the new. The iconic roof will remain in place, the green space around the arena will be kept as well. The modern amenities and wider concourses will be added and the design of the new seating will provide hockey fans with great angles to view all of the action.

The talk in Seattle is that now that the NHL looks like a lock to come to the Emerald City, where is the NBA in all of this? When can the Sonics return to the hardwood? That looks rather unlikely from the standpoint and tone of the NBA and their Commissioner, Adam Silver, in recent statements.

Some people do not understand it, but in my earlier coverage of this topic and the NBA expansion bid to Seattle, it makes sense. The NBA preferred the “SoDo arena” proposal as it was known with Chris Hansen investing in all of that land downtown to build a brand-new arena for the Sonics to return. That agreement with the city was for an NBA-first facility. It would be designed with hockey as a secondary tenant.

The Key Arena proposal which the city ended up going forward with, is an NHL-first agreement which means that the NHL team will be the primary tenant and will get the better end of the revenue and gate sharing agreements in the building. The NBA expansion to that market under those conditions would limit the profitability of the Sonics. The NBA also has no imminent plans to expand and has other markets that will promise and are in better position to deliver, better profitability for the NBA in the long term than Seattle at this point.

The fans of hockey in Seattle should be thrilled, it is an exciting time for them and for hockey fans in general; especially given the success of the Golden Knights in their inaugural season last year. The next big decision once the vote comes through in December is to determine a team name. The NHL is coming to Seattle and the excitement has only just begun.

(thanks to The Seattle Times for some background information and to NHL.com as well)