Harden’s Dynamo stake sheds light on valuations
James Harden is adding “team owner” to his long list of professional accomplishments, and MLS is getting a jolt of star power from the red-hot NBA in a deal that offers insight into rising franchise valuations in the 24-year-old soccer league.
On July 18, the Houston Dynamo and Dash announced that the Rockets star guard had bought a minority stake in the MLS and NWSL teams as well as BBVA Compass Stadium, the home of both clubs. Harden’s stake is reportedly 5% of the team’s value. A source close to the transaction said that the 2018 NBA MVP invested “in the neighborhood of $15 million” at a valuation between $400 million and $425 million, suggesting he got a discount.
Initial reports said Harden had invested at a $475 million valuation, but a source familiar with the terms of recent MLS team sales said that seemed unlikely. Mexican billionaire Gabriel Brener, who was a minority owner of the Dynamo, bought the remaining 50% of both teams and the stadium back in 2015 at a $200 million valuation. A Dynamo source said that the club’s valuation has since grown at basically the same pace as the league’s expansion values, which have doubled in that period.
In a statement, Harden called himself a soccer fan and said, “I saw this as a way to invest in my city and expand my business interests at the same time.” Harden’s business manager, Lorenzo McCloud, and True Capital Management helped facilitate the deal.
The Dynamo has already felt the impact of Harden’s deal. “We’ve definitely started to see a lot of positives,” said a club spokesperson. “Certainly we saw a big bump in terms of media coverage and social media exposure around the announcement, but we’ve also heard from several corporate partners who have reached out since the announcement. Our ticket sales and service teams have also seen a big uptick in terms of excitement and enthusiasm from existing members as well as prospects.”
That $475 million valuation had struck sources as unlikely in part because last year D.C. United, historically a better MLS market than Houston, underwent an ownership change that valued that franchise at about $430 million, according to a source. There would be little reason for the Dynamo, a team ranked 19th out of 24 clubs in attendance this year, to command a minority investment at a higher number.
MLS does not make its revenue figures public, but team valuations have reportedly been rising and expansion fees have skyrocketed. Montreal paid $40 million in 2010, and Commissioner Don Garber announced in April that the yet-to-be-named next two MLS expansion teams will have to pay fees of $200 million each.
Portland Timbers CEO Merritt Paulson said that the growth potential of MLS has captivated investor interest.
“A significant increase in media revenues is expected when our current deal expires in 2022,” Paulson said. “There is also growth to be achieved in major markets that lack long-term stadium solutions; New England and Chicago both have the potential to do what D.C. United has done and capture a much larger audience in their local markets.”
Corey Leff is a writer in New York.