Empire XI: The Unmentioned Part of the Chivas USA Deal


Staff Writer

Thankfully, Jorge Vergara’s tenure as owner of Chivas USA is now over. MLS bought control of the franchise for a reported $70 million and will operate the club for the season. It is never a good thing when a league has to assume control of a franchise for any period of time, but overlooked part of the news on Thursday is that the unspecified time looks to be short.

MLS is not in an unprecedented situation with Chivas USA. The NHL assumed a controlling interest of the Phoenix Coyotes after they declared bankruptcy in 2009. The franchise’s fate remained in limbo for four years until being sold in 2013. It is unlikely that Chivas USA are going to be in the same limbo as the Coyotes and that is probably the best thing for the league going forward. However the best thing for the league and for American soccer is not only that Chivas USA are not going to be in limbo, but the fact that there are multiple ownership parties trying to get the club off the league’s hands as soon as possible.

Do not underestimate the importance of Don Garber’s statement ruling out Stan Kroenke as a prospective owner. The MLS Commissioner said that he is trying to end the multiple owner era as quickly as possible which will be a milestone for the league and American soccer. That could happen sooner rather than later.

If there are truly multiple ownership groups interested in Chivas USA, then it is a positive in two ways. First, it’s a good sign that there is high interest from people with money looking to invest in the league. Secondly, amongst that group, there may also be interest that can be deflected or shifted elsewhere, to Houston, to the NASL and elsewhere.

Currently, AEG are the lone owners of multiple MLS franchises as the principle operators of the LA Galaxy and majority owners of the Houston Dynamo. Reading into the tea leaves of this and Garber’s statement, it should become clear that the league would prefer AEG to not have the 50% stake it currently has with the Dynamo.

That leaves AEG with two options: Have their partners (Brener International Group) buy their stake or sell their stake to an outsider — an outsider who is probably looking at the situation going on with Chivas USA and considering whether or not to place a bid. If he/she were to inform the league of their interest, the onus falls upon the league to keep them in the loop on the Dynamo as well. The league wants that door to open with the Dynamo, and by the looks of what’s going on with Chivas USA, there are people who would line up in front of it eagerly waiting.

By effectively making the 50% stake in the Dynamo a consolation prize, the league gets its goal of ending multiple owned teams, AEG gets some return on its investment, a new owner invests in the league which can now begin to phase itself out of the training wheels of single entity, and heck, maybe the league can even flip Chivas USA for a profit.

Yet there is a symbolic significance in the fact that people actually want to buy Chivas USA. If there are truly multiple people who want to buy the most poorly operated soccer franchise in recent years with a reportedly expiring stadium deal, then it can safely be said that MLS has successfully gained a foothold in the sports business conversation. With only two potential immediate ownership opportunities set to arise, there are going to be people shut out of MLS. It’s up to the NASL and the USL to attract those shut out ownership groups. If that can happen, then we have ourselves an irony: a Mexican team’s failed attempt to capitalize on its growth potential will have raised the growth potential of many more American teams instead.

Empire XI

1. We’ll probably hear today or in the near-future about whether or not the USA-Ukraine game scheduled for March 5 in Kharkiv will be affected by the political unrest in the country. From a soccer point of view, the US needs to play this game in order to look at the European-based players contending for a spot on the World Cup squad. At worst, they need a training camp with the team together for a few days.

2. But to quote former Colombian National Team Coach Francisco Maturana, “Soccer is not an island.” Ukraine is not a secure place to be in right now. The State Department has issued a travel warning for all US citizens to “defer non-essential travel to Ukraine during the transition period following the departure of the President from Kyiv.” Kharkiv is not Kiev but soccer is not essential. As long as that travel warning remains and the unrest continues, the USMNT should not make the trip.

3. Disclosure: I am a Fulham supporter. The Clint Dempsey loan criticism seems a little misguided to me. The loan was a good move at the time but it was unfortunately ruined by two factors: Dempsey being unfit and Fulham’s managerial situation. Dempsey was in the awful position of not having a preseason for what amounts to two consecutive seasons and it showed as he struggled to get himself into the same positions that he is capable of. When Rene Meulensteen was fired, the final nail in the coffin was hammered in. New manager Felix Magath needs to have a squad he can count on to avoid the drop and he simply can’t count on someone who is going to leave in a week or so. Though if Dempsey starts out his first full season with the Seattle Sounders well, then technically, the loan move worked in its intent on preparing him for the MLS season, no?

4. Thinking about the Dempsey loan brought me back to a comment USMNT Head Coach Jurgen Klinsmann made about the market not being there for MLS-based players to go to Europe for that short, offseason loan. The concept of it is not as great as it seems. Managers like building up squads over time. They don’t like rentals which is what the short term loan is and the only teams that could really use a rental are usually teams towards the bottom of the table with Landon Donovan and Everton being the rare exception. Going forward, it may be best for players to either look for longer loans, transfers or to stay in the US for preseason.

5. Fabian Johnson will join Borussia Monchengladbach on a free transfer when his current contract with Hoffenheim expires. Good, cheap move for Gladbach who are in sixth in the Bundesliga which would give them a spot in the Europa League. Good move for Johnson who will be at a European contending club for the prime years of his career.

6. A really solid piece by Jeremiah Oshan at SB Nation outlining the CBA stances for both the league and the MLSPU. To add to the point made about establishing a more stable middle class (as he puts it), it is up to the Players Union to be as unified as possible which is a little more difficult for the MLSPU than it would be for other player unions. Since MLS is not a ‘top league,’ not every player is all that interested in its long-term future, especially if they know the European leagues are looking at them. Of course, the Players Union brass needs to have the interests of every player in mind so it may be a little exceptionist in nature to only look at what is best for the American player.

7. Not looking good for Virginia Cavalry FC at the moment. The new NASL club already deferred its inaugural season to 2015 and they remain unsure as to when their new stadium, Edelman Financial Field, will be completely built. “They’re still trying to get funding for the stadium,” General Manager Mark Simpson told SoccerWire.com. “Obviously I do want to play at that ballpark, but right now we’re in a holding pattern.”

8. Unfortunately Cavalry FC are not the only team in that part of the country with stadium problems. DC United just met its strongest and most powerful critic in D.C. Council Member and mayoral candidate Muriel Bowser. While Bowser has the power to kill off the project by simply not tabling the bill, take her words in the Washington Post with a grain of salt since it has the careful spinning of a politician attacking a controversial issue. In other words, she’s just picking low-hanging fruit to get some votes.

9. One nerve-racking takeaway from New York Cosmos COO Erik Stover’s interview with EoS was his admission that the Belmont stadium plan is “the same as it has been for a few months.” It’s been 15 months. While Stover has experience in stadium building as part of his work on Red Bull Arena, his experience on that does not translate as well as he hopes it does. Stover is dealing with a notoriously slow-paced development company and will eventually have to deal with the Town of Hempstead — the same town that stifled the more popular New York Islanders’ plan to renovate and develop the Nassau Coliseum through a privately funded project, then private-public funded project. The Islanders spent about a decade pursuing that deal, losing a reported $200 million. The Cosmos do not have $200 million to lose on a stadium development deal. They have to have a plan-B waiting in the wings soon or else the potential losses could kill the franchise.

10. The P.R.O. – P.S.R.A. negotiations have been, at best, uninspiring. The P.S.R.A., representing the referees, not only appear to be strong in their stance but completely justified in their complaints to the National Labor Relations Board. It is too early to definitively say whether or not a strike looks likely or not but it does look like P.R.O. are on the backfoot and likely to relent in the upcoming negotiations.

11. Good to see NYCFC supporters meet for the first time this past weekend and also the Borough Boys honor Marcos Senna as player of the year. All the best to each, as well as the New York Red Bull supporters, as they continue to build up support for their respective clubs.

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  • I don’t think anyone is salivating at take over Chivas USA and its current infrastructure as much as it is another slot an “expansion” team can take. There are many cities vying for the last spots in Garber’s 24 team expansion and Chivas’ slot would be another way in.

  • Tony

    Can’t believe mls bought chivas and at that substantiall price. All profit for vergara, I guess the rich never loose even when they run the business to the ground. MLS shows the lack of business accumen on this deal. Since they Are big on making up rules they should have told chivas bounce on account of the new rule low attendance, lack of marketability, or any myriad of stories. Heck they could have used lalas story of racism at chivas USA.

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