Sacramento’s Higher Revenues, U.S. Open Cup Success Do Not Guarantee MLS Expansion – Sportico.com
In 2019, Sacramento Republic FC, of the second-division United Soccer League, was signed, sealed and all but delivered to be the next Major League Soccer (MLS) expansion team. The team was backed by billionaire businessman Ron Burkle, and a new stadium was in the works.
But the plan came crashing down when the billionaire businessman pulled out amid lawsuits and bitter fights, and Sacramento could only watch as Nashville, Miami, Austin and Charlotte entered the top U.S. league.
From the ashes of the failed MLS efforts, Sacramento has become America’s feel-good pro soccer story of 2022, advancing to tonight’s Lamar Hunt U.S. Open Cup semifinals against Sporting Kansas City.
The Republic made it to the semis after upsetting two far better-funded MLS teams: the San Jose Earthquakes and the LA Galaxy. Sportico’s 2021 MLS valuations list the Galaxy’s 2020 revenue at $33 million, with a 2019 (pre-pandemic) revenue of $80 million, and the Earthquakes’ 2020 revenue at $12 million, with a 2019 revenue of $36 million. Sacramento did not disclose its revenue, but according to the employment site Zippia, it is listed at $3.6 million.
Sacramento has seen success off the field, as well. The team, which draws an average of 10,000 fans a game, signed 20 new partners in the last year and is building a soccer specific 15,000-seat stadium downtown. And they’re doing it all without a big-money backer like Burkle.
“There’s no question in my mind Sacramento should have been an MLS a couple of years ago,” Kartik Krishnaiyer, senior writer at World Soccer Talk, told Sportico in a phone interview. “It’s unfortunate because if MLS made a decision based on who supported soccer, Sacramento would be on the top of the list. Teams who like to join MLS have to answer one question: Where is your billionaire?”
Since 2009 six teams have joined MLS from USL (Seattle, Portland, Orlando, Cincinnati, Nashville and St. Louis).
“We look at four factors when we select expansion markets: strength of the ownership group, whether we think the market can support a successful MLS club, whether the market is of a size and has an engaged fan base that would help us achieve our national objectives, and whether there is a stadium plan for the MLS club,” Mark Abbott, the MLS president and deputy commissioner, told Sportico in a Zoom interview. “We need all four factors to be in place before completing an expansion agreement.”
While MLS was hand-picking the ripest fruit from the lower divisions, according to Krishnaiyer, USL was also reaping tangential benefits—with the prospect of jumping to MLS a boon to fan support and the league’s own expansion fees.
But it is not all about money for Sacramento. “First and foremost, we want to have a successful team that goes out and competes, wins trophies and shows that this year has been a good start,” Todd Duniviant, the president of Sacramento Republic, said in a phone interview. “We want to build a new stadium downtown. Our fan base is excited for it. We’ve done much of the work to get the stadium project over the line. And we are taking destiny into our own hands on both things that will ultimately be good for our club.”
A possible barrier could be the MLS expansion fees, which have gone up significantly since Sacramento’s USL team launched in 2015. Back then, expansion fees were only about $70 million, except for Los Angeles, where the price was set at $110 million. In 2019 when the team secured all four requirements and had Burkle’s backing, the fee was $200 million. Today that number is between $300-$400 million, depending on the city. Expansion fees in the USL Championship today are $20 million, up from $10 million in 2019; they were as low as $1 million in 2015. At the lower USL League One level, initial franchise fees in 2022 are at $5 million.
Beyond that, the MLS door may be closing. As of 2022, MLS has 28 clubs, and St. Louis City SC is scheduled to join in 2023. “We are focused on finalizing Las Vegas as our 30th club,” Abbott said. “And we have not yet made a decision whether we’re going to expand beyond 30.”
