MLS Sacramento expansion plans come a cropper

Article posted by Coliseum, March 3^rd, 2021

Image: HNTB & Sacramento Republic

The coronavirus pandemic which has played the role of ‘Death the Reaper’ globally has also sounded the death knell on Major League Soccer’s (MLS’s) expansion plans in Sacramento (California, US) with primary investor of the proposed team American billionaire businessman Ronald Wayne Burkle pulling back from the deal recently citing COVID-19 as the reason with the United States still reporting 65,000 cases a day despite the vaccine rollout.

Major League Soccer (MLS) is a men’s professional soccer league sanctioned by the United States Soccer Federation, which represents the sport’s highest level in the United States and Canada. The league comprises 27 teams – 24 in the US and 3 in Canada – and is expected to expand to 30 teams by the 2023 season.

‘ESPN’ reported that Sacramento was awarded an MLS expansion team in October 2019 and the Sacramento Republic FC, in the State of California, US, was to be the league’s 30^th franchise due to begin play in 2022 but pushed back to 2023 because of the pandemic.

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Sacramento Republic FC is an American professional soccer team based in Sacramento, California, that plays in the Western Conference of the United Soccer League (USL) Championship.

Burkle, who also co-owns the Pittsburgh Penguins of the National Hockey League (NHL), is co-founder and managing partner of The Yucaipa Companies LLC, a private equity investment firm.

The Pittsburgh Penguins are a professional ice hockey team based in Pittsburgh. They compete in the National Hockey League (NHL) as a member of the Metropolitan Division of the Eastern Conference.

Burkle informed MLS officials that he had “decided not to move forward with the acquisition of an MLS expansion team” in the City because of the impact of the coronavirus pandemic.

Despite the setback MLS will now persevere to find out ways in which to bring a franchise to the City. In this regard, it plans to work with the Mayor of Sacramento Darrell Steinberg to bring the project to fruition.

A statement on the MLS website read, “Ron Burkle informed the League that based on issues with the project related to COVID-19, he has decided to not move forward with the acquisition of an MLS expansion team in Sacramento. After working for many years to bring an MLS team to Sacramento, the League continues to believe it can be a great MLS market. In the coming days, the League will work with Sacramento Mayor Darrell Steinberg to evaluate possible next steps for MLS in Sacramento.”

The statement in the MLS website quoted MLS Commissioner Don Garber as stating, “I want to thank Mayor Steinberg for his continued efforts to bring MLS to Sacramento. His commitment to the City and delivering for its passionate soccer fans should make all citizens of Sacramento proud. Interest in owning a club in Major League Soccer has never been higher. And I remain incredibly optimistic about finalizing expansion plans for our 30^th team.”

‘ESPN’ quoted Mayor Steinberg as stating, “I am very disappointed in Burkle’s decision to step out of his October 2019 public commitment to our City. Despite the difficult past year for our City, we have upheld every commitment to Burkle, the league and our community. We took major steps to welcome Major League Soccer to a new stadium in The Railyards (a planned 21,000 seat soccer-specific stadium to be built in Sacramento, California), and we remain prepared to move forward immediately.”

“I greatly appreciate the support of Commissioner Don Garber and MLS. They have done right by us, and they continue to stand behind us. We will still bring MLS to Sacramento, and we will work with the league to find a new lead investor,” the Mayor added.

An inkling of Burkle losing interest in the project could be gauged when reports surfaced earlier in 2021 that his group had not signed the long form agreement with MLS.

Several factors combined together may have been the reasons for Burkle backing out. Among the reasons cited were escalating costs associated with building a stadium at the Downtown Railyards site for the expansion team to play in.

It was reported that the costs for the Sacramento stadium had gone up by more than 75 percent from the previous estimates – that is from $300 million to $400 million, while infrastructure costs increased from $27 million to $47 million. On top of those increases, the ability to raise funds from the projects’ limited partners, all in the middle of a pandemic, fell roughly $60 million short of what was anticipated.

Another reason may have been the complicated acquisition procedure.

Burkle and co-investor Matt Alvarez had not only to shell out a $200 million expansion fee, plus the costs of the stadium, but the duo also needed to acquire a majority stake in United Soccer League Championship (USLC) team, Sacramento Republic, from present owner Kevin Nagle which also fell through.

Sacramento Republic was well supported and staged its home games at the 11,000-seat Papa Murphy’s Park and a new $300m (£215m/€249m), 20,100-seat stadium was imperative to the club’s MLS ambitions, but the project came a cropper with Burkle deciding to pull out.

Finding an ownership group with deep pocket for Sacramento Republic has so far been elusive.

In late 2017, Sacramento was thought to be one of the frontrunners in the expansion race but ended up losing to MLS teams Nashville Soccer Club and Futbol Club Cincinnati when American business executive Margaret Cushing Whitman opted not to invest in Sacramento’s expansion effort.

Burkle was thought to be Sacramento’s main investor, but now, despite having a stadium site picked out, Sacramento’s future as a home for an MLS team is in serious doubt.

“We are not starting from scratch by any means,” Mayor Steinberg said.

“We have an approved stadium plan and an approved plan to build and pay for infrastructure. We also have the best fan base in the country – one that has shown time and time again that it can support an MLS team,” he elaborated.

“We have only begun to fight for what our City deserves,” the Mayor added.

The stadium was supposed to have been the heart of an ambitious plan that would have also included housing, retail, theaters, parks, museums, a hotel, and a major medical center.

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