Setbacks Sour the Holiday Spirit; Quakes deal is less than ideal
Horowitz has reportedly paid up the money he owes – it is estimated at between $2 million and $2.5 million – but the future of the Fusion is anything but secure.
A league that a few weeks ago was reportedly ready to thin its ranks is instead aggressively revamping itself.
What appeared to be a grim holiday period has passed, and while the New Year is still full of foreboding, MLS has summoned up glimmers of hope.
The first salvo in the MLS offensive came on Jan. 10, when it announced the NHL San Jose Sharks have agreed to take over the operations of the San Jose Earthquakes.
Under terms of the agreement, Silicon Valley Sports & Entertainment (SVS&E), the Sharks’ business operations and marketing arm, takes over the Quakes’ operations and acquires an option to buy the team.
It is not the outright purchase – and thus fresh capital – the league had hoped for, and in fact had been negotiating until two weeks before Christmas, but it is an association with a successful sports entity.
In the next few months, MLS may have more encouraging news:
ò Phil Anschutz, operator-investor of Colorado, Chicago and Los Angeles, is pondering an investment in D.C. United.
ò Season-ticket sales are up in several cities.
ò Stadiums in Los Angeles, Chicago and New Jersey (or New York) may get off drawing boards and into construction.
The league can use some good news, for the past few months have been rocky ones for MLS despite its victory in court.
FIRST, THE QUAKES. San Jose had been operated by the Kraft Sports Group, operator-investor of the New England Revolution, since November 1998. The Krafts recently extended their agreement to operate the team with the hope their losses – believed to be in the range of $3 million – would be repaid if the team was sold.
League officials would not comment on rumors that an Internet entrepreneur and the league had reached an agreement in principle. That deal collapsed when the prospective buyer pulled out amid the nose-dive suffered by many Internet companies and their stock prices.
The Sharks are celebrating their 10th anniversary and regularly fill the San Jose Arena. It set league records for merchandise sales in its first few seasons and has permeated the Silicon Valley consciousness to an extent the Quakes can only dream about.
Sharks vice president Greg Jamison said the proper things upon announcement of the deal. “We feel it is another positive step for San Jose to strengthen the Earthquakes organization and help re-establish the MLS’s foothold in the Bay Area,” said Jamison.
“We recognize the upside in soccer in the U.S. at a professional level and are willing to have our organization get involved and take it to a higher platform.”
The Sharks and Quakes had entered into a marketing agreement during the Krafts’ reign. Failure to miss the playoffs and a lackluster performance by former general manager Lynne Meterparel resulted in the average attendance dropping from 14,959 in 1999 to 12,460 in 2000.
MLS Commissioner Don Garber said of the deal: “They will be able to promote locally. They have great relationships with San Jose State and Spartan Stadium and with local media and local sponsors.
“This is much more advantageous situation for us. We’re connecting with the dominant sports player in the market.”
Garber likened the deal to what Lamar Hunt and Clark Hunt have set up in Kansas City. The Chiefs and Wizards share some of their operations; season-ticket sales, spurred by Kansas City’s triumph in MLS Cup 2000, already have exceeded last year’s totals.
TRIUMPH, THEN SETBACKS. Victory in the players’ lawsuit in early December was accompanied by the sobering news of $250 million in losses during the league’s five years of operation.
The Sharks-Quakes deal came less than a month after that proposed sale broke down at the last minute, which followed by a few months the implosion of the D.C. United ownership group, which came amid reports that Miami operator-investor Ken Horowitz had asked for some of his outstanding payments to the league to be expunged, which coincided with a board of governors meeting in Denver that included debate as to whether the league should reduce losses by cutting loose San Jose and Miami.
There also were reports – denied by league officials yet confirmed by several sources – that the Fusion has made preliminary inquiries about the proposed soccer complex in Winston-Salem, N.C., as a possible future home.
Horowitz has reportedly paid up the money he owes – it is estimated at between $2 million and $2.5 million – but the future of the Fusion is anything but secure. This will be a sink-or-swim season for the franchise, and there already are grave concerns that the market cannot support an MLS team.
The failure to sell D.C. United and the fragmentation of its ownership group is tempered somewhat by the interest of Anschutz. But like the Quakes, it is not the ideal situation.
by Soccer America senior editor Ridge Mahoney