Puerto Rico FC’s Payne Talks Island’s Debt Crisis

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imgresBuilding a successful soccer team at any level is a hard task. The job can seem nearly impossible, though, when your market has been in a recession for a decade and the local government has filed for a form of bankruptcy as it searches for a way to pay off debt and pension obligations of $123 million.

That is the situation Puerto Rico FC finds itself facing a little more than a month into its second season in the North American Soccer League. EoS spoke with the PRFC president Tom Payne during the team’s trip to New York to face the Cosmos. He spoke about the island’s debt crisis, how it’s affecting the team’s growth and how committed the owner Carmelo Anthony is to staying the course.

Q: What’s the mood on the island been like since the latest developments in the debt crisis? 

A: The mood, generally, hasn’t changed much really since I’ve gotten there. People have been living the economy since before I got there. That part of it hasn’t changed, but the recent bankruptcy disclosure and also they just announced the closing of 180 public schools. Those things hit home. They certainly make me think. People there are upset and there’s a lot of protests going, it’s like constant.

There was a big, huge island-wide one maybe two weeks ago. It kinda closed parts of the island for a day. It’s not civil unrest, but there’s a lot of people on edge about the economy and how they’re gonna make it work, how they’re gonna get out of this. It sounds to me, from everybody I talk to, it’s gonna be years. With the bankruptcy, that alone will take three, four years to get out of, or more.

Q: Now that you’re over a year in with the team and have a better understanding of the economic situation, have you re-evaluated your goals or benchmarks?

A: I’ve tried to set our goals at what I think are relatively reasonable levels. Last year I was new there, so it was a little unfair to sort of make them up. I didn’t do that until I got to know the lay of the land a little bit and got to know people. We’re trying to change the culture there from a ticketing standpoint. People there are very much used to getting free tickets to everything. The baseball and basketball leagues there that have been around 70, 80 years are failing right now, the individual teams are going under because the government can’t give them any money. A lot of these teams have been basically funded by the government in their location. Even where we play in Bayamón, the basketball arena’s right next door, I think they’re the most historic basketball team and every year they get hundreds of thousands of dollars from the government. This year, nothing. One positive is we’ve never depended on that because we came in at a time when you couldn’t depend on it. In today’s reality in Puerto Rico, there’s no reality to expecting to get funds from the government.

For us, we’ve pretty much stayed the course with ticket sales and things like that. I don’t believe in free tickets and I think down there it would set a really bad precedent. That’s really why the Puerto Rico Islanders ended up going under, because they couldn’t sell tickets. We struggle. It’s not where we want it to be. I don’t think any of the teams in our league are. That’s the biggest obstacle. So it hasn’t really changed anything since we’ve been realistic from the get-go.

Q: Where are you getting most of your sponsorship money from? On or off the island?

A: On the island. The biggest companies there, so we have Claro and Samsung. Those two combined, I call that our jersey deal. It’s as good a deal, or better probably, as any in the league. The difference is there’s only a couple of those companies on the island that can afford that kind of money. We’ve got Triple-S, which is their version of Blue Cross Blue Shield. We’ve got the beer Medalla, but there’s not as many companies that can do a six-figure deal. That’s affected, too, by the economy. I was with a fast-food company last week that told me a couple years ago they sold four of five million kids meals, now they sell one million. That tells you a lot about the economy. One of the issues is people leaving. It’s young families that are leaving, leaving you with the elderly that cost more for the government to take care of. That’s one of the issues.

Q: And younger families are a key demographic for a soccer team to capture, right?

A: Yeah, the thing that’s important is that the sport has become more important since I came with the Galaxy for a preseason friendly and then the Champions League. We had good crowds, but it wasn’t a soccer crowd. Now if you go to the mall, kids are wearing soccer uniforms. We do pretty well ourselves, merchandise wise. We still have to sell to the same people that the Cosmos do — youth soccer. It’s difficult there, it’s as political as it is anywhere else. It’s not as organized there as it is here where all those organizations are run like big businesses. Down there youth soccer’s not run that same way.

Q: So what’s holding you back from engaging more people? The economy? Attendance seems to be stagnate or even a little lower from last year.

A: The economy’s a big part of it. A family has to make a serious decision about whether to spend 40 bucks on four tickets or putting food on the table this week. That’s where it’s real. I’m trying to meet with Carmelo while I’m here and the one thing I want to make sure he understands is that this is real.

I was talking to somebody here about it and they said you hear about here because of the big Puerto Rican demographic, but you don’t hear things like a 45 percent poverty rate. That’s not reported here. One-hundred-and-eighty schools closing in one week. I don’t think that’s been reported here. That’s true. Kids that need to be going to college aren’t now because there’s no university because they’re trying to lower their budget by 50 percent. I don’t want to scare anyone. I want to be real, though. I want Carmelo to understand this is not going to be a quick fix.

Q: How can you survive in that kind of environment?

A: Every year we expect our revenues to go up by some increment. Right now we’ll try to keep our expenses flat, as much as you can. But that’s not perfect either because if you have players you’re going to bring back on a second- or third-year contracts, you have to pay them more. Things always go up incrementally. I’ve always been pragmatic and realistic. In this scenario, what we’ll try and do is lower the gap a tiny bit every single year.

But I want Carmelo to know it’s going to be quite a few years. The economy’s not going to change overnight. I was with the CEO of one of our sponsors the other day, this all affects his company, too, it could be 10 years before they really come out of this hole. It’s amazing — you see little glimpses of things maybe turning cause there’s a new restaurant or hotel opening. Maybe something’s happening, but then you see the Vanderbilt Hotel is right next to abandoned buildings.

Q: Do you feel better about the direction the NASL is heading with player spending and operating costs? You voiced some concerns about those issues last year.

A: I think so. Listen, it’s a hard business. There are always going to be owners, the Cosmos had one previously, that spend a lot of money compared to our team or most teams. Now you’ve got Miami doing that. I think Miami has a good team. To me they look like the team to beat.

I do think those new rules are good because there has to be some amount of competitiveness or parity. Through the first six games we haven’t won, but I feel like we could’ve won almost all of them cause the team’s are very similar. That’s the way of American sports now, with salary caps and all that. Expansion sounds like it’s coming along to. For me, I’d rather expand slow and get the right owners. That’s always been my argument with this league and the other leagues. Don’t expand for expansion’s sake. You gotta get the owners that are gonna do the right things.

Q: What’s Carmelo’s reaction when you’re giving him attendance figures, budgets, spending reports? Is he patient?

A: He’s patient. We don’t talk every day. He’s a busy guy. We have check-ins when we can. When he comes to visit, which he’ll do in the next couple weeks, we’ll have sort of a midyear check in with the finances. Again, what I’d try to get across to him, because if you’re not in it, you can’t understand the true reality of it. You can say all you want that we gotta get more people to the games. I’m the biggest hard ass about that and I want it more than anybody, but there’s also the reality that it’s going to take a while. We gotta keep chipping away. We want to have three or four big, like tentpole type games that do double what most of our games do and hope those are so entertaining, the presentation is so great and the promotion is so good that it will help lift the rest of the season.

I don’t think our attendance is any worse than most of the teams in the league, to be honest. I know we do fewer comp tickets than most of the teams. I’m not a believer in comp tickets at all. If you get a comp ticket, you don’t spend at the game, you don’t support the partners. There’s all those things to take in to account. Right now our most important asset is our corporate sponsors. Their the key ones spending significant money with us, so we can’t devalue the product or devalue the presentation and have it affect them either. We’re going to try and stay the course. It’s always natural to say, ‘Jesus, I just want to get another 1,000 people at this game, even if it’s free.’ It’s harder to even do there than it is here, I’d say.

Q: Is Carmelo the sole investor in the team? Has there been any talk about bringing on more investors to maybe spread the costs around?

A: I haven’t heard anything about that. When he first interviewed me, the first thing I asked was why Puerto Rico and then I asked ‘Are you the sole investor.’ and he said yeah, that’s the way he wants to do it. He has a big heart. I think he’s fully committed to the team being in Puerto Rico and owning a soccer team, all of it. He put it there for a reason, because he wants to give back and he wants to do something aspirational. He realizes it’s becoming a soccer community. He sees the future there, but I think he realizes it’s going to take time and he’s committed to sticking through it.