MLS Expansion Update: Soccer In North America Continues Growth Trend

The expansion process for Major League Soccer (MLS) is a topic that has been featured consistently over the years here at Frank’s Forum as the league progresses towards the stated goal number of 28 franchises. The league has no shortage of interested cities, which has prompted MLS Commissioner Don Garber to publicly admit that the expansion process could go beyond 28 teams in the future.
The 2019 MLS season schedule was released on Monday, and Cincinnati will join the circuit as the newest expansion franchise with their first match set for March 2nd against the Seattle Sounders. Cincinnati will be the 24th team in MLS with Nashville and Miami both expected to join the league in 2020 ; which would bring the number of franchises to 26.

The developments in Austin have been detailed in previous pieces on this forum regarding the situation with the Columbus Crew owner trying to relocate the team to Austin. The courts in Ohio got involved and the Crew are staying in Columbus with a new ownership group, and as part of the settlement, Anthony Precourt will get an expansion team in Austin which will begin play in 2021 as the 27th franchise in MLS.

This leaves one spot remaining for the “race to 28” and several competitive bids for that spot. This has caused speculation that the league office will look at going to 30 teams, but that is still an unsubstantiated rumor. It should also be mentioned that a group of residents in Austin has started a petition against the soccer stadium construction, but the local news sources there do not think the maneuver will deter the project from meeting the 2021 timetable to join the league.

The bid by Sacramento, which seems like it has hung around forever, would be the most likely to gain approval in the immediate future. The group has a stadium plan in place with government support, they have a minor league team with an established base of loyal fans, and according to The Sacramento Bee, they will have an announcement of a new high-profile investor.

The lack of a well-heeled investor to back the franchise for the long term was the sticking point in the Sacramento bid in the last round of expansion. That allowed Nashville and Cincinnati to move ahead of them in the process. The other attribute that works in their favor at this point being a bid from California is the failed bid from San Diego. The referendum vote against the soccer stadium in Mission Valley sealed the demise of the San Diego attempt at an MLS franchise.

The league would probably consider moving beyond the 28 franchise total if Sacramento and St. Louis get their pitches solidified. The St. Louis bid, in a previous piece I wrote, was considered dead in the water because they lost the tax funding needed for the public-private stadium construction project that was central to their bid in 2017.

The St. Louis expansion attempt received new life when the Taylor family which owns Enterprise rental car (which is based in the city) joined the investors group. The plan now is for a privately funded stadium proposed for a parcel of land next to Union Station downtown with excellent public transportation access. This development, should it be approved, would give St. Louis a leg up in the competition because of the rich soccer tradition in the city as well as the relocation of the Rams football team. It is an interesting bid.

Phoenix has gained a lot of momentum of their own in recent months. That desert destination has assembled a large group of deep pocketed investors interested in bringing MLS soccer to a very large market. The issues with the bid are notable: they have no tangible stadium plan and they have no minor league team to drum up interest or fan loyalty.

The league would have to weigh the addition of another market in that part of the country balanced against the market size and demographic reach. The other factor as mentioned before with cities like St. Louis who have less competition for fans because they lost the Rams to relocation; Phoenix has several major pro sports teams which will have an impact on fan retention as well as corporate sponsorship opportunities. That certainly is a lot of risk.

Raleigh is another long-shot type bid for expansion that might end up gaining some traction due to a variety of factors: Steve Malick is the visionary behind the bid and he is well respected within MLS circles – so they have their big money investor, the city has an established minor league team with a fan base, and they have desirable demographics for an MLS franchise.

The main issue with Raleigh is similar to other bids: the stadium plan is not formalized. The proposal from Mr. Malick is to build a 22,000 seat soccer stadium on a piece of government owned land in downtown Raleigh. The original plan, according to The News Observer, was to privately finance the project.

However, an alternative plan is being discussed where some public funds could be used through the county and city levels as well as an increase in a hotel tax to help pay for the facility. Another scenario could put into place a government board to oversee the facility and have the MLS team lease the stadium from the board, which is a similar arrangement to how the arena in Raleigh, PNC Arena, is managed currently. The Austin MLS expansion plan for that stadium is a similar arrangement, but with a wrinkle, the team is going to “gift” the stadium back to the city of Austin in exchange for a sweetheart lease agreement.

The political will is going to be the driving factor in Raleigh because Malick is passionate about getting a team in the city. The political changes from the elections in November could alter the public contribution to a stadium. If the stadium proposal gains approval they have, in my view, a better shot than other analysts think. The opposite is also evidently true, if the stadium plan and the land use agreements get thwarted, their bid is dead just like in San Diego.

Detroit had a bid that looked like a “sure thing” at one point because of the billionaires involved in the investors group there, and their quick pivot away from the original stadium proposal which I have covered in previous pieces. The latest developments have Detroit on the outside looking in, so the saying goes.
The condensed version of the scenario is this: Detroit had a stadium proposal for land downtown where a jail is currently located and the investors were trying to work out a land swap with the local government to have a new jail built on a piece of land in another part of Detroit which the investors owned. The plan fell through, and the bid pivoted to add the Ford family as partners and use Ford Field, the home of the NFL’s Detroit Lions as the home venue for the MLS team.

The bid pointed to the Atlanta United using an NFL stadium and being very successful. The MLS officials that toured the site had some concerns and suggested that artificial turf is not desirable for the league games and that they would improve their chances at Ford Field (a domed facility) if they converted to a natural grass playing surface.

The investors attempted to propose to the Ford family, the city, and MLS a plan to convert Ford Field to natural grass and to change the roof of the facility to a retractable roof so that the grass could be maintained properly. That plan to retrofit would take place in the football offseason months, but the plan was defeated due to cost and other concerns.

MLS does not seem interested in Detroit using Ford Field with the way it is currently configured, so the bid is essentially on the last legs.

Tampa/ St. Petersburg had a strong bid at one point, but it has taken on some tough twists and turns in the past few months. The original investor, Mr. Edwards, sold the minor league team, the Tampa Bay Rowdies, to the owners of the MLB Tampa Bay Rays. The baseball team owners then appointed a group to run the Rowdies and oversee the MLS bid.

The investors from the Rays have indicated that they are considering keeping the Rowdies as a minor league team in the USL. The move to MLS would be complicated because the team would have to get permission from Orlando City FC because they share the same media market. This bid has an outside chance but is unlikely to move ahead.

Charlotte is an intriguing bid now that David Tepper, owner of the NFL’s Carolina Panthers has reinvigorated the investors there and has a plan to use the NFL stadium for soccer games. The previous investors had focused on attempting to get a taxpayer funded stadium built, and that proposal failed to gain public support, so Charlotte was passed over during the last expansion round.

Tepper is a billionaire with a bold vision for soccer in Charlotte, a city with so many transplanted residents from the Northeast and Mid-Atlantic that it makes sense for MLS to want to be there as well. In fact, when I wrote my last article on MLS expansion I received messages from fans in Charlotte about how excited they are with the bid because it reminds them of Atlanta with the Falcons owner getting involved.

Charlotte has some momentum here, and the stadium is not an issue as the team would play in the football stadium, and the demographics could work well for a successful bid.

Indianapolis is another bid that is certainly in limbo at this point. The positives for the bid are the strong support for their USL team, Indy Eleven, which has the second highest attendance figures in that league last season (next to Cincinnati). The three big issues for the bid are: the Crew staying in Ohio, Nashville & Cincinnati getting approved bids for MLS teams, and the stadium financing.

They have a billionaire owner already who owns Indy Eleven and owns a construction company. The Crew staying put means that geographically there is not a need for a team in Indianapolis, but if they had moved to Texas it would have put Indy’s bid into play.

The close proximity to two teams: Nashville and Cincinnati will probably make MLS think about putting a franchise elsewhere in another less represented region to grow their overall footprint.

The final issue is the stadium plan because the original proposal for public-private development of a site downtown failed to gain full political support. The fund created by the State of Indiana to fund Lucas Oil Stadium for the Colts is currently basically out of money. The potential for playing all of their games in Lucas Oil Stadium (Indy Eleven uses it currently for special games) could be a way that this bid adapts to try to stay alive, but the MLS has come down on Detroit for a similar proposal. The other factor is some within the media in the city suggesting that they stay in USL like the Tampa Bay Rowdies and just grow their presence in that league now that Cincinnati is moving up to MLS. In my view, I think the bid is dead.

San Antonio is the final city in the group of bidders remaining for MLS, and as I have covered in prior pieces on the coverage of the Crew relocation to Austin debacle, they lost the most momentum of any other expansion hopeful.

San Antonio rebooted their MLS bid when the minor league team in the city changed ownership to the same group that owns the NBA’s San Antonio Spurs. The Spurs are the most successful small-market team in NBA history, and probably in all of professional sports history.

The Spurs owners then appointed a team of experienced people to run the minor league soccer team and prepare an MLS bid. The new bid would change direction away from the prior investors plan of expanding the minor league stadium on the outskirts of the city, instead focusing on getting a stadium built in the downtown core of San Antonio, which MLS traditionally favors that type of location.

Then, the attempt at moving a team to Austin took place and MLS took so much heat for trying to move the Crew out of Ohio, yet the people in Austin spent money and energy on the proposals there, that MLS felt compelled to have to give Austin an expansion team down the line.

The San Antonio bid was dead once the Austin expansion deal was announced. The county that San Antonio falls within, Bexar County, has conceded that and has closed down all proceedings related to bringing MLS to the city. It is sad for San Antonio who had followed all of the proper channels for expansion and got beat by an “end around” by Anthony Precourt and the Austin politicians.

In the end analysis, MLS has a great deal of interest remaining in all of these potential relocation cities. The league has to be careful to not make the same mistake as prior American soccer leagues which met with failure because of over expansion.

The league has a plan for 2026, that they want to be fully expanded by that point. The speculation is that number could hover between 30 and 32 teams. In my view I think that the 32 number is too many franchises for the league to remain profitable and sustainable.

The three bids I see as having the best chances after covering this topic for the past six years are: Sacramento, St. Louis, and Charlotte. I could envision the league in those three cities doing well and that would bring MLS to 30 franchises. It will be fascinating to see which direction the league will go in the next round of expansion and if they go beyond the 28 team number or not.

One thing is certain, MLS is certainly gaining in popularity and shows no signs of slowing down anytime soon.

Follow Up: Sears Begins Liquidation Process

The seemingly impending demise of the once dominant American retailer, Sears, took another significant step in that direction on Tuesday. The news media is filled with reports that Sears has rejected a proposal from CEO Eddie Lampert who was attempting to put together an investment proposal through his private equity company to salvage Sears.

The Sears Board of Directors informed the judge overseeing their bankruptcy case that they intend to move forward with the liquidation process. This is the final step taken before a company dissolves, and Sears will now take the necessary steps of liquidating inventory, shutting down stores, and laying off employees.

It is a very sad day for the American retail business landscape because Sears was a huge player for over 100 years (126 years to be exact) and the end of that company and some of the brands associated with it, is an end of an era in retail. The company consolidated with Kmart about 14 years ago and that proved to be one of the key factors in the demise of Sears.

In earlier coverage of this story, I shared how Sears was a store that my parents shopped in frequently for tools and appliances. It is unfortunate that many people thought of Sears for those products, and not for anything more. It also did not help that Sears did not connect with consumers that were not my parents age or older, they lost that next generation of families as well as their children who are now young adults.

The aggressive marketing of Wal-Mart, Target, and Amazon siphoned those customers away from Sears and Kmart ; and neither one could recover from that setback. My local area is a good representation of that effect, the Sears has been there for decades and the Target has been there for less than twenty years. The Target location is consistently crowded, jammed. The Sears has been so empty the last five years that I would drive by and wonder if it was closed.

I read a post on social media earlier that was effectively stating that Sears will cease to exist after 116 years, which is longer than Wal-Mart, Target, and Amazon have been in business combined. The “Amazon effect” is hurting several brick and mortar retailers that have failed to innovate. Sears missed the window to innovate their business model.

Sears should have built up their website and used their physical stores as essentially distribution centers where the customer could come and pick up items, especially expensive items that they would not want shipped. Sears owned so much of the real estate that their physical store locations are located upon that they controlled so much of the costs of not having to lease or rent space from a commercial real estate landlord, that they could have reaped so many benefits from the order online, pick up in store scenario. They did not capitalize on that in a forward-thinking way, by the time they went that direction it was already too late to recover the business.

However, even Jeff Bezos, the CEO of Amazon conceded recently that one day he expects even Amazon to perish, to cease operations. That seems unthinkable to so many, myself included, but his full quote explains further that essentially everything has a shelf life, and at some point Amazon will outlive its usefulness.

Sears managed to cobble together a pretty good run when all things are considered in the retail industry space today. It was such a huge part of Americana, the trips I remember as a kid to Sears to buy a TV, a dishwasher, or going with my Dad to buy tools for a home improvement job. I also recall before I left for college my Mom taking me there to get clothes and lamps to get my dorm room all set up.

Those memories will be all I have as well as others will have left of Sears, it will join the list of retailers and in a similar fashion to Toys R Us, who were crushed by a debt load that was unsustainable. In a similar fashion, an ex-CEO of Toys R Us attempted to save the chain from going under, and was rebuffed by the board and the court in charge of the proceedings.

Eddie Lampert put together a $4.4 billion package to try to save Sears, or at least part of it. The number was deemed to be not adequate enough to effectively salvage the company for a sustained period of time. Lampert will receive criticism for his handling of the last years of the Sears brand. His involvement with a private equity firm has already drawn scrutiny from industry analysts. His next venture remains to be seen, but this loss is going to follow him around for a long time.

My own personal last visit to my local Sears store, which is slated to close very soon, was in mid-November. I went to get work clothes and active wear at greatly reduced discounts. The store was a wreck, and it was sad walking through empty corridors and empty areas of this huge store. The memories came flooding back from my childhood one last time, of days that were easier, simpler times. That is where those memories will stay, like Sears did, frozen in time. A piece of America is gone and is never coming back.