SUM’s Bid to Buy Cosmos Cited in NASL Antitrust Case

IMAGE, STEVE HAMLIN PHOTOGRAPHY

The back and forth between the North American Soccer League and the United States Soccer Federation continued in federal court this week as the league filed its latest response in its antitrust case against the federation.

In this week’s filing, New York Cosmos owner and NASL Chairman Rocco Commisso contends that Major League Soccer‘s marketing arm, Soccer United Marketing, submitted a bid to buy the Cosmos as they were on the verge of collapse late last year. Commisso claims in his declaration to the court that SUM’s offer was made with “the intent to terminate the franchise and eliminate the organization as a competitor.”

An email dated Dec. 15 of last year from New York City FC president Jon Patricof, which MLS deputy commissioner Mark Abbott was copied on, outlined SUM’s offer of $5 million to then Cosmos chairman and owner Seamus O’Brien. Included in the SUM term sheet was that “New York Cosmos, LLC and its owners shall not own or operate a soccer team in the New York metropolitan area under any name.”

At the time of SUM’s offer, OBrien and the Cosmos had already received a bid from GF Capital Management, a New York private equity firm. According to reports then, GF Capital’s only interest in buying the team was in the intellectual property (trademark, trophies, videos). It had no desire to operate the team. Cosmos ownership had already fired virtually its entire front office staff, and vendors and contractors were still unpaid a month after the season. The team had lost a reported $30 million in just four seasons. Commisso eventually began talks to buy the team in December and a deal was completed a month later.

The NASL is attempting to use this offer from SUM as evidence that the marketing firm was involved in a conspiracy to kill the league and the Cosmos. All three entities are closely tied financially, but the NASL is alleging they’ve worked together to prevent the league from challenging MLS.

USSF rejected the NASL’s Division II sanctioning application in early September when the league could not guarantee more than eight teams for next year. Now the league has brought its grievances to federal court, claiming the federation’s division arbitrary standards have hurt its ability to grow. The NASL is seeking a primary injunction to maintain its current D2 status while the lawsuit proceeds in court.

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SUM released the following statement in response to Commisso’s allegations about its bid to buy the Cosmos:

“Yesterday, in litigation that NASL and Rocco Commisso (the new owner of NASL club the NY Cosmos) are pursuing against the United States Soccer Federation, Mr. Commisso placed in the public record a bid that Soccer United Marketing (SUM) made for certain intellectual property and related assets of the NY Cosmos in 2016, before his purchase of the team.

“The facts behind that bid are that SUM, the marketing, licensing and commercial affiliate of Major League Soccer, was informed that the Cosmos were going out of business and were trying to sell its commercial assets for as much money as possible to pay its creditors. Those assets included the Cosmos name, a film library, the use of Pele’s likeness in connection with Cosmos-related merchandise, etc. As one of the leading soccer commercial companies in the United States representing a wide variety of soccer properties, SUM placed a bid for these soccer-related commercial opportunities with the view that it could develop merchandise and other products for the public.

“As a part of its bid, SUM included common provisions that the seller–the prior owner of the Cosmos–would not devalue those assets and create consumer confusion by operating a new team in the New York metropolitan area for 10 years. SUM’s bid was not successful, and it made no further efforts to buy the assets. Any suggestion by Mr. Commisso that SUM’s conduct was in any way improper is without any merit.”