MLS Expansion: What's expected of winning bidders

MLS commissioner Don Garber announced the targeted cities, timelines and fees for expansion as the league grows from 24 to 28 teams. Here's what the expansion committee will be looking for from winning bidders.

MLS Expansion: Who's Who

CITIES. MLS has identified 10 cities as expansion targets based on interest of ownership groups:

St. Louis
San Antonio
San Diego
Tampa/St. Petersburg

DEADLINES. Interested groups must submit proposals by Jan. 31, 2017. They must detail ownership group, stadium plans and local soccer and corporate interest. There is nothing that would prevent other groups beyond those in the 10 cities from coming forward by the Jan. 31 deadline, but the time frame is short.

TEAMS NO. 25/26. Two expansion teams will be selected during the second or third quarter of 2017 and will begin play in 2020. The fee for these expansion teams will be $150 million.

TEAMS NO. 27/28. The next two expansion teams will be announced at a later date. The timeline for selecting these teams and the fees they must pay will be decided following the filing of applications.

REQUIREMENTS. Here's what MLS's expansion committee, which consists of Jonathan Kraft (New England), Andrew Hauptman (Chicago), Anthony Precourt (Columbus), Phil Rawlins (Orlando City) and Jay Sugarman (Philadelphia), will be looking at:

1. A committed local ownership group with the resources to invest in the soccer infrastructure to build the sport in its market.

"The expansion fee really is the start of a huge investment in MLS from each group," said Garber in a media conference call on Thursday. "As every potential market will be building a stadium, that leads to an investment that will go well north of $300 million. Officially, these new teams will be making significant investments in training facilities for the first team and the youth academy, and also building out their administrative staff."

Expansion fees, stadium and start-up costs are nothing. Probably the biggest change in recent years has been the money owners must spend on player development (academy and USL teams) and training facilities. Some training projects are costing $50 million, almost double what the first MLS soccer-specific stadium cost in Columbus in 1999. LAFC, which doesn't begin play until 2018, already has a youth academy in operation.

2. A market that has a history of strong fan support for soccer, is located in a desirable geographic location and is attractive to corporate sponsors and television partners.

Orlando City came out of nowhere to enter MLS in 2015 thanks in part to its strong support in USL PRO. That same support has catapulted Sacramento Republic FC to the top of the current expansion list and made FC Cincinnati a contender in a market that a year ago would garnered zero interest from MLS.

"Geographic footprint" is important to MLS as it tries to reach major media markets. It means MLS will seriously look at Detroit, the largest television market without an MLS team, and it won't go with two teams in North Carolina, where Charlotte and Raleigh/Durham are both bidding.

MLS wants to see corporate commitment, and for the first time will require teams have naming rights for jersey-front sponsors confirmed. Its experience has been that too many details have been left unresolved upon the launch of expansions teams, whose leverage over potential sponsors then decreases.

3. A comprehensive stadium plan that ensures the club will have a proper home for their fans and players and serves as a destination for the sport in the community.

Those details include the proposed site plan and required government approvals and support for the stadium. Again, unresolved stadium issues have tripped up expansion teams.

Two years into MLS, New York City FC still doesn't have a soccer stadium -- and none is on the horizon. Almost three years after initial plans were announced, David Beckham's Miami group doesn't have a stadium, creating all sorts of issues for MLS with its 24th team.

25 comments about "MLS Expansion: What's expected of winning bidders".
  1. R2 Dad, December 15, 2016 at 10:46 p.m.

    Still more financial opportunism from MLS. Do they really need the extra $50M over the previous $100M entrance fee? I'd have hoped for something more responsible/clever, because this sport is bigger than just MLS. Perhaps new clubs seeking entrance would have to pay $150M if they insisted on getting public funding to build a stadium, but only $100M if they privately funded the stadium? Drawing public funds to build NFL stadiums has turned into a huge burden on cities--why is professional soccer different? For a sport that is looking to win over people new to the sport, a little tax relief (and positive PR) would go a long way. Those 10 hopeful expansion teams are all in small markets.

  2. don Lamb replied, December 15, 2016 at 11:31 p.m.

    "financial opportunism"? That is a funny way to describe a business. What league is not trying to make money? That is how they get better. Don't kid yourself -- they aren't get better because they are open, or because the fans are more intense or even because the youth development is far superior. Those are major factors, yes, but it all comes down to the amount of money that flows through them. Money and assets are what make the league better, and expansion fees are a great way to get a quick infusion of cash while also making your entire league better in terms of overall value given the additional assets and better in terms of quality of play given raises in salary cap and other investments made with the cash.

  3. Bob Ashpole replied, December 17, 2016 at 10:08 a.m.

    Keep in mind that transfer fees on a single attacking player contract sometimes exceed $50 million. That sum does not look so excessive when considering the value of contracts for 25 players.

  4. don Lamb replied, December 19, 2016 at 9:19 a.m.

    Good point, Bob. Simply put, if you want to be involved in owning a top flight soccer franchise, you better not blink at a $150 million buy-in. If you do, you don't belong there.

  5. Dan Eckert, December 16, 2016 at 8:06 a.m.

    If just FEELS like a professional version of "pay to play".

    One could argue this is also a financial way to lock in - i.e. NO POSSIBLE way to ever introduce the concept of relegation - no real way for a small club to move up thru the divisions and get a shot. No real way for a Leicester City to emerge.
    I know - I know - I'm silly for thinking that this is about a game and not about money - I know - but it is Christmas - so I can be optimistic - at least for a little while. It's kinda like buying a lotto ticket - that for 1-2 days before the pick - and you can imagine what it would be like to win only to sigh when the scan reveals you are "Not a winner"

  6. don Lamb replied, December 16, 2016 at 9:10 a.m.

    Ironically, continued expansion is the most likely thing that could lead to a promotion and relegation system. Our "pyramid" is nowhere near organized or mature enough for that now, so the continued development of MLS and USL and the eradication of NASL are things that will help get us there. There is a lack of realism and perspective that exists with promotion and relegation fantasizers. Rightly so, MLS's priority is not on providing a path for Aimes, Iowa to join their league.

  7. Dan Eckert, December 16, 2016 at 9:18 a.m.

    Hey now. I got my ass kicked in Aimes, Iowa once. Just because they don't have a beach or a tall buildings - doesn't mean they are not interested in soccer.

  8. don Lamb replied, December 16, 2016 at 10:15 a.m.

    haha. Aimes is great and all, but we are still in the building/investment phase of our professional leagues, and this phase has to be very intentional and measured in order to be successful. I share the pro/rel fantasy, but there are many other more foundational fantasies that need to fall in line regarding the development of the game here before that one really gets interesting.

  9. Glenn Maddock, December 16, 2016 at 2:16 p.m.

    Where is Las Vegas? I thought they were building a stadium for the Raiders that could be used for MLS. I don't like the Seattle model of NFL teams sharing a huge stadium on turf, but that seems to be the model MLS is after in Atlanta and other markets. The big problem is finding growing and big enough soccer support to fill 20k -25k stadiums for regular season games. 1 season in USL tells me nothing. A few large crowds for USMNT games doesn't cut it. The MLS product is getting diluted, and most of these new clubs are going to lose a lot. MLS fans disappear when their clubs start losing

  10. Bob Ashpole replied, December 17, 2016 at 10:22 a.m.

    I think weather and grass fields are critical to the quality of soccer as well as to injury prevention.

  11. Wooden Ships replied, December 17, 2016 at 2:06 p.m.

    I agree Bob, but we have, what I refer to as pseudo fans, becoming the majority.

  12. Brian Kraft, December 16, 2016 at 3:32 p.m.

    1. I wouldn't think that head counts for El Tri games tell us much about the possible success of an MLS team.

    2. With all this interest, all this money, all this growth, all this speculation (stadiums being built without teams!), now seems like the PERFECT time to move toward a market-based soccer club model in the US, with promotion and relegation. Where is the US Soccer Federation?

  13. don Lamb replied, December 16, 2016 at 4:55 p.m.

    No group is building a stadium without a team. Those are merely plans for if they are granted a team. All of this uncertainty makes this a perfect time to implement pro/rel? The league finally has a solid foundation and a specific plan (and maybe even an end goal) for expansion, and THIS is the moment you want everything to go topsy-turvy?

  14. Brian Kraft replied, December 17, 2016 at 1:03 p.m.

    I mis-read the Sacramento blurb in the other article, but yes, perfect time. The "uncertainty" is which ownership groups The Don will choose. All of those groups are willing to put up the $150M or whatever it ends up being. That is not uncertainty, that is a ridiculously robust market for the sport from coast to coast. All of those groups ought to have teams (many already already do) and every pro team ought to have the opportunity to compete in the first flight through promotion. The bad old days are over, the money is pouring in, and the market should take it from here.

  15. don Lamb replied, December 19, 2016 at 9:23 a.m.

    Those people are only willing to put up that money IF they are part of MLS.

  16. aaron dutch, December 17, 2016 at 8:42 a.m.

    This is the greatest bubble in sports history getting created before our eyes. Just like the commercial real estate bubble. Just like commercial real estate take $1 and create $10 of leverage as long as the value is going up. The bubble is on all sides of the transaction ( at buy in, selling advanced rights, branding, going public, selling pieces off in the secondary market, finally suckers paying overpriced scarcity rent) bubble is when they go public in the next 5 years and raise $5bn in stock market funny money. This is just the warm up phase. MLS is using the next $300m for teams 25/26, then the fees jump to $200 a team for $400m more that $700m + $100m the rights/sponsorships/backdoor partnerships at SUM (no one knows about) = $800m the league will use to stay alive i.e. $30m over 4 years. My estimate is the each team loses $5-10m a year that MLS/SUM has to float and SUM is sitting on $1-1.5bn in cash. Then they keep selling and adjusting the buy in and rights/sponsorships to $250m a team for teams 29/30 and $300 for teams 31/32 etc.. The goal is to ride it to 40 teams and have a stock value of $50bn at bubble peak and either unload it to a "real sucker" or sell it off to private equity before it crashes. This will make all the owners $1 billion+ before it implodes and takes all of US Soccer with it.

  17. don Lamb replied, December 17, 2016 at 9:46 a.m.

    That is a very interesting piece of fiction, Aaron, but you left out the part about how MLS franchises are ACTUALLY growing in value. This is not some "bubble"; it's based on real economics, mainly due to the fact that MLS is reinvesting the money it is getting from expansion fees into assets that will sustain the long term growth of the league. Almost every team owns their own stadium, which is a MAJOR factor in these economics. Teams are investing in more valuable player assets as well. More importantly, teams are investing in facilities that they will use to develop their own players. And the league itself is growing steadily in popularity, which brings bigger and better opportunities for financial growth to come in the future. Again, this popularity is not based on a "bubble" -- look at the demographics and you will realize that MLS is riding a soccer tidal wave, not existing inside some fragile bubble.

  18. Bob Ashpole replied, December 17, 2016 at 10:17 a.m.

    I agree with don Lamb. In 1996 you could hardly call MLS a business enterprise. In comparison the prospects for the next 20 years are looking strong. The single entity structure and business plan for conservative growth have been successful beyond my expectations.

  19. don Lamb replied, December 19, 2016 at 10:16 a.m.

    Bob - Few people here are willing to include as far back as 1996 as part of their perspective. It seems that many only include the current picture of what is happening here compared to what is happening in other areas of the world as their complete perspective. This narrow view of MLS, how the game has developed in the US, and how it should continue leads to a lot of ignorance.

  20. aaron dutch, December 17, 2016 at 12:25 p.m.

    Don/Bob, how can you call a league that can only be sustained by adding teams, not the rights fees, transfer fees, academy value, attendance/concession revenue, doesnt have transparent relationships (how much $$ does SUM have, where did they get it from and what do they do with it), overpays by 2-10x for talent that when benchmarked on the open market has very little demand for it. Needs to sell & control all levels of the pyramid and decides itself who becomes MLS or not. Not the quality of the product on the field. If the goal is a soccer monopoly then you are right they are a success. If the goal is anything to do with healthy competitive soccer (we can't even win CONCACAF Club) that has any value to U.S. or the players then it has almost no chance to succeed.

  21. don Lamb replied, December 19, 2016 at 9:42 a.m.

    Aaron - MLS is not a league that can "only be sustained by adding teams." It is doing fine and growing as it is. However, expansion happens to be part of the strategy, not just for the sake of revenue generation, but for the sake of getting to the structure that is desired. A country the size of the US can easily support a league with 28 teams, and that is where MLS is heading. Not simply for the money, but because that is how they want to operate in the long term. And teams are absolutely chosen by their ability to put the best product on the field as possible. The big markets and good ownership have this ability, so there is no reason to "let this play out on the field" instead of through a strict assessment and vetting process. It would be very short sighted (and stupid) to let Rayo OKC enter MLS instead of St. Louis or Cincinnati or whoever. Secondly, the values of the teams are rising specifically because of the things you mention -- academy infrastructure, stadium and training ground infrastructure, attendance and concession revenue, media rights revenue, etc. MLS is nowhere close to a soccer monopoly. I'm sure you don't actually believe that Kaka had no choice but to come play in MLS. Or that Jordan Morris didn't have a choice. Or that any other player didn't have a choice. Every player simply made a decision that MLS was the best choice for them. The goal is CLEARLY "healthy competitive soccer." Teams are improving markedly year after year, and it is only a matter of time before MLS teams start winning CCL regularly.

  22. Bob Ashpole, December 17, 2016 at 1:06 p.m.

    Your question is difficult to address. I will make two points. First you are simply making the valid point that MLS does not fit your (and perhaps many others too) expectations of how a soccer league should operate. My response is simply that I don't care if MLS is typical or not. Second the business plan calls for parity. That means MLS clubs are unlikely to win international club competitions unless the typical MLS club is better than other nations best clubs. Even then the MLS clubs are at a disadvantage because of roster limits. Multiple competitions are very difficult to manage for clubs with small rosters.

  23. Wooden Ships, December 17, 2016 at 5:05 p.m.

    I'm going with Aaron and Brian on this discussion. Interest is widespread and will continue to grow, more than any other sport as has been the case for the last 40 years. In my thinking, as it was in the 60's and 70's, pro-rel is the ultimate goal. Not just because of the drama (not our typical stale pro sports leagues) but also because of it insuring the accelerated rise of USMNT eligible players. Players that will have to compete in our soccer culture, to develop the requisite skills, in large enough numbers, to amass a truly viable threat at the World Cup. Yes, the MLS is nice, but with nothing to lose, does anybody really believe they are going to produce what's needed. Parity equals everyone getting a ribbon. The soccer consumers will either make it happen or not and unfortunately I'm not optimistic of our trending.

  24. Wooden Ships replied, December 17, 2016 at 5:07 p.m.

    Ensuring, not insuring.

  25. Bob Ashpole replied, December 17, 2016 at 7:10 p.m.

    Parity does not mean non-competitive. Exactly the opposite. It avoids the prospect of a big market team (or two) dominating the league like the NY Yankees did for decades in Baseball and as is typical in every major soccer league in Europe. To date it has succeeded in avoiding perpetual dominance by elite clubs. It is a very different model, but that difference is its attraction.

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