Empire XI: Sacramento Republic FC Alters MLS’ Expansion Plans

Sacramento Republic FC

Sacramento Republic FC won the USL Pro Championship in their first season of play. They also set a league attendance record. The only other USL team with a resume equal to Sacramento’s is Orlando City SC whose resume was good enough for MLS to grant them a franchise.

It logically follows, then, for Sacramento to get a franchise as well.

Sacramento Republic FC may or may not join MLS because MLS has not yet committed to having a team in that area. As Jonah Freedman reported, club president Warren Smith approached the league in an attempt to buy Chivas USA and move them to California’s capital, but the league declined. It is another example of how frustrating the league’s measured approach can be for its observers.

Judging off of MLS’ expansion plans and the impending sale of Chivas USA,  the league will probably get between $250-300 million more in investment from new owners. That number comes from three reported figures: Atlanta’s expansion fee, the reported price for Chivas USA and the discounted rate David Beckham has for a franchise. Those three figures add up to $190 million. Add that to the $70-100 million in expansion fees for the league’s 24th franchise and you get the aforementioned estimate in MLS’ incoming revenue; the endgame for the league’s current expansion calculus.

The issue with that calculation is that it is a very safe one to operate in. Under this mindset, the only potential revenue that is relatively uncertain is the expansion fee for the 24th franchise. All other figures are pretty much set in stone, assuming Beckham’s plans for a Miami franchise do eventually come to fruition. The fact that we have to assume, for argument’s sake, that Beckham’s franchise will happen partially explains why the league is keeping it safe. If Miami falls through for good, then MLS will need to rethink its strategy.

However, that should not be the only impetus for potential change. If Chivas USA are set to be mothballed, why not sell them to the Republic’s ownership group? At the face of it, $100 million is $100 million, regardless of whom it comes from. However, this is not totally about the money.  It is essentially guaranteed that someone will pay that amount because of the league’s commercial success. Ultimately, the issue is how the league wants to use that $100 million.

If MLS sells mothballed Chivas USA to the Republic’s ownership group, it will immediately make LA2 an expansion priority, effectively ending the competition between Minneapolis, San Antonio et al. for that 24th team. Southern California is as tough a market to launch a professional sports franchise as any place in the country. Land is expensive and scarce and the public is fiercely against the use of government funds or assistance for stadium building.

Despite consistent success on and off the field, the LA Galaxy have not conquered the Southern California market largely because of the fact that the StubHub Center is in Carson; far enough to dissuade enough fans to give the Galaxy the lame statistic of only one sellout this season. Because of that, and the massive Hispanic market, the league needs a second Los Angeles franchise. Those reasons were why Chivas USA were created and it is why the league has set its stipulation that the club’s new owners keep the team in Los Angeles.

That methodology explains the league’s measured approach but MLS has taken risks with its expansion before. This is why likening Southern California to New York is the right thing to do. The league had two wealthy prospective owners buy in to the idea of a NY2 team so it can do it again for LA2 while getting rid of Chivas USA. By declining the Republic’s attempt to purchase Chivas USA, the league shows that it will not take the previously mentioned, more ambitious route.

Does keeping a mothballed Chivas USA in Los Angeles for a new owner to rebuild and rebrand while waiting to decide if Sacramento Republic FC is truly built for MLS produce a better reward than selling Chivas USA to Sacramento Republic FC and letting prospective owners compete against each other for LA2?

The latter is certainly a higher risk because it relies on more variables, but it produces a better, much richer reward.

Empire XI

1. The particular reason why the LA Galaxy’s one sellout this season looks lame? MLS just announced that it has set a record for most sellouts amongst all its teams. Not a great look for the Galaxy, one of the flagship franchises, to not be leading the way in this regard.

2. MLS television ratings continue to increase. According to Sports Media Watch, ratings on ESPN/ESPN2 are up 51%. A good sign, but ratings are not a hot button issue yet. Playoff ratings and early season national ratings for next year are going to be the ones worth close examination.

3. There is no other way to put it: Saturday was catastrophic for the Portland Timbers. Will Johnson will be out for six months after suffering a broken leg; they went from 2-0 up to losing 3-2, and the Vancouver Whitecaps passed them in the race for the last playoff spot in the Western Conference.

4. Since the Timbers finish the regular season with matches against Real Salt Lake and FC Dallas, they need to go for all six points in their upcoming home-and-home series with the San Jose Earthquakes.

5. If the Timbers slip up and the Whitecaps take points from either the Seattle Sounders or FC Dallas, Vancouver has the inside track to the last spot with matches against the Earthquakes and the Colorado Rapids to finish the regular season.

6. This is probably going to be Mark Watson’s last season with the Earthquakes, who ‘no-commented’ Alexi Lalas when he inquired about the Houston Chronicle report that Houston Dynamo Head Coach Dominic Kinnear has permission to speak to them. It is unethical for the Dynamo to leak the terms of Kinnear’s contract after the current season’s struggles and shows that ownership sees Kinnear as expendable.

7. New York Red Bulls Head Coach Mike Petke should keep his job regardless of what happens this season. That being said, how good of a head coach he is remains undetermined. To go from a massive over-achievement in 2013 to a massive underachievement in 2014 does not reflect well on Petke. However, Petke brought the club its first major trophy and happens to be a historical figure within a club that is trying to resell itself based on its history, both factors that will keep him around.

8. And to think this time last week, we were toasting the Red Bulls for saluting their past in an inspired evening at Red Bull Arena. It is safe to say that the Red Bulls/Metrostars’ consistent ability to disappoint on the big stage was not an aspect that the marketing department sought to commemorate when they unfurled the new banners.

9. Chris Duvall made bad rookie mistakes last night.  If only there was a sort of arrangement that allows for young players to refine themselves in the Red Bulls’ infrastructure while also playing competitive games at a lower level.

10. All I want to happen out of the upcoming lawsuit made by the likely players in the Women’s World Cup against FIFA and the CSA is for the case to get to a point that requires officials from FIFA and the CSA to go on record and under oath to answer the charges made against them. The perception of rampant sexism within FIFA is a completely logical one to have and one that FIFA has not cared enough about. Forcing FIFA to answer questions about this under oath will allow for us to see how correct our perception actually is.

11. So I’m not going to be around regularly writing for Empire of Soccer for the time being. A full workload of courses in my last semester of undergrad plus a football beat has a funny way of sucking away all my time. I’ll be back making regular contributions sometime after the MLS season finishes. Hope you all don’t miss me too much.