Opening a new MLS soccer stadium in 2021 poses unique challenges

The current pandemic has created many financial challenges to MLS clubs.

Twenty of the 26 teams play in the stadiums they own or operate, including Atlanta United and the New England Revolution, which play in football stadiums they share with NFL teams their owners own.

That means they don't have revenues coming in from MLS games -- game-day ticket sales, premium seating sales, concessions, merchandise, parking, all the revenue streams they sought to control when the soccer-stadium boom began in 1999. (MLS has given clubs leeway about how to handle season tickets -- give credits toward 2021 purchases, offer refunds, etc.) There are also sponsorship deals for stadium naming rights, sign-boards and game-day activations that are up in the air.

But the lock-down also means MLS clubs that own or operate their own stadium do not have revenues coming in from other games and events played at their stadiums. Six NWSL teams were slated to play all or some of their games in MLS stadiums in 2020. Two XFL teams played in MLS stadiums until the league folded, a victim of the coronavirus.

For six current or future MLS teams there's an added problem. They are building new soccer stadiums -- three set to open in 2021 and three in 2022 -- but don't know when they will be able to welcome paying spectators in them.

MLS stadiums on the horizon:
*Austin FC (new stadium, 2021 opening)
FC Cincinnati (new stadium, 2021 opening)
Columbus Crew (new stadium, 2021 opening)
Inter Miami (approval stage)
**MLS St. Louis (new stadium, 2022 opening)
Nashville SC (new stadium, 2022 opening)
New England (exploratory stage)
NYCFC (exploratory stage)
**Sac Republic FC (new stadium, 2022 opening)
*2021 expansion team. **2022 expansion team.

One of them is FC Cincinnati, which on Monday announced it had sold naming rights to First Financial Bank for the largest club at its new stadium with more than 2,100 premium seats. It was a rare bit of news on the sports sponsorship front during the pandemic that has put most new deals on hold.

In a video conference call with media last week, FC Cincinnati chief operating officer Dennis Carroll outlined the challenges the second-year MLS club faces.

Carroll said FC Cincinnati generates about 90 percent of its revenues from home games. Without any games for the last two months or games with paying fans in the foreseeable future, FC Cincinnati, which finished third in MLS with an average of 27,336 fans a game in 2019, is feeling the effects.

“We’ll feel the pain,” Carroll said. “There’s no doubt it will have a long-term effect.”

FC Cincinnati has already taken steps to mitigate its losses. Executives voluntarily took pay cuts of up to 15 percent of their salaries, and hiring for 10-11 new positions at the second-year MLS club was frozen. FC Cincinnati opened the  $35 million Mercy Health Training Center in 2019, but work on additional facilities at the complex in suburban Milford has been put on hold.

Carroll praised the FC Cincinnati ownership group this is led by American Financial Group co-CEO Carl Linder III and added Meg Whitman last November.

“We may not feel the pain this month, next month or the following months," he said, "but we’ll feel it down the road."

He added the pain is immediate for some other MLS clubs.

"They’re taking reserves of money to keep the lights on and make payroll," he said. "The longer we go with games not being played, they’re going to have to have a cash infusion.”

Through the winter and into the spring, work on the new stadium in Cincinnati's West End has continued. Construction of the stadium is considered essential in Ohio -- along with work on the new soccer stadium in downtown Columbus -- and the stadium is still scheduled to open in 2021.

"There's been no scheduled timing issues to date," Carroll told the media. "Our other concern is supply chain issues, that may pop up. But so far, we haven't seen any there. It's moving along."

The stadium is slated to seat 26,000 fans with the closest seats within 15 feet of the field. The design calls for the Bailey, the supporters' section, to hold 3,100 fans, 53 traditional suites and 4,500 premium seats in four premium club spaces, like the First Financial Club.

Convincing corporations to take out sponsorship deals or buy tickets for premium seats will be tough.

"For us specifically, there are very few sports teams in our position," said Carroll, "where we're trying to plan for 2020, but more importantly, we're opening a stadium next year. Trying to open it in this unknown economic climate."

As designed, the stadium should be one of the most spectacular in MLS, featuring a 360-degree canopy roof will cover every seat but still allow sufficient sun in to grow a natural grass field and lighting that will make the stadium glow and change colors at night. The cost of the stadium is $250 million, and it is being privately financed.

But in drawn-out negotiations that extended from December 2017, when MLS cut down its expansion field to four cities, to May 2018, when Cincinnati was confirmed as an expansion team for 2019, the city of Cincinnati committed to supporting the stadium projection with infrastructure work (site preparation, roads, utilities, parking) worth $33 million.

Faced with major losses of income tax revenue, Cincinnati will likely finish its 2020 fiscal year with a $15 million deficit and its 2021 budget is projecting a $91.4 million deficit.

Last Wednesday, Cincinnati city councilman Chris Seelbach introduced a resolution to ask FC Cincinnati to "do the right thing" and pay back all or part of the city money for the infrastructure work. The council rejected it by a vote of 6-2.

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