49ers executive officer Jed York, left, sits with Republic FC’s Kevin Nagle, center, and Warren Smith, right, during the 2015 State of the City address by Mayor Kevin Johnson last month at the Memorial Auditorium. José Luis Villegas jvillegas@sacbee.com
49ers executive officer Jed York, left, sits with Republic FC’s Kevin Nagle, center, and Warren Smith, right, during the 2015 State of the City address by Mayor Kevin Johnson last month at the Memorial Auditorium. José Luis Villegas jvillegas@sacbee.com

Soccer

Sacramento leverages pro teams as allies in MLS bid

By Dale Kasler and Ryan Lillis

dkasler@sacbee.com

February 13, 2015 06:32 PM

Trying to buy a Major League Soccer franchise? It might help to own a football or basketball team first.

Many of the top teams in MLS are controlled by owners of other big-league sports franchises, and MLS likes it that way. It’s a big reason why Sacramento Republic FC, pushing its case to gain admission to MLS, lined up the Sacramento Kings and San Francisco 49ers owners as minority investors.

Since their investments in minor-league Republic FC were announced two weeks ago, the Kings and 49ers owners have given Sacramento’s MLS expansion push a good deal more credibility. Kevin Nagle, managing partner of Republic FC, said MLS officials had suggested to him that they’re more comfortable with bidders that have ownership ties to other major-league sports.

“It positions us better,” Nagle said.

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Eight of the 22 existing MLS franchises are controlled by current or former owners of teams from other sports, including the New England Patriots, New York Yankees and Oakland A’s. Sacramento’s chief rival in the MLS expansion derby, Minneapolis, has the backing of the NFL’s Minnesota Vikings. A second, competing group from Minneapolis has the hometown Twins of Major League Baseball and the NBA’s Timberwolves as minority partners.

The league’s affinity for owners from other sports is rooted in MLS’ struggle for acceptance in the United States. Founded just 20 years ago, MLS still lags other major leagues in popularity, and some experts say cross-sport alliances can fortify soccer’s attractiveness to corporate sponsors, broadcast partners and even casual fans.

MLS officials “are methodically trying to raise the consciousness of the league,” said David Carter, director of the Sports Business Institute at the University of Southern California. “Celebrity owners and people who have had success in other sports go a long way towards that.”

Look no further than the new franchise recently awarded to Los Angeles. The team, which will start play in 2017, has an ownership roster that reads like a who’s-who of sports, from Magic Johnson to soccer’s Mia Hamm to Golden State Warriors co-owner Peter Guber. An Atlanta team that debuts in 2017 is owned by Arthur Blank, who also owns the NFL’s Atlanta Falcons.

“It looks good and it sounds good and that’s why Major League Soccer is looking for it,” Carter said of the inclusion of owners from other sports.“It’s a tacit endorsement that people in other areas of the sports world look at Major League Soccer as a place to be investing.”

The price of admission for an expansion team is probably around $250 million, including a $100 million expansion fee and an estimated $150 million to build a stadium to MLS specifications. Nagle said Republic FC has ample financial backing from its nearly 20 investors. Financial terms of the Kings and 49ers owners’ investments weren’t disclosed.

The national sports media certainly noticed Republic FC’s new investors. Sports Illustrated said the Kings’ and 49ers owners’ contributions have “altered the MLS expansion landscape.” ESPN wrote on its website that Sacramento is now “within touching distance of the expansion finish line.”

Drew Epperley, who writes the popular soccer blog WVHooligan.com and is following the expansion story, said the new investors have made Sacramento nearly irresistible to MLS officials. “I think it’s now at a point where it’s almost too good to ignore for MLS,” he said in an interview.

Republic FC leaders aren’t ready to go that far. “It’s nice to read, but we have to stay focused,” Nagle said.

Having the Kings and 49ers owners on board guarantees nothing. MLS Commissioner Don Garber has made it clear he’d like to see a franchise in Minneapolis, which would help the league remedy a relative scarcity of teams in the Midwest. The third competing city, Las Vegas, was eliminated Thursday.

Dan Courtemanche, an MLS spokesman, wouldn’t discuss the impact of Republic FC’s two newest investors on the expansion competition. He would only reiterate the league’s plan “to announce the next MLS expansion market during the first six months of this year.”

Concerned about competition

The Kings’ investment capped a somewhat complicated courtship. The team considered becoming majority investors in August. Kings President Chris Granger accompanied Nagle, Republic FC founder Warren Smith and Mayor Kevin Johnson to a meeting with MLS executives at the league’s All-Star Game in Portland.

But it was Nagle, a Kings minority owner, who wound up buying a controlling interest in September. Eleven other Kings minority partners made smaller investments.

It took an intervention by Johnson to get the Kings as an organization to buy in. The mayor convinced Kings Chairman Vivek Ranadive that an investment would boost Sacramento’s chances – and would be good for the Kings, too, offering cross-marketing opportunities.

Ranadive was reportedly reluctant to make a deal. Sports Illustrated and ESPN reported that Ranadive saw an MLS franchise in Sacramento as a competitive threat, especially in light of the Kings’ investment in a new downtown arena not far from Republic FC’s proposed stadium. Quoting anonymous league sources, Sports Illustrated said Ranadive expressed those concerns to MLS executives “on multiple occasions.” At the same time, Sports Illustrated said Ranadive told MLS officials he was interested in owning a controlling stake in the franchise, not a minority share.

The Kings denied any suggestion that they viewed Republic FC as a threat.

“We’ve been fans of the Republic since the beginning,” Granger said. “We’ve been supportive of the Republic.”

Smith and Nagle also denied there was ever any resistance from Ranadive. Smith, however, acknowledged Ranadive may have had legitimate concerns about the impact of an MLS franchise on the Kings’ finances.

“If I were putting $300 million into a (basketball) stadium, I would want to make sure my stadium is successful,” Smith said. “You have to understand that.”

Johnson also brought the 49ers owners to the table by introducing Nagle to 49ers principal owner Jed York. After months of discussions, the mayor announced the deal at his State of the City speech, one day after the Kings’ investment was disclosed. The investment is by York and several other owners individually, not the 49ers as an organization.

Nagle said the 49ers owners won’t be passive investors; they will work with Republic FC on stadium construction, food and beverage issues, and so on. The 49ers last summer opened their new Levi’s Stadium in Santa Clara.

Back at Hughes

Besides credibility and expertise, the 49ers bring something else to Republic FC – the ability to help smooth over any possible friction with San Jose’s MLS franchise, the Earthquakes.

Although Republic FC was the Earthquakes’ minor-league affiliate this year, and could perform that role again this year, Nagle said the San Jose team holds “territorial rights” over the Sacramento market.

That means the Earthquakes could demand some form of compensation from Republic FC or become an obstacle to Sacramento’s bid for MLS status. The 49ers, meanwhile, have business ties to the Earthquakes, including a five-year agreement to host an Earthquakes game once a year at Levi’s Stadium.

The 49ers owners’ investment in Republic FC doesn’t automatically resolve the territorial rights issue, but it can’t hurt. Nagle said he has had “some informal discussions” with the Earthquakes about resolving the rights question. Officials with the Earthquakes, who are owned by Oakland A’s owner Lew Wolff, couldn’t be reached for comment.

In the meantime, Republic FC is still working to sell Sacramento to MLS. Besides polishing its plans for its proposed downtown stadium, the team is adding more than 3,000 seats to its temporary facility, Bonney Field, and promoting marquee exhibition games against the Earthquakes on Feb. 21 and the New York Cosmos on Feb. 28.

The Cosmos game in particular is shaping up as a major event. It will be held at 20,000-seat Hughes Stadium, where a stunning string of sellouts last spring opened MLS’ eyes to the huge appetite for soccer in Sacramento. The team moved to Bonney because Hughes’ field didn’t meet international standards. It will host the Cosmos at Hughes because of the renovations at Bonney.

Several thousand tickets have been sold since tickets went on sale Thursday, and Republic FC leaders are thrilled at the prospect of reminding MLS officials of the strength of the market.

“The exciting part is we’re going to go back to Hughes Stadium,” Nagle said. “We’re going to fill that stadium with 20,000 people, 20,000 Sacramento fans.”

Call The Bee’s Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.

Futbol, football and other sports

Eight MLS franchises are controlled by owners or former owners of other major-league teams.

▪ FC Dallas: Hunt family (Kansas City Chiefs)

▪ New England Revolution: Kraft family (New England Patriots)

▪ Atlanta expansion team: Arthur Blank (Atlanta Falcons)

▪ San Jose Earthquakes: Lew Wolff (Oakland A’s)

▪ Toronto FC: Maple Leaf Sports & Entertainment (Toronto Raptors, Maple Leafs)

▪ Colorado Rapids: Stan Kroenke (Denver Nuggets, Colorado Avalanche, St. Louis Rams)

▪ D.C. United: co-owner Jason Levien (formerly Philadelphia 76ers)

▪ New York expansion team NYCFC: New York Yankees, England’s Manchester City soccer club