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Volume 26 No. 113
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Sacramento Mayor Played Key Role In Landing MLS Expansion Club

MLS increasing its expansion fee to $200M before awarding Sacramento a franchise meant that Mayor Darrell Steinberg "had a problem to solve" in order to land a team, according to Bizjak & Breton of the SACRAMENTO BEE. Sacramento Republic FC Owner Ron Burkle and investor Matt Alvarez in April were "upset" when they learned MLS' asking price, which had been $150M for the previous two expansion teams. Burkle and Alvarez "agreed to pay the fee." However, sources said that talks with MLS "stalled over how much of a down payment was needed and what the installment schedule would be." The ownership group had to "go over their pro forma," adding $50M "more in entry fees than they anticipated." At the same time, stadium construction costs were "starting to leak up" from an initial estimation of $250M, eventually approaching $300M. Steinberg at that point "saw Sacramento's momentum slipping away." The Sacramento City Council earlier in the year had "agreed to reimburse" Burkle $27M in infrastructure costs "near his planned stadium site." Steinberg at that point said that he would "ask the City Council instead to advance" that $27M as an "upfront loan to help Burkle finance" the costs. Burkle would "pay the loan back to the city with interest." Steinberg now says that that "showed Burkle that the city was willing to take on the role of partner in the complex deal." Steinberg then called MLS Commissioner Don Garber, "encouraging him to meet with Burkle," who then flew to N.Y. on Aug. 8 and "worked out a payment plan, overcoming the last significant hurdle" with MLS.

IF AT FIRST YOU DON'T SUCCEED: Steinberg and Kevin Nagle, the original lead investor of the Sacramento MLS group, in December '17 presented an expansion bid, and "behind closed doors, the league decisively turned them down." Garber said that original bid "ultimately died." He added, "Their expansion plan was not complete. So they were out." Steinberg said, "Garber made it clear to me that I was going to have to lead here." Garber said that he saw a mayor "already taking the lead, more than any other MLS city mayor had before." Garber "ended up relying on the mayor as a vital facilitator." Additionally, Sacramento Republic FC President & COO Ben Gumpert "spent months on the phone talking to potential investors" (SACRAMENTO BEE, 10/25).