MLS expansion: why cities are deciding stadiums are 'welfare for millionaires'

https://www.theguardian.com/football/blog/2017/jan/31/mls-expansion-funding-stadiums-soccer

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Alderman Samuel Moore represents Ward Four in St Louis - one of the poorest areas of the city. During a committee meeting last Thursday he held up photographs of dilapidated housing in his local area and announced: “This is what I live every day”. Moore and other aldermen were considering a request by a group called SC STL that hopes to bring Major League Soccer to the Missouri city. The request? SC STL wants the city and its taxpayers to approve $60m of public funding (an initial request for $80m was rejected) for a new stadium that will eventually cost an estimated $200m. Moore, to put it politely, thinks that kind of cash should be spent elsewhere.

It turns out Alderman Moore is not alone. Similar debates are taking place in cities across America as MLS plans further expansion and other pro sports organizations plan upgrades or new facilities. Moore’s issue is simple. Why should a city - or state - facing major infrastructure and social challenges provide taxpayer money to help billionaires build a soccer stadium?

Last December, MLS commissioner Don Garber announced his league’s 25th and 26th teams will be unveiled in late 2017. The 27th and 28th teams will be announced at an unspecified later date. This Tuesday marks the deadline for bids to get their paperwork in for this expansion round. There are 10 known contenders for the four available slots (some may call them “markets”): Charlotte, Cincinnati, Detroit, Nashville, Raleigh/Durham, Sacramento, St Louis, San Antonio, San Diego, and Tampa/St Petersburg.

The 27th and 28th teams will join MLS in 2020, getting in line behind Atlanta United, Minnesota United, Los Angeles FC, and supposedly Miami, if the ownership group known as Miami Beckham United ever breaks ground on its long-proposed stadium. And that is the catch. To become an MLS team, the 25th and 26th hopefuls will have to pay a $150m joining fee (to get an idea of how much fees have increased in 10 years, it cost Toronto FC $10m to join MLS in 2007), satisfy ownership and fan base requirements, and lay out “a comprehensive stadium plan that ensures the club will have a proper home for their fans and players while also serving as a destination for the sport in the community.”

Ignoring that New York City FC – co-owned by the cash-flush City Football Group and New York Yankees – seemed to have slipped through the usually tight MLS net to play its matches on a baseball field, owning, funding, and constructing a stadium is a key puzzle for any new bid. Just ask St Louis.

Newly-elected Missouri governor Eric Greitens, sensing an electoral no-brainer, said before he took office in early January that public money for the construction of a downtown St Louis stadium was “nothing more than welfare for millionaires. Right now, because of reckless spending by career politicians, we can’t even afford the core functions of government, let alone spend millions on soccer stadiums.”

He may have a point. The SC STL does not seem shy of access to private investment. Its ownership group includes Paul Edgerley, a former Bain Capital executive who has financial interests in the Boston Celtics and Serie A’s Roma, and Dave Peacock, a former president of Anheuser-Busch and currently chairman of the St Louis Sports Commission (SC STL did not respond to requests for comment for this article).

Last week’s city aldermen meeting was just one step in a long process to approve - or not - public co-funding of the project. A vote to further consider the request was eventually passed after two attempts and the issue has now been kicked along to the city’s full board of aldermen to consider whether the issue should go to a public vote in April. Accessing public money takes time, mostly because the pros and cons are not black and white and sometimes involve something of a gamble.

“Indianapolis was a dead city until they started investing in sports venues,” says Peter Wilt, the founding president of MLS’ Chicago Fire who later launched Indy 11, a startup soccer team from Indianapolis that entered NASL in 2014.

“In Indianapolis, they built an NFL stadium without an NFL team. That is visionary and that is gutsy. That stadium lured the Colts downtown. Then they built a new basketball venue for the Pacers and that also livened up downtown Indianapolis. When a venue is downtown, it can energize a city.

“That benefit is often tangential,” he adds. “It is about image and plays into making a city cool to live in, a good experience for young professionals, and reducing the brain drain on a community. Things like that are sometimes not taken into account. If Oakland loses the A’s and the Raiders, which is a possibility, then no one will hear about Oakland in any positive terms for the foreseeable future. At the same time I will acknowledge that these are hard times for people and you have to have priorities. Basic human services for citizens should come before palaces for wealthy owners.”

Of the incoming bids, Sacramento, Tampa Bay, and San Antonio have construction deals in place or will upgrade existing facilities. Strikingly, San Diego’s MLS plan is to take advantage of the NFL’s Chargers fleeing the city for Los Angeles after residents voted down a request to fund $1.1bn of a new $1.8bn stadium project. Instead, San Diego may now get a privately-funded 40,000-seat, $200m, stadium shared between an MLS side and the San Diego State University football team, part of a $1bn project to also include a residential, shopping, and entertainment district.

Pushback seems to be catching on. In Charlotte, another MLS contender, the city and county have been asked to each contribute $43.75m for a $175m stadium. To complicate matters, the proposed MLS stadium site had already been eyed as a possible venue for Charlotte Independence, which plays in the second division United Soccer League. The Charlotte MLS bid is led by Marcus Smith, the CEO of Speedway Motorsports, a company that owns Nascar racetracks across the country.

In a scorching editorial in the Charlotte Post, Mecklenburg County Commissioner Jim Puckett wrote: “Does this project increase economic development? Little, if any. Does it enhance a fragile neighborhood? Hardly. Does it offer magnificent financial returns? No, we break even at best. Does it conform to a long-term master plan, fill a gap in adult or youth recreation needs, provide long-term jobs, build community, enhance our green space? No, no, no, no and no. Is a $75m loan to a billionaire more prudent than a fund to encourage small business growth?”

The pressure appears to have worked: at the end of last week the city council announced it would not pursue an MLS deal for the time being. “Any major decision we make needs to be considered as part of the bigger picture as we serve our entire community,” read a statement from the City of Charlotte local government.

Of course, in many other professional soccer competitions around the world, rather than pay out, you get a financial boost to join the league. Clubs promoted to the Premier League from the Championship can see an increase between $100m and $200m in revenue for their first season at the top level (teams also get parachute payments if they are relegated from the Premier League). This, though, is America where MLS is by invitation only, the price of admission is (currently) $150m for a licence, plus a new stadium (by contrast, NASL and USL expansion fees are estimated to cost between $2m and $2.5m for new teams – neither leagues would confirm these amounts).

“MLS has done a wonderful job in creating false scarcity in these licences,” Wilt says. “Since there were 12 teams in the league they have been saying they are going to expand by only a couple of teams. Even now when they say they may stop at 28 teams everyone knows there will be more. [San Diego’s] Nick Stone said he believe this is going to be the final round of expansion. I don’t know if he really believes that. If he does they have him hoodwinked. MLS will go to 30 teams, they will probably go to 32, and there is a chance they will go to 40.”

That’s the financial genius of MLS expansion - millionaires and billionaires want into a party that may close its doors at any time. Don Garber can raise license fees to as big a number as he feels the market will take. The flipside is not everything is going the way of America’s millionaires and billionaires – at least not as far as pro sports team ownership is concerned. It may not be a revolution – or even a “movement” – just yet but, from St Louis’s neglected neighborhoods to more affluent San Diego suburbs, the public is starting to see that funding a rich man’s plaything might not be what was quite meant by soccer being the ‘people’s game’.