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Volume 21 No. 2
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What's next for New York?

Major League Soccer still envisions a second franchise in the New York market. This could be the year all the pieces come together.

If everything comes together for Major League Soccer this year, the league will announce a second team in the New York market to begin play in 2016, receive a $100 million expansion fee for the franchise, finalize a deal for a $300 million soccer stadium in Queens, and introduce an extravagantly wealthy group as the owners of the club.

Going four-for-four and establishing the league’s 20th franchise would be a landmark step for MLS, which has come a long way since 2002, when it contracted franchises in Miami and Tampa Bay, and AEG owned six of its 10 teams.

The growing interest in soccer in New York was obvious in December when the Red Bulls helped open recreational soccer fields in Brooklyn.
Photo by: Getty Images
Still, MLS officials caution that more work needs to be done before any official announcements can be made. For now, the league is hesitant to talk about specifics.

MLS declined to make Commissioner Don Garber available for this story to speak about the issues surrounding his attempt to have a second club in the New York market.

In an email, MLS President Mark Abbott shared only the league’s view of why it wants another team in the New York area and what it is looking for in an owner for the franchise.

“We look at a wide variety of criteria when evaluating potential expansion teams, but the most important measures are a committed ownership group, a comprehensive stadium plan where the ownership controls the venue, and an appropriate market that is attractive to our partners, has the right geographic location and has a history of strong fan support for soccer matches and other sporting events,” Abbott wrote. “New York certainly fits all of our key criteria, and we believe another team in the New York area will build upon the momentum the Red Bulls have and ultimately create one of soccer’s great rivalries.”

According to an industry source, the Abu Dhabi United Group, which owns Manchester City of the English Premier League, is the front-runner to own MLS’s second New York franchise.

The group, led by Sheikh Mansour bin Zayed Al Nahyan, purchased Manchester City in 2008 and immediately spent money to upgrade the roster. Manchester City won the EPL championship in 2012 and is established as a perennial title contender with rival Manchester United.

Representatives from the Abu Dhabi United Group and Manchester City did not respond to requests for comment. Citingleague policy, MLS declined to comment on prospective owners.

With a personal wealth estimated at more than $5 billion, Mansour would have no trouble paying MLS’s $100 million franchise fee established for the new club in New York. The $100 million would more than double the highest expansion fees ever paid to MLS. The league’s most recent expansion teams in Vancouver, Montreal and Toronto each paid $40 million.

According to Dan Courtemanche, executive vice president of communications for MLS, “multiple” groups approached the league about buying the second New York franchise and were not discouraged by the $100 million fee. Courtemanche declined to reveal the names of any bidders.

Steve Horowitz, a partner in the New York investment firm Inner Circle Sports, has been involved in six MLS franchise transactions, including the sale last summer of D.C. United to Indonesian businessman Erick Thohir, and is currently representing an MLS team looking for investment. Horowitz said the potential for a new standard in MLS expansion fees is not a surprise.

“We may just look back on the $100 million expansion fee for a team in New York City as a steal,” Horowitz said.
“We’ve seen rapid growth in the price of MLS franchises over the past three years. There are many driving factors, beyond the increase in popularity of soccer in the U.S. It’s not a big reach to think that the next domestic television contract will be meaningfully higher than the present one.”

The New York Cosmos, once considered a top candidate to become MLS’s second club in New York, appear to be out of the running.

The New York Cosmos have passed on MLS for now, but still hope to build a 25,000-seat stadium in Elmont, N.Y.
Photo by: New York Cosmos
The Cosmos, a legendary brand from its Pelé-led championship days of the late 1970s, were revived in 2011 by an ownership group led by Saudi Arabia-based Sela Sport and Chairman Seamus O’Brien. After several discussions with Garber were fruitless, the Cosmos announced last July that they would join the North American Soccer League — considered the second-tier soccer league in North America.

“Instead of paying $100 million to 19 clubs owned by men good and true, I’m sure, for the pleasure of being MLS’s 20th team, we decided that actually wasn’t very appealing,” O’Brien said during an interview at the Cosmos’ executive offices in downtown Manhattan. “If we are going to spend $100 million, we want to invest it in our own assets.”

According to soccer insiders, the average fee for an expansion club in the NASL is $2 million. The NASL, which will have 10 franchises by 2014 and a goal of having 18 by 2018, does not have a salary cap and places no restrictions on club licensing.

The Cosmos, which own the rights to Pelé’s name on its merchandise in perpetuity, undoubtedly would benefit from the higher profile of MLS, but have the potential to make more money out of the gate in the NASL because of the lower expansion fee and unrestricted licensing.

Although four new MLS clubs have roots in the NASL — Seattle, Portland, Vancouver and Montreal — it appears unlikely that the Cosmos will become the MLS franchise at the Queens site. O’Brien accepts that fate.

“I’ve got no problem with Don [Garber] and MLS wanting to get big bucks in the big city,” O’Brien said. “As investors, we thought the NASL ownership model allows us to build the most sustainable business. Good luck to MLS, but we still feel the Cosmos can be America’s global team. That remains our vision.”

The Cosmos begin play in August at 13,000-seat Shuart Stadium on the campus of Hofstra University while attempting to complete a deal with Nassau County for a 25,000-seat soccer stadium adjacent to Belmont Park in Elmont, N.Y.

That site is no more than a 20-minute drive from where MLS hopes to build a stadium in Flushing Meadows-Corona Park in Queens, near the New York Mets’ Citi Field and the USTA Billie Jean King National Tennis Center, site of the U.S. Open. It is difficult to envision that area going from having no soccer stadiums to two state-of-the-art facilities in a short time — including one for the Cosmos, competing in a league below MLS.

MLS continues to meet with community groups about the 13-acre site in Flushing Meadows-Corona Park. So far,

opposition has been minimal.

Risa Heller, MLS’s spokeswoman for the Queens stadium project, said she did not expect community opposition to hinder the completion of a deal. “We’ve done hundreds of meetings with park users, local electeds, community groups and everyone in between. We plan to continue to do these meetings.”

Heller said it would be impossible to put a timetable on the process. “All I can say is we are committed to Queens and feel very optimistic,” she said.

Julie Wood, a spokeswoman for New York City Mayor Michael Bloomberg, said the city is “100 percent” behind MLS’s efforts to build a stadium in Flushing Meadows-Corona Park. Before focusing on Queens, the city and MLS considered many sites in New York City, including Randall’s Island, East Harlem and Pier 40 in lower Manhattan.

“This major private investment in Queens would create thousands of quality jobs in an area of the city where economic activity is badly needed,” Wood said.

MLS envisions its second New York club as a rival to the New York Red Bulls, who play in Red Bull Arena in Harrison, N.J.
Photo by: Getty Images
SHoP Architects, the New York firm that designed the Barclays Center in Brooklyn, has been chosen by MLS to be the architect of the proposed stadium in Queens.

MLS envisions its second New York club as a rival to the New York Red Bulls, who play in Red Bull Arena in Harrison, N.J. — just 34 miles from the proposed site in Queens.

In an interview in November on Fox Soccer, Jerome de Bontin, the first-year sporting director of the Red Bulls, was not supportive of MLS’s plans for a team so close to his, suggesting the league would be better off considering expansion to Minnesota, Atlanta and Florida.

Whether the Red Bulls heard from Garber about their public reluctance is unknown, but de Bontin has since softened his stance.

Asked for comment about the proposed second MLS club for New York, de Bontin pointed out that his focus was on building the Red Bulls into a contender and on his team’s efforts in raising soccer’s profile in North America.
Said de Bontin: “We will welcome another team in New York, if it does come to fruition.”