Sacramento faces 'funding gap' in Major League Soccer bid, Mayor Steinberg says

Sacramento Mayor Darrell Steinberg held a press conference Dec. 21 to discuss Major League Soccer's decision to delay the announcement of the league's next franchise until next year.
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Sacramento Mayor Darrell Steinberg held a press conference Dec. 21 to discuss Major League Soccer's decision to delay the announcement of the league's next franchise until next year.
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City Beat

Sacramento team needs more money to join Major League Soccer. Owner says it’s a ‘tall task’

By Ryan Lillis

rlillis@sacbee.com

December 21, 2017 08:28 AM

Sacramento is still in the hunt for a Major League Soccer franchise. And the group leading the city’s expansion bid knows what it will take to make the cut: a lot more money.

Despite a significant funding gap, the city’s bid remains alive after Major League Soccer announced Thursday morning that it will not name the next expansion franchise until next year, saying it “remains in discussions” with Sacramento, Cincinnati and Detroit.

“All three submitted impressive bids which the league will take additional time to review before announcing a final decision in the new year,” MLS said in a statement.

Nashville was awarded an expansion franchise Wednesday, and one more spot remains up for grabs. MLS had said it wanted to announce two expansion cities before the end of the year.

The Sacramento group said Thursday it must strengthen its funding plan over the next several months. It is unclear how much more time MLS will give cities to strengthen their bids.

Time has not been an ally to Sacramento’s MLS quest: the expansion fee has nearly doubled in recent years to $150 million. Meanwhile, the cost of a new soccer stadium in the downtown railyard is expected to be around $250 million, roughly $70 million more than the original budget.

“We have a funding gap, that’s no secret, but it’s one that can be fixed,” Mayor Darrell Steinberg said at a morning press conference outside City Hall. “The gap will be fixed.”

To the SRFC family, I want to thank you for your patience over the past few weeks. I understand why emotions are high and am right there with you. I’m writing to update you on our progress and path ahead.



Sacramento, we’re heading into extra time:https://t.co/Kc7yZpCvNm

— Kevin Nagle (@KevinNagleMLS) December 21, 2017

Sacramento is not the only city facing questions. Both Cincinnati and Detroit have unresolved stadium issues, although their investors have far more wealth than the group leading the Sacramento effort.

In a letter to Republic FC fans, Sacramento lead investor Kevin Nagle wrote the escalating costs of launching an MLS franchise “are typical challenges in business, sports, and MLS,” but that the increased costs “have required us to revisit and rethink how we will fund the bid.”

“While we’ve made tremendous strides, the plan we presented to the MLS Expansion Committee a few weeks back raised fair and reasonable questions about the need for additional financial capacity,” Nagle wrote. “Both then to MLS, and now to you, we have pledged to do whatever it takes to address and resolve these questions.”

Nagle said the group would try to find a new major investor, or investors, “who have a passion for MLS, bring additional financial wherewithal to the group, and will protect the spirit, culture and values of Republic FC.” Nagle wrote in his letter he would remain the lead investor, noting he has personally invested nearly $30 million in the bid already. However, he said at the City Hall press conference he would be “open and flexible” with his role “to attract the right partners.”

Neither Steinberg nor Nagle would specify the amount of the funding gap, but indicated it is significant. The process of finding a major investor may take several months, the mayor said.

“I will not predict the outcome, but I can confidently say this: when we address our ownership equity gap, MLS would make a smart, savvy and visionary decision to choose Sacramento,” the mayor said.

Republic FC will also seek more limited partners and will “identify pathways for our fans, corporate partners, and community at large to help us reach this final objective in our bid.”

Meanwhile, Silicon Valley executive Meg Whitman has again withdrawn as an investor; Nagle said Whitman previously was a limited partner.

Jed York, the CEO of the San Francisco 49ers, has invested in the stadium development and may contribute further investments. Sacramento developer Mark Friedman is another significant investor in the expansion bid.

“No question, this will be a tall task,” Nagle wrote. “And we will need to move quickly to remain competitive for the next expansion slot. But if ever there was a community that can dig deep and persevere, it’s Sacramento. Our paths to victory are rarely straight. We’re no strangers to adversity. We’re used to beating the odds and proving skeptics wrong. We’ve been here before. This journey, long as it may be, will prove once again why we are truly indomitable.”

The MLS delay indicates the league may have questions about the bids in Cincinnati and Detroit as well.

Cincinnati’s expansion group has received $51 million in public money for a stadium in the Oakley neighborhood, roughly five miles from downtown. But FC Cincinnati had initially asked for $70 million in public money and it’s unclear if the approved subsidy will be enough, according to media reports. MLS has said several times it prefers stadiums in urban settings.

FC Cincinnati also has floated building a stadium in the West End neighborhood, bordering downtown. However, the team does not control the land where a West End stadium could be built.

A third possible stadium site is in Newport, Ky., across the Ohio River from downtown Cincinnati.

In Detroit, the expansion bid leaders have proposed playing games in Ford Field, home of the NFL’s Detroit Lions. MLS has said many times it prefers teams play in soccer-specific stadiums.

Sacramento’s stadium proposal in the railyard has the approval of the City Council and the team has spent millions preparing the site for construction.

The ownership group representing Sacramento Republic FC, joined by Mayor Darrell Steinberg and former Mayor Kevin Johnson, arrive at MLS headquarters Wednesday to make its final presentation to Major League Soccer owners tasked with recommending t

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