MLS commissioner Don Garber, in Washington, DC yesterday to meet with DC United players, coaches and team administrators, told the media in a wide-ranging conversation he believes the team will ultimately be sold, but did not offer a timetable on when that might happen.
"There are people interested in buying this team," Garber said of the four-time MLS Cup champions. "It’s different than it was years ago, when we were looking for people just to fund losses." He added that "the folks here aren’t just buying a team, but are investing in the stadium, and perhaps even broader real estate as part of the whole project. There’s interest in the team. That’s a very positive thing.
"I don’t think the new ownership will drive the new facility because the Anschutz Entertainment Group is one of the country’s best real estate facility developers, and I think the District would like to have them involved," Garber said. "The transfer of the team is part of an effort we have to get our teams down to some point of one team, one owner. That is a process that is going to take some time. So, I don’t think those two are necessarily related."
The MLS commissioner said that, except for not having a soccer-specific stadium and owner, Kevin Payne and DC United "have gotten it right. … I don’t think we could have written a book better."
Garber called United the league’s "most-established" team.
"This team deserves a stadium, and I think the community will be well-served by it," Garber said, also noting that "the market is right, the fan base is right. You need a stadium and a local owner."
Garber said United will never break even so long as they’re playing as tenants in a stadium built for another sport.
"We’ll never be able to have a business that is profitable for our owners unless we own or control our own stadiums," Garber said, noting the difference between the league being profitable and the individual teams being profitable.
The commissioner said that because there is very little revenue in the league’s budget, "there’s never going to be any profit at the league level. That’s never been an objective."
On the other hand, Garber said "some" teams are profitable, with other teams on the verge of profitability.
"You can make the logic, or leap of logic, that in places such as LA, we should make money," Garber said. "But in Arrowhead, we’re never going to make money. We’re getting closer to profitability in some soccer specific markets. And we’ll never be profitable unless we’re in soccer specific stadiums in all markets."
He said if MLS has teams in 10 soccer specific stadiums by the end of the decade, "our model shows us that those teams are breaking even or making money."
Garber also touched on the importance of keeping young players like Freddy Adu in MLS, versus letting him leave to play in Europe.
"I want all American players to play in Major League Soccer," Garber said. "I don’t believe that having a player play in a bottom of the table Premier League team does anything to build the sport here. Bruce [Arena] disagrees with that. My deputy commissioner, [Ivan Gazidis] or the most part disagrees with that. … I think we need our best players playing here so little kids can grow up and be like Freddy. And when they are over there, and that might help us have a better national team, which helps us in other ways, I’m not sure it gives us that connection."
Garber said the league does not plan to change the salary budgets for teams until at least 2009. He did say, however, that MLS is "looking at the concept of a designated player.
"Ivan’s group would still sign the contract, but that player’s salary would be paid by the individual owner in a specific market," Garber said.
The text of his question and answer session with the media follows:
Don Garber (DG): "It’s been a busy day. Ivan and I are active in going around the MLS cities meeting with players, coaches, and team administrators, and the media. In this case, we’ll be meeting with an investor later today."
"The player discussion took a bit longer and was more comprehensive than any other team visit that we’ve had. I think it speaks to what we have going on here in DC."
"It’s good to be down here in DC. This is where it all started for Major League Soccer. It’s our most established team; it’s the one that truly represents the game in ways that that everybody dreamed of when the founders of the league started Major League Soccer. It started with the team name, when others were called things like ‘Clash’ and ‘Mutiny’ and ‘Burn’, this thing was called ‘DC United’. And it was all about the game on the field and the beautiful sport of soccer. Their logo represents that, their colors represent that, the fact that they were the first Adidas team and looked like a regular, normal soccer team were all part of Kevin Payne’s vision to create a soccer team in this country that could stand along side teams in other parts of the world. I think many of our other teams have taken a lead from what DC United has done here over the last several years, both in terms of their business on the field, as well as off the field."
"I think a lot of the credit goes to Kevin and what he’s put together. This team, as you know, is for sale. He is actively working along with AEG to find a local investment group that can take forward the vision, for what I believe, is one of the most popular teams in this region. As opposed to being just one of the more popular soccer teams, I think this team is competitive with the other sports teams. It’s covered like a major league. It gets its play in both the print and broadcast media. Our television ratings locally reflect that. And the fact that there is interest and energy in getting this team its own facility speaks to its position in the market place. I am confident that in due time DC United will get its own facility, and we need it here, like we need it in every other market, in order to be in a position to respect the game on and off the field, and to have the economic opportunity that every other sports team has in this market and other markets have."
"Stadium development has been a big driver of Major League Soccer’s stability over the last number of years, and our ultimate success in getting to the point that we’ve had today. It started in 1998 in Columbus. In 2003 the Home Depot came on line. In 2005 FC Dallas’ Pizza Hut Park will open up. Chicago’s new facility for the Chicago Fire will open up in June. We’re off tomorrow to Toronto and we’ll have a press conference announcing our new team in their new facility, which is already under construction–Exposition Park on the lakefront. We’ll have our new complex in Denver, that’s about 60% done, about eight miles outside of the city of Denver. That facility, as well as the Denver facility, and I think where Kevin is looking into something similar here in this market, they aren’t soccer stadiums, but instead they are complexes. The Denver facility will have 24 soccer fields. It will be the largest soccer complex in the world taking over for FC Dallas’ Pizza Hut Park–it has 17 soccer fields surrounding the facility, giving us the ability to connect the relationship between the youth market and the professional literally with bricks and mortar. I know the DC United complex is to have local community fields that can connect the youth market with this great team."
"In addition to stadium development, we’ve been successfully making progress on television regarding the process of finalizing a network deal and cable deal with ABC and ESPN. Those deals will pay us right’s fees. Similarly, we’ll have our first relationship in many years with Univision. And Univision will be a right’s fee partner. All those deals we hope to finalize in the next couple of months. There will be long term deals starting in 2007 thru 2014."
"Expansion, as I mentioned, will happen next year in Toronto. The next team, our 14th team, will be in the Midwest–Cleveland or St. Louis, two cities that are vying for that 14th team. The 15th and 16th we hope to happen by the end of the decade. That will be in either St. Louis or Cleveland, possibly Philadelphia, San Jose, and Milwaukee is another market where we’re making a lot of process. We have a lot of cities that are interested in being number 15 or 16. Then we’re going to take a deep breath and stop for awhile. We want to maintain that 16 team league size for a number of years to let the game grow and be able to manage where we are competitively with many new teams coming on in a short period of time."
– Can you tell us the name of the Toronto team?
DG: "The Toronto name of the team is being announced tomorrow. I will say that it is a traditional team name."
– How will the odd number of teams in the league affect scheduling next year. And what is the current situation with Kansas City?
"Kansas City is for sale, and we hope to get a local owner. As you know, Arrowhead (Stadium) is under renovation and we’re not going to be able to play there, perhaps as early as next season. We’re going to have to find a place to play. We’re going through the process of figuring that out. Our hope is to stay in Kansas City with a new owner playing in a new facility. Hopefully we’ll get a new owner that will be in a position to build a new facility. But, we’ve got a lot of work to do before we get to that point."
"None of that should have anybody think that that team is going on hiatus. I don’t know where that came from. That’s never going to happen."
Ivan Gazidis (IG): "A simple answer with respect to the format, with 13 teams you obviously have an idle team every week. We formed a technical committee in November, which has soccer people on it, people who have a lot of experience in the games–players, coaches, administrators that really know the game. Bruce Arena is on that committee, for example. One of the key functions of that committee during the course of this year is to be looking at our competition format with a view to putting a presentation to the board in our November board meeting at MLS Cup to establish a new competition format for the next 5 years in Major League Soccer. So, obviously this is an interim problem until we get to 14 teams, but the really the goal of that committee is going to be looking at a 5 year solution as we get into new facilities and expand further."
– How dramatic will the changes be? Will the conferences be re-arranged?
IG: "Everything will be on the table. It could be as dramatic as you could imagine, but it may be the conclusion that we’re not too far wrong now. I don’t want to pre-judge. We haven’t really started the process. It’s going to be a reasonably lengthy process."
– When do you think you will have a decision about Cleveland or St. Louis?
DG: "We should be in a position to finalize and announce by our All-Star game. That is what our goal is."
"But, these things are different today than they were in the past. We don’t need to expand. I think years ago we needed to expand. I think we needed to show that the league was growing, and to show that there were new investors coming in. Now expansion is about strategic growth. We need the right owner, we need to have a facility plan in place, and we need to be sure we’re in the right market. We don’t need an additional team just so that we feel that we have a bigger league. One more team isn’t going to affect our national footprint dramatically as far as television ratings or sponsorship value. It’s all about building for the long term."
– When do you expect the league to break even financially?
DG: "We get asked that question a lot. It’s a long answer because it’s not like a typical corporation that has all the revenue flowing in, and you have a ‘pro forma’ at the end of the day, you’re making money or you’re losing money, you’re distributing income, if it’s a public company, to shareholders."
"Major League Soccer as an entity, the player salaries are paid for by the league budget. There’s very little revenue in that budget. So, when people say, ‘The league is losing money’, unless something changes to our structure, there’s never going to be profit at the league level. That’s never been an objective."
"The question really is, when will our teams be profitable? At this point we have some that are, which is a good thing, when we didn’t have them a couple of years ago. And we have some that are close to it. And we have some that have a long way to go. By the way, those that are playing as tenants, in stadiums that are built for football, or in DC United’s case, built for baseball, they’ll never be able to break even. We’ll never be able to have a business that is profitable for our owners unless we own or control our own stadiums. So, you can make the logic, or the leap of logic, that in places such as LA we should make money. But, in Arrowhead we’re never going to make money. We’re getting closer to profitability in some soccer specifics markets. And we’ll never be profitable in unless we’re in soccer specific stadiums in all markets."
– If that is the case, how long until half the teams are profitable?
DG: "I don’t know if we could answer that. We haven’t put a time table on that. I’d have to do the formulas, and figure out when we’ll be in the stadiums . . ."
IG: "You could extrapolate how long it’s going to take when we’re going to be in the stadiums. Each individual situation is presumably . . ."
DG: "If we’re in 10 soccer specific stadiums by the end of the decade, our model shows us that those teams are breaking even or making money."
– In terms of DC United, what can you tell us about the new investor? And, how close are you to getting the team into a stadium?
DG: "Kevin Payne is leading the effort on behalf of Anschutz Entertainment Group. There are people interested in buying this team. It’s different than it was years ago, where we were looking for people just to fund losses. Now we have people like Red Bull that invested $100 million in the league, and as part of that are funding half of a $25 million soccer stadium. So the folks here aren’t just buying a team, but are investing in the stadium, and perhaps even broader real estate as part of the whole project. There’s interest in this team. That’s a very positive thing. I do believe that this team is going to be sold."
– Is there a specific timetable? How much will the new owner drive the stadium development?
DG: "I don’t think the new ownership will drive the new facility because the Anschutz Entertainment Group is one of the country’s best real estate facility developers, and I think the District would like to have them involved."
"The transfer of the team is part of an effort we have to get our teams down to some point of one team, one owner. That is a process that is going to take some time. So, I don’t think those two are necessarily related."
– How important is it for the league to hold onto a player like Freddy Adu with his marketability to increase the popularity of soccer in the US?
DG: "I believe I’ve been very consistent with this. I want all American players to play in Major League Soccer. I don’t believe that having a player play in a bottom of the table Premier League team does anything to build the sport here. Bruce (Arena) disagrees with that. My deputy commissioner for the most part disagrees with that, and I’ll let him speak for that. I think we need our best players playing here so little kids can grow up and be like Freddy. And when they are over there, and that might help us have a better national team, which helps us in other ways, I’m not sure it gives us that connection."
"As I’ve been going around to the various teams, in Denver, there’s a kid named Colin Clark who grew up in Commerce City where the stadium is being built. He’s a development player. The kid never knew life without the Colorado Rapids, and he dreamed of playing for the Colorado Rapids. By the way, he didn’t say, ‘I want to go play for FC Barcelona’, he couldn’t. But, he really wanted to play for his local team."
"Michael Parkhurst, who was our rookie of the year, showed me a picture of him standing, leaning over at Gillette Stadium getting an autograph from Mike Burns, who is now an assistant coach at the team."
"This is happening all over the league. To me, it’s important for our guys to be here. Most soccer people don’t agree with me on that."
– How important is it to keep him in the league versus a possible large transfer fee?
DG: "Whatever money we get from a transfer fee isn’t going to affect our business. We’ve never been about our transfer fees. Ever. The fact that Ivan has been able to negotiate great transfer fees is a credit to our ability, and a credit to the increased respect of our players . . ."
IG: "It’s not a revenue stream in our projections. It’s not something we think about. And don’t say that I disagree with Don. I don’t disagree with him."
"Every transfer is thought about strategically first. Revenue is actually the last consideration on the list. When Manchester United approached us about Tim Howard the discussion had nothing to do with the transfer fee. Obviously, once we made the decision that this was a good place for Tim to go, then you negotiate the best transfer fee you can. But, that’s not the driver for this."
"The question is, how important is it to keep this guy here versus how important an impact to where he is going. When it is Tim Howard going to Manchester United, I would argue that is a positive impact. And, if it’s a guy going to play at mid level in Belgium, I would argue that is a negative. We’d rather have him here."
DG: "You guys are soccer guys. Did anybody hear about Benny Fielhaber? He was a star with the U20s, and now he’s disappeared. Is that good for American soccer? It might be good for him because he’s making more money there than he would here. I don’t know about his development. I’m being very candid with you about that."
"I think these guys are going to do better for themselves by being pioneers for the league and the sport in this country. That’s my opinion. It’s a free country, and they can make whatever decision they want to make."
– What are the plans to connect with the bigger clubs overseas?
IG: "There’s clearly a lot of international interest in the league. The Red Bull investment is something coming to fruition. But, all the big international clubs are looking at the US market and Chinese market avariciously. We have got to be careful how we approach this."
"We must enter into relationships with overseas clubs that benefit us and not just those clubs overseas. There are clubs overseas that are very interested in the talent pool. That’s something I’m not sure that we see a benefit in a club coming over here and taking our best players away from us. At the same time, I think those relationships we’ve developed are getting stronger every year, and have the potential of being beneficial. What they are going evolve into, I don’t know. It literally ranges from all the way from potential ownership on one end, to players going back and forth on the other end–the key being ‘back and forward’, not just out of the US."
"Had [Lionel] Messi been playing in the US for the last couple of years, I’d argue that would have been a great thing for Major League Soccer. But, you need to have some give and take for that to happen."
– Under the recent player agreement the league planned for slight increases in team’s salary budgets for the next five years. With the additional investors, or any other factor, what are the thoughts on possibly raising the salary budgets more than originally planned to raise the competitive level?
DG: "The answer to that is no. Certainly we’re going to have to re-visit that in 2009. However, we have been looking at the concept of a designated player, this idea of having a player signed outside the salary cap. Ivan’s group would still sign the contract, but that player’s salary would be paid by the individual owner in a specific market."
"By the way, this isn’t that revolutionary. We do that now, it’s just that everybody pays for it. Landon Donovan is paid outside the overall salary budget of the LA Galaxy, and a portion of it is applied to their budget, but it’s paid for by all the owners. That’s done for a handful of players throughout the league. And we needed to do that. We needed to make this group investment because we didn’t think an individual could make it, or would make it, and we needed to be sure it was done the right way.”
"Now, maybe we’re ready to do that. Now we’re thinking it might be time to having that done by the individual owners. It’s a process that we’re going through, and it will be discussed at our board meeting at the end of the month, May 25 in Chicago. It will be the focal point of the discussion. If it gets approved, and it’s not close to getting approved, it’s the kind of thing that would change the league and put it in a different path."
– One per team?
DG: "One per team. That’s why you hear about Ronaldo talking about playing here and [David] Beckham playing here. Interestingly, these are guys we’re reading about that want to play here. We’re not calling up Ronaldo asking if he wants to play in Major League Soccer to play for DC United. These are guys that are hearing about what is going on, Red Bull is a very popular brand in Europe, that investment was very noisy in the international soccer community, and they see what is going on with our national soccer team, Ronaldo was here to play against the Galaxy in the Home Depot Center, Beckham was here at the same time . . . . There are a lot of positive indicators that are happening for the league. But, we’ve still got to be smart and make decision for the long term."
– What are the chances that will be agreed to?
DG: It’s hard to speculate. There’s certainly a reasonable amount of interest by a group of owners. But, the most important thing that has gotten us here today is being very focused on slow, strategic growth, which by the way is not something sports leagues do when they get a bit of momentum."
"We’ve got to put ourselves in a position where we don’t think we’ve cracked the code. We’ve got ourselves in a good position today, but we’ve got a long way to go to be where we want to be for all teams to be profitable, in a soccer stadium, when the country stops when the US team is in a World Cup, when DC United is on the front page every Sunday after a Saturday night game. We’ve got a lot of work to do."
"We remind ourselves that in many ways, and it’s not an excuse, it’s reality, this league is 11 years old, and we’re not very old. We’re not in any rush."
IG: "Don made a good statement earlier that we’re not broken, so let’s be careful not to break it."
– Do you support the idea?
DG: "I believe that the time is right for us to start thinking about perhaps expanding the market that we can capture here in this country. We’ve been thinking about how to go about capturing that. You’ve got hard-core European soccer fans, that are watching games on Fox Soccer Channel, and are going to Manchester United and AC Milan games in New York, but aren’t coming to Red Bull games. So, what do we need to attract them? We need to have a higher quality of play, and perhaps in certain markets a star player will help us get there."
"In DC, I don’t think you need to do that. That Chelsea versus DC United game last year, 80% of the crowd was here for DC United. That was a great sports event. They cared about their team. They’ve been able to figure out how to create that passionate relationship between the fans and the team without having to go out and just having to buy players. It’s been the team. It’s been about Barra Brava, it’s been about great media support."
"In other markets it’s more difficult. In New York you have 13 professional sports teams. You’ve got 6 or so in Los Angeles, so it’s been a bit of a challenge. We haven’t captured the hard core fan. And now we have this growing ethnic community, primarily Hispanic, and we’re trying to figure out how to capture that audience. That’s not necessarily going to be done with the same formula we have today. That’s the long answer saying I think we’ve got to do something, I’m not sure that’s the answer."
– Why has DC United ‘gotten it right’?
DG: "You’ve heard me say this, and you’d expect it from someone who is a commissioner, but these guys have gotten it right. The only thing they don’t have right is having a soccer stadium, and they have not yet secured their owner. Every other aspect of it, I don’t think we could have written a book better."
"But, now we’re at that next level. We need a local owner. They don’t need to be part of a multi-team ownership. The team is able to stand on its own and find a way to find a local owner. By the way, it could be that they will remain in partnership with their current owner in a variety of different things. That’s important."
"The second thing is that they need a stadium. We have one in Los Angeles, Dallas, we’re going to have one in Toronto, and they built one in Rochester, New York! This team deserves a stadium, and I think the community will be well served by it. So, it’s all of those things working together, and now they have to put other piece of the puzzle in there. The market is right, the fan base is right. You need a stadium and a local owner."
– How important is the World Cup to marketing MLS?
DG: "It’s important, but it’s not something we’re dependent on. Clearly, one of the big milestone events in this country, and for Major League Soccer was the popularity of the 2002 World Cup, and quarterfinal appearance. I think it raised the creditability of the league internationally, and got some non believers here that the US could stand toe-to-toe with other countries around the world."
"But, I think we’re strong enough to manage through if we don’t have success. France has had the lack of success by not getting out of their group, and England hasn’t qualified for World Cups before. You know we’ll get through it as we become more of a soccer nation. This is a tough group, but I think we have a great team, and we’re certainly hoping for success."