Miami MLS Saga: Freedom Park Proposal

The five plus years saga that has been David Beckham’s quest to find a site suitable for a soccer stadium for his planned Miami MLS expansion bid has certainly been unbelievable at points.

The former soccer mega-star and his partners received permission recently to have the latest attempt (site number six for those counting), a development known as Miami Freedom Park, included on the November ballot as a city-wide referendum question. The voters will decide whether or not Freedom Park is a positive project for Miami to undertake.

The land that the proposed Freedom Park sits on is currently a public golf course. The opposition of the planned proposal for the stadium and other retail/hotel/office space construction will be those who want to save the golf course and those who want open space. The other consideration will be traffic impact because the land sits next to Miami International Airport.

Beckham has seen the other attempts to build a soccer stadium for his planned new club come apart for all sorts of reasons. The Port of Miami site received almost instant backlash from the cruise industry due to traffic concerns on weekends when they embark and disembark the most ships.

The site next to Marlins Park failed for a variety of reasons, and the Overtown proposal seemed like it was moving forward (see my earlier article on it) but that proposal relied on a parcel of land that was owned by the county. The sale of that land dragged on for a protracted amount of time until it was finally approved.

However, Beckham brought in new partners, the Mas brothers, and they did not want to move forward with the Overtown site. That area of Miami is notable for violent crime and they may have had concerns over putting a stadium and retail development in that neighborhood.

The issue with the golf course site that is now being dubbed Miami Freedom Park is that, according to reports in the Miami Herald the site has environmental contamination. The land at one time was the site of a large trash incinerator nicknamed by Miami locals as “Old Smoky”.

The disruption of the ground to build a 25,000 seat soccer stadium, a 750 hotel rooms, 600,000 square feet of retail space, and 400,000 square feet of office space is going to require a massive environmental cleanup of the site. The cost of getting the land properly remediated is going to be a tremendous outlay of money. The question of who pays for that is going to be central to this site plan.

MLS has longed wished to return to the Miami market because they see it as a missed opportunity from the failure of the Miami Fusion franchise early in the history of the league. The Fusion played in Fort Lauderdale, far from the downtown area of Miami, and removed from any direct public transportation access.

Miami had tremendous TV ratings both for Spanish language and English telecasts of the World Cup from Russia which took place this summer. MLS has given Beckham a deadline of October 2019 to be the latest point for his group to break ground on a stadium. The league strongly prefers the expansion bids to include a soccer specific stadium because it allows for maximized control of the revenue streams generated compared to renting a facility used by an NFL or MLB team.

The league gave Beckham a sweet clause in his player contract to own an expansion franchise in his retirement by only having to pay a fraction of the expansion fee that other teams have been required to pay upon entry into MLS.

The speculation is that Freedom Park could provide some outstanding enhancements to that neighborhood of Miami that would also benefit the whole city and region by having an MLS team back in South Florida.

The detractors think that the project is too ambitious, and others want to save the golf course. It is being rumored that a golf course, range, and training center are being added to the newest Freedom Park renderings, potentially as a compromise as residents will decide at the polls.

Beckham deserves some credit for sticking with the Miami opportunity for over five years. His bid was not tied to any specific geographical area. He could have pursued a new bid in San Diego, Tampa, or another area where MLS is seeking to potentially add a franchise. He stuck with Miami despite numerous setbacks and uncooperative political and community support at points.

The counterpoint there would be that Beckham stayed with Miami because the market has the most potential financial upside. The demographics of the city coupled with the size of the TV market and the weather all combine to make that an attractive site for a future expansion franchise.

Freedom Park, as the name suggests will ironically have its destiny determined by a democratic voting mechanism known as the referendum. The people will decide whether or not the site should remain a golf course and green space, or whether it will become the site of the next MLS franchise.

In either case, the remaining issue at hand is that Beckham, the Mas brothers, and his other investment partners are running out of time to get this Miami team up and running. It may result in five years of futility for Beckham, and it will leave MLS with no choice but to go in another direction as they look to expand the league.

MLS Expansion: LA, Miami, “Group of 12”, Future of Soccer In America

MLS Commissioner Don Garber announced recently that the newly rebranded Los Angeles Football Club (LA FC) which are the initials they will be known by in the future, will be entering the league alone in 2018. This is a deviation from a trend of expanding the league by two teams at a time, and it also casts some doubt on the state of the Miami expansion bid.

It was anticipated that the Miami bid spearheaded by former soccer superstar, David Beckham, would also begin play in 2018 with LA FC. The Miami bid has had numerous setbacks, most notably with securing land for a stadium as well as securing total private financing for the stadium.

When the calendar flipped to 2017, the news out of Miami was, that after striking out on their attempts at obtaining land at the Port of Miami, Museum Park, and a plot of land across from Marlins Park; Beckham had secured land in the Overtown section of Miami. The group does need to acquire the adjacent lot which is owned by the county for municipal vehicle storage.

The Overtown section is north of Miami’s main downtown and is notably a high crime and economically depressed area with a very diverse population from several countries. The Beckham group proposal has the jobs generated from the stadium and team being located there as the primary piece in his pitch to the government.
The plan for the stadium, according to local news sources and the MLS site, is for a 25,000 seat venue that will cost around $200 million in the final estimates. The Beckham group is currently reported to be seeking out additional minority investors to help come up with the rest of the financing needed to get the stadium facility built successfully. The target date now is for Miami to join the league in 2019, but all parties involved caution that those parameters could change in the future.

The league has issued statements of support for Miami, which also happens to boast the highest overall TV ratings for soccer in the U.S. (which is a huge reason why the MLS has been so patient) and a demographics mix that is favorable for supporting a soccer club for the long term. In my prior coverage of the expansion of MLS, the media rights deal for the television packages both regionally and nationally has come into focus.

The league wants to grow their presence in large TV markets so they can increase their revenue capture in the next TV rights deal. The addition of Atlanta and Minnesota as expansion clubs this season and the second team in LA in 2018 as well as potentially Miami in two years, will be a huge bargaining chip for MLS to get more revenue dollars out at the negotiating table.

The second LA team mentioned earlier, LA FC, has a star studded ownership group and is the rebranded entry for the disbanded Chivas USA which shared the Los Angeles market with the Galaxy for a period of years in MLS history. The Chivas experiment was a complete failure, as the club never gained real traction in L.A. and shared a stadium with the Galaxy, which did not help their marketing attempts.

LA FC will have their own modern stadium which is under construction currently on the site of the former LA Sports Arena which is just south of the LA Memorial Coliseum. The location is very good and very convenient for fans, and the league will be releasing information on the expansion draft to help them construct their roster in the near future.

Group of Twelve

The addition of LA FC in 2018 will bring the league to 23 teams, the first time in a while they will have an odd number of teams, which will be a scheduling headache for the league office. The Miami bid looks like it is eventually going to get done as the 24th entry to MLS, which has a stated goal of expanding to 28 teams.

The remaining four spots for expansion will be decided among what is called the “Group of Twelve”, the twelve cities that submitted proposals for consideration for an MLS expansion franchise. The group consists of: Tampa/St. Petersburg, Cincinnati, Detroit, Indianapolis, Nashville, Charlotte, Raleigh-Durham, Phoenix, Sacramento, San Diego, San Antonio, and St. Louis.

I have produced individual articles on some of these cities and their quest for an MLS expansion franchise in the past, I have also completed larger summary articles on each of these bids as well as others which were not included in the “Group of Twelve”. It should also be noted that MLS executives intend on reducing down this group to a smaller number, potentially as early as this summer.

In my view, and I have no indication from the league on this part of the process, it would make sense to cut the group down from twelve bids to eight, since only four slots are available. Then it could either be cut again to six bids, or the four approved bids could be announced.

The summary of each bid can be found below:

Tampa/St. Petersburg – see my full article on this emerging and popular bid. The Tampa Bay Rowdies have an established fan base, a passionate owner, and plans to renovate and expand their existing stadium on the St. Petersburg waterfront. The stadium plans do not require any changes to the city street grid or any “fill” in the bay to complete which is a big positive with local government and the residents. MLS executives are intrigued by the stadium site and the size of the market for TV purposes. They also have a very organized social media campaign.
The negatives would be that the Tampa Bay area is already part of the territorial rights for the Orlando City FC franchise and they would have to agree to another franchise joining MLS from the same region. Orlando City would also have to be compensated for the alteration to their territorial rights, which could get very sticky and expensive.
Some analysts see that territorial issue and the fact that the league had a team in Tampa which folded in the early 2000s as two major issues with the bid. I think it is still very much in play because of the size of the market, the fan base of the team, the ownership, and the stadium.

Cincinnati – The bid has many strong points such as an established fan base for their current minor league club, strong attendance figures at those matches, and a committed ownership group with great resources. The Midwest is an area of need for MLS expansion when looking at the current footprint of the league.
The negative point for the Cincinnati bid is a big one: the stadium. Their current stadium for their minor league club is too old and too small. The successful bid for this city would need to include a new stadium plan that is actionable. The government seems supportive of that concept and the stadium is a vital component to an MLS bid because the league needs full control of the facilities that their clubs play in for scheduling and maximum revenue generation purposes.
Some analysts feel that this bid only needs a vote on the new stadium and it is going to be one of the approved bids out of the this “group of twelve”. I am not so sure because the spots are limited and MLS executives are very high on the presentations by St. Louis and Detroit and may think those two cities will be an adequate representation of the Midwest at this point.

Detroit- The bid for Detroit is also a process which I wrote a separate article about several months back, it has risen from a long shot to a very real possibility for one of these last four spots on the MLS franchise expansion list. The strong points are: an ownership group that includes two billionaire professional sports owners, one of the largest untapped TV markets for MLS, a diverse population with a history of supporting soccer, and it is the second most populated metro area after Phoenix in the “group of twelve”.
The downsides to this bid: they have no high level minor league presence in the market. Detroit City FC is essentially a fifth tier team that is supporter funded, though they have done a great job on a small scale with marketing the club.
The other main issue is the stadium site. Dan Gilbert and Tom Gores, the two principle potential owners are eying a site in the rapidly redeveloping District Detroit, where the other sports stadiums are located. The site is a few blocks from Ford Field / Comerica Park and is currently a failed municipal construction site for a proposed jail. The budget money ran out and the site has been abandoned for some time. Mr. Gilbert and Mr. Gores have proposed essentially a land swap where the jail would be moved to another area in the city and they would acquire the former jail site to build the soccer stadium. The city is mulling the proposal, and if they turn it down, there is no contingency plan for a site for a stadium. There are some analysts and soccer media people who feel that the stadium site could sink this deal, and others who believe that MLS is so interested in reviving Detroit that it could still move forward with a successful bid.

Indianapolis- This city which I have visited several times is one of the most underrated sports cities in the nation. The downtown is very easy to walk and all of the stadiums are in the same area which makes it very convenient. MLS favors the downtown urban setting for the stadiums for their franchises and the league has appeal with millennials, who also favor the concept of living in a downtown area with access to sports as well as entertainment options.
The city has an upper tier minor league team called “The Indy Eleven” which play in Carroll Stadium and have garnered some impressive attendance numbers. The support of this club is seen as a very strong aspect to the bid. The club has a very wealthy and well connected owner that is very driven to get into MLS.
The city also has robust support from the local and state governments, which just created a tax zone for the area that the proposed new stadium would be constructed. The tax revenue from gate receipts (ticket sales), concession sales, and tax revenue from those that work at the stadium would comprise the public portion of the new stadium funding. The proposed site is near the Colts NFL stadium downtown.
The negative aspects to this bid are that the minor league club does not have an established history, the Midwest could get crowded if the league decides to grant access to St. Louis and Detroit as well, and the last negative is the stadium. The proposal for the tax zone may not gain passage before MLS decides on the last two bids for expansion. In the event that the financing plan for the stadium is uncertain, this bid will fail. I view this as more of a long shot bid.

Nashville- A bid that has gained some traction in recent months is the proposal from Nashville to join the largest soccer league in North America. This push is being spearheaded by the Ingram family worth billions of dollars and enjoys outstanding governmental support. The city is the smallest metro area of this group of twelve applicants, and it has never supported a soccer club on any level.
The stadium site has gained some clarity now that the Nashville Fairgrounds has been zeroed in as the proposed area for development of that facility. The city has a large millennial population and a growing diversity in their population which MLS executives have noted as strength areas.
The fact that they have a strong ownership group and substantial potential corporate sponsorship support are the positive aspects to this bid.
The negative aspects are that they have no attendance figures or history of supporting a soccer club, the size of the metro area, and the lack of a definitive stadium plan puts this bid in jeopardy of being passed over for one of the final spots in this process.

Charlotte- The bid by Charlotte is one of two from the state of North Carolina (Raleigh-Durham is the other) and MLS Commissioner Don Garber has stated that the league would like to expand their presence in the Southeast. There was some confusion between the potential owners and the city council because of the timing of their request for public funds to build a soccer stadium on the site of the old American Legion Memorial Stadium. The municipal government felt it was rushed, and that is because essentially Charlotte came late to the MLS expansion party and had to apply prior to the deadline.
This bid will most likely be for one of the final two spots in the process because other cities are at a more advanced stage at this point. The positives for Charlotte are the location and the passion of the potential owners, the powerful Smith family of NASCAR fame and wealth. The political support is a bit split with the mayor on board and the county level officials on board with the bid and the stadium plan, and some city level officials that are seeking more time to evaluate the use of funds for an elite level pro soccer team.
The stadium site is fairly convenient as it is close to Charlotte’s Uptown area, which is where the NBA’s Charlotte Hornets have their arena. However, in recent weeks there seems to be some uncertainty being reported by the local media around the stadium plan and the financing for the project. That is obviously never good news when it comes to the prospects for an MLS expansion team. The other positives include the corporate sponsorship presence, the size of their media market, and the support of their other sports teams.
The Independence are a minor league affiliate of the Colorado Rapids of MLS, and they play in Charlotte currently. The support for the team will be part of the evaluation of the bid as will be the robust support that the residents there provided to the U.S. Men’s National team games held in the city recently. My view is that the demographics and some other metrics make this bid interesting, but if the city council blocks the stadium deal, this bid will be eliminated.
Raleigh – The other Southeast bid is from Raleigh, which has a successful minor league team (Carolina RailHawks re-branded recently as North Carolina FC) a dedicated ownership group led by businessman Steve Malik, and a demographic mix of highly educated professionals transplanted from the Northeast as well as millennials starting their careers.
The corporate presence is a bit lacking in major Fortune 500 types, but several large multinational corporations have a presence in the “Research Triangle” area. The bid proposal stressed the fact that the area has just one major pro team, the NHL’s Hurricanes, and that the population can support an MLS team. It also stressed the teamwork between the owner, the local government, the corporations, and the local residents.
The media market size is on the smaller side, but MLS has clubs in small markets that have done very well. The all-important stadium situation is the area where the most progress is needed. They have a design concept, a mid-20,000 seat stadium with a translucent roof. The renderings look amazing, but the site is still not determined. The North Carolina FC club plays currently in a small facility in Cary, which is outside of Raleigh. MLS prefers downtown urban stadium locations with access to public transit. The stadium will be mostly privately financed.
Raleigh is an interesting bid, I still think if Charlotte gets the stadium plan voted through it may have an advantage. Many analysts close to the league feel that North Carolina will get one of the four teams. Then, others feel that Atlanta and Orlando are so dominant in the Southeast that the league may look to hit other areas where they need a presence.

Phoenix- The entry of this city into the group was a surprise to some because the market has not done particularly well supporting their lower tier minor league team through the years. The market is the largest metro area without an MLS club and they have no competition, the next closest MLS club is over 300 miles away so that makes this bid unique.
This bid by Phoenix is a mixed bag of positive and negative elements. The positives are that they have a current minor league club: Phoenix Rising FC, they have an ownership group, and they have a stadium plan as well as a site. There are groups within Phoenix that believe that the support for the minor league club was not strong because the stadium location is not convenient. The new stadium would be in Scottsdale, an ideal location for accessibility.
The negative elements are that the corporate support for the potential MLS club is tepid, the city has other major sports so competition for entertainment dollars is steep, and the market has limited soccer heritage or history to draw upon.
In my view, the stadium moving to Scottsdale is a key component. The population and TV market numbers are very compelling. I think Phoenix has a strong chance because I think MLS wants to be there just from the size of the market and the demographics of the market, just from that perspective. I do have reservations about the ability of the area to support a team and whether it would work, particularly playing matches in the summer months in Arizona.

Sacramento- The soccer world was anticipating this expansion bid to be a virtual “lock” based on the progress that this group made in all phases of the process. The events of the past few months, however, have put the Sacramento bid in a degree of jeopardy. The capital city of California has been working tirelessly over the past four years to obtain an MLS expansion franchise. The demographics are ideal for MLS, the market size has some attractive attributes, and there is little competition with only one pro sports team in town: the NBA’s Kings.
The other main positive to the bid is that the minor league club, Sacramento Republic FC, has been a huge success in that market. The club has set attendance records in their league and was the initial reason behind the interest level for MLS being so high in potential expansion to that market. The branding of that club clearly has connected with the community and it “checks all the boxes” as far as MLS criteria for a minor league club presence and established fan support base.
The stadium site is also a positive attribute to their quest for one of the last four spots in MLS. The new facility is designed and the project is shovel ready in a tract of land in the Railyards section of the Sacramento downtown, which is part of a huge redevelopment project being spearheaded by the city.
The ownership component is a bit tricky because Kevin Nagle, who is leading the MLS bid process did not have the rights to the branding of the Republic name, logo, and colors. Those rights are controlled by Warren Smith who runs the operations of the minor league club. The two men caused the issues with the bid alluded to earlier in this section because at the time the bid was due to MLS, Nagle submitted it without the Republic being a part of the submission. This created concern within the league over whether the local ownership was fractured. In the end, an agreement between Nagle and Smith was made about four days later, and the MLS process will move forward with the Sacramento Republic being the name and branding used for the potential expansion team.
The other issue with Sacramento is the emergence of San Diego as an exciting candidate for expansion, which raises the question of whether MLS would add two more teams in California.
In my view, this bid is still very solid and MLS cannot ignore the unbelievable success pattern that Sacramento Republic FC has had over the past few years. The ownership situation appears to be solidified as far as the transition of the branding for the minor league club. This bid seems more reliable than others in the group.

San Diego- This city, along with the two bids from North Carolina, are the most recent additions to “the group of twelve”. The San Diego attempt at MLS expansion gained a huge amount of momentum when the city’s longtime NFL franchise, the Chargers, relocated to Los Angeles in January. The city officials, seeking to fill a void, moved quickly to facilitate a comprehensive proposal to obtain an elite pro soccer franchise for San Diego.
The proposal has several positive attributes from the outstanding climate, the proximity to other franchises in the league for rivalry purposes, and to the favorable demographics. San Diego has a growing millennial population and has strong potential corporate sponsorships available as well.
The other positive attribute is the stadium proposal which calls for a comprehensive redevelopment of the Mission Valley site that was home to the Chargers football stadium. The old stadium would be torn down and a new smaller venue for soccer and college football would be built there along with other housing, office, and retail space for the university.
The downside is that the San Diego bid is up against some stiff competition with cities who have been honing their MLS bids for years. The government is supportive but the league also currently has teams in California and may want to use the expansion slots to grow the game in other areas of the country.

San Antonio- The bid from this city is interesting because the support for the minor league team is solid, and that club was just recently purchased by the same group which owns the San Antonio Spurs of NBA small market success. The ownership group is the strongest aspect of this bid. The renovation and expansion plan for the facility where the minor league Scorpions club plays currently is very unclear, and thought to be the negative that could eliminate this bid from the whole process.
San Antonio has the right demographics and millennial population, but it is in a similar predicament as San Diego. MLS has two clubs already in Texas and may not want to add a third franchise there, especially when FC Dallas has struggled to connect with the fan base in that market over many years.

St. Louis – The bid is similar to San Diego, this city also lost their NFL team (Rams) to a relocation to Los Angeles. The plan is to build a soccer stadium on land near the Union Station railway hub downtown. I wrote a separate article about this city and the quest to gain an MLS spot. The ownership is dedicated and passionate and the city has great soccer heritage as well. The downtown site is ideal.
The city has hosted some high profile soccer matches which were well attended recently. The expansion there would fill a hole in the Midwest on the MLS map.
The negative aspect is the unproven aspect of being able to support a team long term from both a sponsorship and fan base perspective. The other red flag on this bid is the stadium proposal. The Governor of Missouri has pulled the state level financing, and the city has amended a bill to try to gain tax revenue for their portion, but the use of tax revenue is going to be decided by the voters.
Commissioner Garber was in St. Louis on Monday ahead of the vote on both propositions for the proposed stadium, trying to drum up support. The long and short view of this bid is that MLS wants to be in St. Louis, but they have to iron out the financing of the stadium or this bid will not be approved. The option to privately finance the stadium project is still on the table but ownership is already reportedly going to pay $150 million in an expansion fee to MLS, then they committed another $80 million toward the stadium costs plus the overruns. They would need private financing of another $80 to $100 million to get the project completed.

In the end analysis, my own view of this situation with expansion of MLS in the future is that it is a very fluid situation. The Miami club will most likely be granted into the league at some point in the near future. The league has spent an inordinate amount of time, money, and resources trying to make Miami a viable situation. That would leave four open slots for twelve teams.

The most likely group that will emerge in my view of the situation are: Sacramento, San Diego, St. Louis, and Tampa/St. Petersburg. The league is really intrigued with those four markets for various reasons. However, in the event that St. Louis cannot get the stadium deal done, Detroit or Cincinnati could slide in as a replacement in the Midwest. That is provided that they get their own stadium deals in place, if the jail site land swap fails, Detroit is out of the running.

I know two California teams seems like a wild concept, but Sacramento is the most ready of all the bids and is such a great fit as an MLS market it makes too much sense for them. The league is really taken with San Diego, and they have a fairly straightforward bid because the city owns the land in Mission Valley and is supportive of the development project there.

In the event that the St. Petersburg group cannot reach an agreement with MLS and Orlando City FC on the territory rights, that could doom that bid. In that case, I think the league would go with one of the North Carolina bids to fill a spot in the Southeast. The stadium issues being resolved either in Charlotte or Raleigh would be the deciding factor in which bid moves forward.

I also understand that many fans and those with interest in this topic feel that Cincinnati has a great bid, and they do, but they are in a small media market. I think a spot opens for them only if one of the spots fails to seal the deal, namely St. Louis. I do not see the league adding two Midwest teams.

The interest in the league is growing and the speculation around how the league will look in the next few years is an exciting prospect. The theme of this whole process is that soccer in America has really gained a foothold and is gaining popularity.

The expansion process will play out in the next several months and it will be interesting to see from the vote in St. Louis, to the land swap in Detroit, to the city council decision in Charlotte, and to the negotiations for the St. Petersburg territory; which bids will be successful in joining the league. The process will play out and the league will have some exciting new cities on the franchise map in the near future.

Follow Up: MLS Expansion Update

In a follow up to a recent story covered here on my blog, Frank’s Forum, Major League Soccer (MLS) will, according to a number of high profile media sources, announce the expansion of the league to Atlanta.

 

This expansion franchise addition in Atlanta has been long rumored and the team will begin play in 2017, when the new downtown stadium for the NFL’s Atlanta Falcons is scheduled for completion. The official announcement is expected next week from the league, and Arthur Blank, the owner of the Falcons is expected to be named the owner of the MLS franchise as well.

 

I have written previously in my article series on sports expansion and demographics that Atlanta made sense for the future of MLS because it is a Top 10 TV market, the metro area population size, and the need for franchises in the Southeast.

 

MLS currently has no presence in the Southeast, and with the population demographic shifts in the U.S., they realized this needed to be addressed in future expansion. Atlanta will be the 22nd team in the league which currently has 19 teams split between two conferences. New York City FC will be the 20th franchise and will begin play next year along with Orlando, the 21st franchise and the first in the Southeast.

 

Miami is rumored to be the next expansion target for MLS with David Beckham heading the ownership group there, the bid is hinging on the finalization of both a temporary stadium, and more importantly, a plan for a dedicated soccer specific stadium being approved.

 

The South Rises

 

In the event that the Miami group headed by David Beckham gains approval for an expansion franchise, MLS will have 3 teams in the Southeast, reflecting the importance of the region to the future of the league. It will also create regional rivalries between Atlanta, Orlando, and Miami which MLS also prefers to cultivate in order to grow the overall intensity within the league and the fan base.

 

These expansion plans will launch MLS into the local and regional markets of some very large demographic areas which also have high yield population growth potential in the future. Each market in the South (Atlanta, Orlando, and Miami) has a nice blend of multicultural diversity which lends itself well to soccer with its strong homogenous global popularity.

 

Atlanta hosted a big international soccer match last month which drew the largest paid attendance for a soccer game in the city’s history. Orlando draws very well with their current minor league level club, and those numbers are expected to grow with the jump to MLS and the larger capacity in the new stadium.

 

Miami has been much maligned in the sports media regarding the previous failure of an MLS franchise called the Miami Fusion. The Fusion played four seasons in MLS from 1997 to 2001, and then the franchise was contracted by the league. The franchise failed for many factors: it played in Fort Lauderdale not in Miami, the team lacked corporate support, and it played in an old stadium, Lockhart Stadium, which lacked access to public transportation.

 

The ownership of the Fusion also lacked the financial resources to operate the team further after the losses they suffered, which will not be present in the group that David Beckham is bringing to this new franchise. The Fusion did spend money to convert Lockhart Stadium into a soccer specific stadium, which is a trend that lasts today and has contributed greatly to the financial stability of MLS.

 

The new Miami franchise will not have any of the same issues that beset the Fusion. The team plans to play in downtown Miami in a location with excellent public transit access. The latest rumor is that Beckham wants to purchase land for a stadium in the Port of Miami, which has caused the cruise industry to raise objections with the city regarding traffic and parking issues.

 

The cruise industry objection is a legitimate one being that the busiest day for the cruise industry is Saturday, and the busiest day for the MLS during the soccer season is Saturday as well. I am not sure how that situation will be resolved, but the Beckham group does not require public financing for the new stadium. That is a big factor toward this stadium being located basically wherever they want it to be located.

 

One More To Go

 

MLS Commissioner Don Garber has openly discussed reaching 24 teams by the year 2020. That leaves one more expansion slot left after these other plans which have been made public in recent months. My prior article in the series on sports expansion and marketing demographics speculated on where that other franchise might be awarded, and I still think it is most likely going to be in Minneapolis or in Sacramento.

 

The league has a hole to fill in the franchise coverage of the Midwest which would be filled by Minneapolis, which is also an excellent TV market with an established soccer fan base. The stadium used would be the new NFL stadium for the Vikings, similar to how the MLS plans to operate in Atlanta with the new NFL stadium there being used to host the soccer team during the spring and summer NFL off season.

 

The case for the growth of MLS is clear, the interest in the league here in the U.S. has never been greater, and the future only looks to be even brighter when these new franchises spread the game even further through America.

(Background data courtesy of AP.com, SI.com, AJC.com, and MLSSoccer.com)

TV Markets and the Expansion of Sports – Part 5

This series has demonstrated the importance of particular demographic information on the decisions to expand a specific professional sports league. Each league has varied rationale behind the importance of this information and it can be weighted differently based on the respective league.

 

The first four parts of this series focused on the “Big Four” professional sports in the United States and North America. This final part of the series will focus on the emerging sport of professional soccer in the U.S. and their top league, Major League Soccer (MLS).

 

Unlike some of the other major sports reviewed in this series, Major League Soccer has already announced their intention to expand in the future. The league currently consists of 19 teams split into two conferences: the Eastern Conference and the Western Conference.

 

MLS Commissioner Don Garber has publicly detailed some of the future expansion plans for the league. Mr. Garber has indicated that the league wants to expand by 5 teams to 24 teams in the next four to five years. They have several candidates and have already announced 2 of those 5 expansion teams (www.mlssoccer.com).

 

The expansion criteria outlined by the Commissioner is:

  • Location
  • Ownership stability
  • Stadium Plan
  • Demonstrated fan base
  • Sponsors and TV market
  • Strategic Business Plan

 

Overall, the league has seen a drop in TV ratings, which they are going to have to address. MLS is currently televised by ESPN and NBC nationally, and many of the individual teams have deals for television coverage with Regional Sports Networks (RSN).

 

This past week, Forbes conducted a survey of the league and detailed the values of the franchises as well as providing some other data on the overall business side of league which just concluded its 18th year of operation.

 

On the Rise

 

The report noted that the average franchise value for MLS is $103 million, which represents an increase of 75% in the last 5 years (www.forbes.com). The most valuable franchise is the Seattle Sounders at $175 million.

 

The report continues by detailing the TV ratings slide on ESPN and NBC. The ratings for ESPN are down 29 percent to an average of 220,000 viewers. The NBC telecasts (air mostly on NBC Sports Network) are down 8 percent to 112,000 viewers (www.forbes.com).

 

However, the league is up for a new TV contract before the 2015 season begins, and MLS currently earns $30 million combined per year in national TV revenue from NBC, ESPN, and Univision according to Forbes. I have covered in other articles the trend toward huge sums of money being spent by networks to obtain the rights to live sports programming of any kind. MLS should be able to negotiate for a substantial increase in their next TV deal.

 

A particularly interesting note on the future TV deal negotiations is that Fox launched a new sports network, Fox Sports 1, in August. The Fox group lost the bid to retain the English Premier League television rights in the U.S. to NBC, so Fox will be looking to pay a premium to obtain the rights to MLS.

 

The Game Experience

 

The biggest statistic in the Forbes report was regarding the attendance figures for MLS for their games. In 2011, the average MLS attendance was 17,872 and in 2012 it rose to 18,611 (www.forbes.com). The figures for 2013 are not yet available, but the figures from both 2011 and 2012 are better average attendance numbers than both the NBA and the NHL. That is very impressive for a league that is only 18 years old.

 

Many trends drive that increase for attendance for MLS in recent years. First, the popularity of soccer is on the rise in the U.S. with so many youth leagues popping up everywhere. Next, the quality of players in the league has been dramatically upgraded. The league is starting to gain traction and so many youth leagues run trips to their local MLS team games and go in large groups.

 

The final and most lasting change in the trend toward attendance growth is that the younger people and teenagers who went to games in the early years of MLS entering the U.S. sports landscape are now older. They have jobs and disposable income and they spend it by going to MLS games with their friends. I am a perfect example of that trend because that is exactly how my affiliation with MLS progressed.

 

In fact, the average MLS team earned $26 million in 2012 from in-stadium revenue streams (tickets, merchandise, luxury suite sales etc.) according to the Forbes report.

In my own experience, I have gone to several games for my home area team, the New York Red Bulls. The live game experience is very good. The skill level of the players and the speed of that level of the sport translates so much better in the live experience compared to watching an MLS game on television.

 

However, I watch numerous Red Bulls games on TV and I think MSG Network (the RSN for the Red Bulls) has an excellent production value for their telecasts of the games. I do not like the camera angles or production presentation of the NBC telecasts, and I think ESPN does a very good job at presenting MLS, but most of their games are West Coast games which air very late in the Eastern time zone.

 

Two New Teams

 

The first two expansion slots of the five teams that MLS wants to add have already been announced. The league will expand to the following locations in 2015:

  • New York
  • Orlando

 

The long anticipated addition of a second team in New York will be a reality in 2015 and it is a very lucrative deal. The team will be called NYC FC and it is owned by a partnership between the New York Yankees and the owners of the English Premier League team, Manchester City (www.nbcsports.com). The ownership group paid $100 million dollars for the expansion rights in New York, which is a sign that MLS has truly gone up a notch.

 

The Yankees will be handling the logistics of building the stadium and operating the team in New York. The Manchester City side of the group will handle the player personnel side of the team, evaluating talent and stocking the roster with players. The team will be based in Queens, and the new stadium site has not been completely finalized but it is likely going to be constructed near the US Tennis Center and Citi Field in Flushing Meadow (www.nbcsports.com).

 

The league just last week announced the Orlando expansion approval. The city in central Florida has a very successful minor league level team called Orlando City FC, which will be elevated to MLS in 2015 (www.mlssoccer.com). The team is nicknamed the Lions and will keep that name and their purple uniform color scheme, which is extremely popular with the fan base there.

 

These decisions keep with the MLS expansion directives of a demonstrated fan base and strategic business plan. However, the biggest key piece in the Orlando expansion approval was the stadium plan approval by the government entities in Florida.

 

The new stadium will be built in an area of downtown Orlando that is in the midst of a huge development trend. The stadium is a major component of an MLS expansion bid and is required for any new teams to enter the league (www.nbcsports.com).

 

The new stadium requirement is very important to MLS because it significantly improves the live game experience for both the fans and the players. MLS began playing in the mid-1990s in mostly gigantic NFL or college football stadiums, which were not conducive to hosting soccer games. The adjustment to the configuration for soccer created some poor sight lines, and made the fans feel too far away from the action.

 

The MLS move to the Soccer Specific Stadium (S.S.S.) provided a huge lift to the revenues of the teams and the league. The teams were able to use the majority of the revenue to improve the quality of the players and the operations of the team rather than paying rent on a stadium that they were tenants playing within.

 

Potential Expansion Candidates

 

The following cities are currently on the short list for an MLS expansion team either by 2017 (three slots are left) or in a future expansion round. The revenues are going up so steadily for MLS that many analysts believe that they can add several more expansion teams in the future.

 

The league has openly discussed that they intend to target the Southeast region for near-term expansion (www.mlssoccer.com).  That region of the country has no presence for MLS currently and will have only the Orlando club by 2015. MLS prefers to develop regional rivalries, which will require additional teams around Orlando very soon.

 

The list of potential expansion franchises for MLS are as follows (all TV Markets data is courtesy of www.stationindex.com , the population demographic information is courtesy of www.census.gov and the Fortune 500 corporate data is courtesy of www.money.cnn.com ):

  • Atlanta, GA – the largest city in the Southeast is a major city of high interest from MLS for future expansion.

TV Markets Rank: 8th

Metro Population Rank: 9th

Fortune 500 Company HQ: 5

Synopsis/Overview: The Atlanta bid achieves many of the expansion directives for MLS. The rumor is that the current owner of the NFL’s Atlanta Falcons, Arthur Blank, is interested in owning an MLS team. Blank has a son who plays soccer and the Falcons are going to be moving into a brand new stadium in a few years in downtown Atlanta (www.nfl.com).  The stadium could be built with coverings that will drape the upper levels of seating so that it makes for a more intimate seating configuration for soccer. This is similar to the system currently used in Vancouver who plays in a shared stadium with a football team. The sponsorship support should be excellent. MLS has current franchises in all of the metro population centers larger than Atlanta, with the exception of Miami.

 

  • Miami – This bid is intriguing to MLS but could have some issues.

TV Markets Rank: 16th

Metro Population Rank: 8th

Fortune 500 Company HQ: 4

Synopsis/Overview: The Miami bid is a bit complicated because it centers upon David Beckham. Part of the bid by MLS to lure David Beckham to play in L.A. and raise the profile of the league included an option for Beckham to, upon retirement, gain an expansion team for a bargain price fee of $25 million in a city of his choice (www.mlssoccer.com).  It has been widely reported that Beckham intends to move forward with the expansion bid and that he likes Miami for the bid. The issue here is that he needs other partners to be able to finance the project, and he has had some trouble lining them up. Beckham has a December 31 deadline to get an ownership group together and get approval of a stadium plan (www.mlssoccer.com). It is not known if MLS will give him an extension if he gains an ownership group and needs additional time to gain government approval on a stadium deal. Beckham has approached basketball megastar LeBron James about partnering with him and James is interested in a piece of the MLS team but nothing is agreed upon (www.cbssports.com).  Beckham also has to find a temporary home field until the soccer stadium is ready. MLS seems interested in Miami and has stated that the demographics there have changed since the league was there previously (MLS had a team in the Miami area – Fort Lauderdale and the team folded because of lack of support and financial losses). Other sources say that MLS is lukewarm on the Miami market and wants assurances on the stadium financing before moving forward there. This bid has very strong potential if Beckham gets it done because MLS feels indebted to Beckham for putting the league on the global map.

 

 

 

  • Sacramento, CA – location in Northern California is an area where MLS has only one other team (San Jose) and the bid has many positive aspects.

TV Market Rank: 20th

Metro Population Rank: 27th

Fortune 500 Company HQ: 0 (several large companies located in city/metro area)

Synopsis/Overview – The Sacramento bid to MLS is one that is very positive but also has a few potentially problematic issues. The city has a solid TV market rank but the population of the metro area is smaller than other cities they would competitively bid against for a team. The bid has many moving parts because right now the city is fielding two bids on alternative tracks to gaining an expansion franchise. The first group is headed up by the co-founder of the Sacramento River Cats (minor league baseball) Warren Smith, who has purchased a USL-Pro minor league soccer team franchise to play in downtown Sacramento in 2014 (www.mlssoccer.com). Mr. Smith’s plan is to establish a fan base (part of the MLS requirements for expansion locations) build a front office that understands American pro soccer, and then deliver a new stadium downtown. The other area bid is from the suburb of Elk Grove which is being spearheaded by a public-private partnership involving Mayor Gary Davis and the City Council. The Elk Grove bid is focused completely on the business side of the scenario with the focus on building a brand new stadium on the site of an unfinished mall called Elk Grove Promenade (www.fox40.com).  The Elk Grove contingency has had discussions with MLS and is rumored to be the favored bid of the two. The area having two competing bids would not be good and would most likely resort in the city getting passed over by MLS. Mr. Smith has stated to local media outlets that if it looks like one bid is progressing better, they would all get in a room and rally around one bid for Sacramento (www.news10.com).  Time will tell if they are successful.

 

  • Detroit – The “Motor City” is in the mix for a MLS team but it is more of an outsider at this point at least in terms of the initial expansion to 24 teams.

TV Markets Rank: 11th

Metro Population Rank: 14th

Fortune 500 Company HQ: 9

Synopsis/Overview: The Detroit rumor of expansion to MLS began four years ago, when the Apostopoulos family and their company, Triple Sports & Entertainment submitted the winning bid for the Pontiac Silverdome, which is the former home of the NFL’s Detroit Lions. The dome has not been used much since the Lions moved out in 2002 to play in downtown Detroit. The Silverdome is about 30 miles outside of Detroit and can seat 70 -80,000 depending on the type of event. That would be too large for MLS standards, so they would have to renovate the stadium or tear it down and build a new stadium on the site (www.sports.yahoo.com).  The family has deep pockets and would control all of the parking and other revenues at the stadium, which MLS finds favorable in a venue setup. The family had an elaborate plan to renovate the site which has changed dramatically. Now, the roof had been deflated in early 2013 to save energy and it has been torn apart by high winds (www.mlive.com). The family has said it is installing a solar paneled roof and they have winterized the building. The TV market ranking is very good, the corporate sponsorship support would be strong as well. The big issues with the bid are the state of the economy in Detroit, the population demographics, and the ability of a fan base to support the team long term. At the time of Triple Sports buying the dome site, Detroit had not had a major soccer event since the 1994 World Cup. Since then, the city was awarded a minor league team, Detroit City FC, and they have pretty solid attendance numbers (www.sports.yahoo.com). The population demographics are trending on the decline and MLS is probably unsure of the long term fan support based on the bankrupt city economy in Detroit (though Triple Sports maintains that they need no public money to build the stadium). The very latest proposal is for a new soccer stadium at the old dome site along with a 275,000 square foot retail space development project (www.cbssports.com).  This bid seems like an outside type of bid based on the priority system of MLS at this point.

 

 

 

 

  • Minneapolis, MN – A very strong contender for the final expansion spot of the first wave announced by the league.

TV Markets Rank: 15th

Metro Area Population Rank: 16th

Fortune 500 Company HQ: 18

Synopsis/Overview: The Minneapolis area has all of the elements of a successful MLS expansion bid. They have a potential ownership group, they have an established fan base, and they will have a world class stadium in the near future. The media market size has been the draw for MLS, they need a franchise in the top 15 TV markets and in that northern region of the U.S. Midwest. The Minnesota United currently play in the minor league NASL and are the defending champions with an established loyal fan base (www.mnunitedfc.com).  The owner of the Minnesota Vikings NFL franchise has so much interest in an MLS team, he had the soccer configurations built-in to the plans for the new NFL stadium for the Vikings, which broke ground last week and will be completed by 2016 (www.nfl.com).  In a move that is very similar to the Atlanta bid, the roof would be lowered for soccer, or a covering would enclose the entire upper bowl of the stadium to bring the seating capacity in line with other MLS facilities. This is a very solid bid which has great potential.

 

  • San Antonio, TX – A rapidly growing city with a successful minor league soccer team and a diverse population.

TV Markets Rank: 37th

Metro Population Rank: 25th

Fortune 500 Company HQ: 5

Synopsis/Overview: The San Antonio bid for MLS has been ongoing for several years. At one point, the city was hoping to obtain an expansion franchise as a tenant for the AlamoDome, which was built with taxpayer dollars in the hope of getting an NFL team, and has never had a primary tenant. The city abandoned that plan and moved forward to explore other uses for that facility when MLS informed them they did not get an expansion bid in the prior round in 2007-08. A few years ago, San Antonio was awarded a second tier minor league soccer team, the Scorpions (www.bizjournals.com).  The Scorpions are regularly near the top of their league in attendance at their new soccer stadium, Toyota Field, which is considered by many to be among the nicest soccer facilities in the minor leagues (www.mlssoccer.com).  The stadium can be expanded to MLS standards, and most definitely would be if the bid was accepted. The ownership group would not be an issue and the corporate support for sponsorship would be very strong. The fan base is established through the Scorpions current presence in the market, and the population is growing there and is very diverse, which is attractive for MLS. The TV market is small, which could be an issue, but remember that ranking is of a lower priority to MLS than it is to other sports leagues (www.sportingnews.com).  San Antonio has great potential for an expansion bid, however, it may be in the second wave of expansion further down the line. The success or failure of this bid is tied to whether or not the Miami bid falls apart (because MLS is still a bit lukewarm on that market) and the progress of the Sacramento bid as well. Those are the main bid cities in competition for those last two slots with San Antonio in the mix.

 

 

In the end, the demographics of the TV market, the metro area population, and the involvement of Fortune 500 corporate support are all very crucial elements in the expansion of professional sports.

 

The role of government is also of paramount importance in the expansion of professional sports leagues because the politicians are involved in many facets of developing land for a new arena or stadium and to garner support for the team within the business community.

 

This article series covered the interaction between all of these elements as they contribute to a bid for a potential expansion franchise. The series also covered each major sports league, their respective current situation, and the challenges which are uniquely inherent to each league regarding expansion.

 

In a society that is becoming more technologically advanced, where job related stress is expected to rise due to many factors, and where family time together or time to spend with friends is becoming more limited; sports has and will continue to take on a larger role.

 

The outlet which sports provides through following a team or a particular athlete, attending games or events, participating in sports fantasy leagues on-line, and the interaction it provides with others: either family, friends, or members of fan clubs are going to combine to make sports increasingly relevant as a source of entertainment.

 

That demand for professional sports of all types will create a need for more teams or leagues. The demographics of the country will shape that trend as well with population shifts to other regions of the U.S., for instance the migration of people out of the Northeast to Southern states. The trend is also evident in the population increase in Texas due to the economic growth there and in the migration of more people to the Western United States.

 

It will be interesting to follow the developments over the next several years of some of these situations described in this article series. The scenario currently in Detroit with the bankruptcy filing by their city government is a case study into the rationale behind the impetus by these other cities to explore gaining professional sports teams. The theory being that if their city obtains one or more teams, they can develop and revitalize their downtown centers with an arena or stadium as the centerpiece.

 

The domino theory being that these developments will bring jobs and population retention keeping the tax revenue within the city and making their city vibrant for years to come. The future will determine whether sports will play a central role in the rebirth of the American city. One factor is clear, the money involved in expanding these leagues is too significant to ignore, so expansion is in our future. The other details will be filled in over the course of the years ahead.