Photo: Paul Rudderow
Philadelphia Union is effectively a small market team. Accept it. Get used to it.
That may be hard to accept for some, particularly during a summer transfer window that opens today and may drive this notion home by producing no big name signings for the Union. Philadelphians don’t view their city or region as small, probably because neither is. Philadelphia is the nation’s sixth largest metropolitan area and fourth biggest media market. It is home to teams in the other four major professional team sports and firmly ensconced within the American psyche as one of the nation’s most important historic cities.
None of that matters much in Major League Soccer.
In MLS, nearly every club is functionally a small market club. Each team has a base $2.95 million salary budget, a figure typically exceeded by a single player’s salary on top European clubs. While MLS offers various means of finding additional funds for salaries, such as allocation money and the designated player rule, it doesn’t change the fact that MLS clubs operate on tight budgets. The most successfully managed clubs (Salt Lake, Kansas City) play Moneyball, and they do it well.
Any question of that should be put to rest by looking at MLS team payrolls (see below for chart) and how these franchises actually operate. There are several clear tiers into which you can group the clubs, and once you do, it becomes very clear just what level of club the Union really are.
The big market teams: Los Angeles and New York
In MLS, only the Los Angeles Galaxy and New York Red Bulls function as large market teams. They’re the only two MLS clubs to approach the $10 million payroll figure and attract megastars like David Beckham and Thierry Henry to play for them. Their major cities are worldwide glamor cities, which helps draw prime talent. Major corporations bankroll them, and they have two of the best soccer stadiums in North America.
New York City FC will likely join them as big market clubs upon entering the league, but until 2015, it’s just these two.
Second tier: Seattle, Toronto, Montreal and Vancouver
Four clubs have team payrolls between $4.5 million and $6 million: Toronto, Seattle, Montreal and Vancouver. Accordingly, they comprise the second tier, both in terms of financial capability and ambition.
The three Canadian clubs are uniquely situated as international cities, less tied to the other big traditional American sports than U.S. markets are. Only Toronto has clubs in the NBA or Major League Baseball, leaving the winter/spring sport of professional hockey as the only true competitor in the major league marketplace. (Canadian football has its fans, but not on a level proportionate to American football.) It puts the MLS clubs more front and center. Their ownership teams raise the clubs’ profile, with Toronto owned by the same company that owns the NHL’s Maple Leafs and NBA’s Raptors and Vancouver’s ownership group including basketball superstar Steve Nash.
All three cities also have unique characteristics that bolster their teams’ standing in the community.
- Toronto has an extraordinarily diverse population and is the nation’s biggest city, so there are more soccer fans there.
- Montreal’s French tilt helps predispose it more toward soccer.
- The Cascadia rivalry makes the Pacific Northwest a hotbed for professional soccer.
Seattle is its own animal. Seattle’s liberal nature, the ill-fated but timely departure of the NBA’s Supersonics, the history of pro soccer in the region, a good ownership group, a good product on the field, and obviously the fans themselves have combined to make the place Soccer City, USA. The Sounders have punched so far above their weight that it has changed the face of American soccer. They didn’t start with the same kind of deep corporate pockets that Los Angeles and New York have, but the Obafemi Martins signing shows they’ve advanced a great deal.
Tier 3: The small market clubs
Then there’s just about everybody else. Philadelphia, Dallas, Colorado, Salt Lake, Kansas City, Chicago, Houston, Columbus and Portland all operate in this space, with San Jose to join them after their stadium opens next season. They are functionally small market teams even if their metropolitan markets are not actually small.
These clubs are defined first by their control of a soccer-specific stadium. This enables them to control revenues and operations for all games and find alternate revenue streams through other events at their stadiums, such as concerts and college sporting events. Basically, it puts them in better financial position to increase marketing to raise the team’s profile and attract more advertising revenue and fans to games.
Within this tier, there is a wide disparity in how effectively teams operate.
The best small market clubs: Salt Lake and Kansas City
Salt Lake and Kansas City are the gold standard, although it remains to be seen whether Salt Lake will operate as well in the long term now that long-time owner Dave Checketts has divested himself of his controlling stake in the club. Kansas City’s ownership group has made the team extraordinarily fan-friendly with clever marketing and development of perhaps the best soccer stadium in North America. Each club has employed excellent player personnel management to get the most out of their salary budget, largely without the need for designated players (though Kansas City has dipped into that well occasionally).
The next small market clubs: Houston and Portland
Houston and Portland are a small step behind these clubs. AEG’s ownership of both Houston and Los Angeles has probably limited the Dynamo’s ambition, but the team’s new stadium can change that and lift the club to a new level. While they have struggled with injuries this season, Houston has been as talented and well-managed as any team in the league for years and could rise to a second or first tier club in terms of clout, ambition and financial capability if a good and more independent ownership team takes control. A sale of the team would likely include an excellent stadium in one of the nation’s largest cities and the bonus of a big, soccer-friendly Latino demographic.
As for Portland, they’re a popular, new club that hadn’t tasted success until this season, but now a winning product will likely further ingrain the team into the city’s consciousness. With a devoted fan base, the Cascadia rivalry, and little competition from other major league sports – only the NBA’s Trail Blazers – the Timbers are positioned for sustainability.
Small market, stadium problem: Columbus
Columbus had the first soccer-specific stadium in MLS, and it shows. Crew Stadium is bare bones. The Hunt family owns the Crew and probably doesn’t devote enough attention to the club, one of just four in MLS belonging to owners running more than one team. The market is one of the smaller ones in MLS, but the team has shown an ability to foster homegrown talent and could function well for a long time if the stadium and ownership situations can improve.
Small market suburban clubs in crowded pro sports marketplaces: Dallas, Colorado, Chicago
Chicago, Dallas and Colorado all have stadiums outside the major cities in their crowded professional sports markets. These teams fight for fan attention with local pro baseball, football, basketball and hockey teams.
Dallas plays in Frisco, a city the size of Allentown located about 30 miles north of Dallas. By most accounts, the distance has hurt the club’s visibility, but they haven’t exactly helped themselves with poor marketing, distracted ownership (the Hunts also own Columbus and the NFL’s Kansas City Chiefs), and scheduling of daytime games during the sweltering summer heat when they could opt for more night games.
Chicago plays in Bridgeview, a downtrodden suburb bordering Chicago’s south side. There’s not much around Toyota Park that you’d want to check out, and there’s no easy subway or train access. Ownership hasn’t punched its weight either, but the team seems on the rise now that hometown guy Mike Magee has seemingly transformed the club overnight.
Then there’s Colorado, whose stadium sits amid a massive youth soccer complex but whose billionaire owner, Stan Kroenke, has shown that his ambition on the field only goes as far as the profits off the field. (He and his family also own Arsenal, the St. Louis Rams, the Denver Nuggets and the Colorado Avalanche in other leagues.)
Tier 4: Teams without stadiums
New England and D.C. United comprise their own tier, anachronisms of MLS v. 1.0 that still play in American football stadiums ill-suited to soccer. They were giants of the early MLS years, but the times have left both behind.
RFK Stadium is one of the worst places to watch an MLS game. That not only hurts D.C. United’s attendance, but it hits the bottom line due to the team’s inability to better control its revenues. If United can ever get a soccer-specific stadium built near public transit, they can be one of the biggest clubs in MLS. Washington is an international city, and organized soccer is hugely popular in suburban Virginia and Maryland.
New England will never amount to much as long as the Kraft family views the team as just a way to fill Foxborough Stadium during the New England Patriots’ off-season. Like United, they spent the last several years failing to modernize after early success on the field made them complacent off the field. Their lip service about finding a stadium in Boston doesn’t inspire confidence that it will happen anytime soon.
The worst: Chivas USA
Chivas USA doesn’t have their own stadium. Ownership barely markets the club and views it largely as a means to help Mexican sister club Chivas del Guadalajara. It has been completely mismanaged, and its exclusionary practices offend many Americans. This team needs to be moved to Orlando next year and rebranded under new ownership.
So where does Philadelphia fit?
The Union fit in pretty neatly with Chicago, Colorado and Dallas, save for the caveat that Philadelphia is a newer team and therefore has less historical context.
Like these other clubs, the Union play in one of the nation’s largest metropolitan areas, competing for fans’ attention with franchises in all four other major team sports. They get short shrift in local media coverage due to local newspapers’ cutbacks and tilts toward the other sports, which slows popularity growth. And they play outside the city limits of the metropolitan center, which limits public transit access to games and likely cuts attendance as a result.
Similarly, team ownership has appeared as invisible as in Dallas and Colorado and shown few signs that it will put in the level of financial investment demonstrated by ambitious clubs such as Kansas City, Portland, Seattle, Los Angeles and New York. Yes, PPL Park is a great stadium, but it was paid for largely with public funding.
The location of a team in the Philadelphia market was never driven by a singularly ambitious ownership group (or, more accurately, investment group, since MLS owns all the clubs and team “owners” are investors in the larger corporation of MLS). Rather, it was more a matter of MLS recognizing that it needed a club in the nation’s fourth largest media market and the Sons of Ben’s unprecedented fan drive to create the team. The Union’s major investors didn’t come looking for MLS. MLS went looking for them.
The Union’s investment group consists primarily of real estate magnate Jay Sugarman of iStar and three principals of the Buccini/Pollin Group, a local firm that made its name redeveloping the waterfront in Wilmington, Del. Sugarman’s firm took a major liquidity hit in the real estate crash of the last decade, which unfortunately for the Union coincided with the launch of the MLS franchise. Union chief executive Nick Sakiewicz, one of several minority investors in the club, has said the market downturn didn’t hurt the Union’s finances. It’s up to you whether you believe him.
The bottom line is that it’s difficult to measure exactly what the Union have spent because the information is not public. You can measure the team’s payroll, but you can’t as easily measure the money put into youth development without access to the team’s books. YSC has joined the club’s investment team, which likely creates some economies of scale that will bolster the foundational approach of establishing youth development as the franchise’s future. In and of itself, it’s a very good way to build a business: Slow, gradual, continuous growth with an eye toward long-term sustainability.
However, the club has shown in other ways that it lacks the liquidity and ambition to compete in the marketplace the same way that clubs like Seattle and Los Angeles do. Philadelphia has only acquired one designated player by choice (Freddy Adu). The team’s current DP, Kleberson, arrived primarily as a way to get rid of Adu and is likely to depart the club once his loan expires at season’s end. Team management has made clear they are unlikely to invest heavily in designated players. Considering how clearly the presence of just one DP limited the Union’s options on player personnel – they could acquire neither a true left back nor a veteran goalkeeper during the off-season partially because of Adu’s salary – it’s hard to argue with the realities of the situation.
Other evidence bolsters the perception that the Union lack financial flexibility. The Union paid money owed to the city of Chester well after it was due. Despite early stated plans to build a training facility, the Union have made no apparent, tangible progress on this, though the availability of the YSC complex makes that a less pressing need. An expansion to PPL Park remains on the table, but it is not imminent. And the Union’s decision to turn goalkeepers coach Rob Vartughian into a part-time technical director instead of hiring a full-time general manager like RSL’s Garth Lagerway looks like the hallmark of a team that can’t afford another executive and opted instead to expand an employee’s responsibilities on an existing contract.
As for Sakiewicz, it remains unclear exactly what his role is with the club. In general, it’s clear he is the team’s face man at the top when it comes to business relationships. Whatever his critics may say, he clearly cares about the team. The question those critics have, however, is whether he’s effective and whether his presence handicaps or improves the club on the field. It was Sakiewicz’s decision and mistake to give Peter Nowak total control of the Union, but it is to a degree an understandable mistake considering Nowak’s prior accomplishments managing D.C. United and the U.S. Olympic team. Few could have anticipated Nowak’s unprecedented demolition of the Union roster or understood the potentially questionable business relationships he might have off the field. The installation of John Hackworth as permanent manager may have been financially expedient, but it was also merited by Hackworth’s performance.
Regardless, what you have in the end is a club whose fans’ ambitions outpace the team’s financial realities. Philadelphia has long been a place where fans can be overly critical of their clubs, and that tendency has been exacerbated by Nowak’s destructive impact and the Union’s decision to limit spending on designated players. The Union’s on-field progress in the last year is impressive. But when you’ve had your hopes for your teams crushed as badly and often as Philadelphia fans have over the last 35 years and then you add in the Nowak effect, many fans may tend toward the hypercritical as they expect the worst once again. It’s just a matter of maintaining perspective. Ups and downs are inevitable with a young, promising and improving club that doesn’t have the money to get really good really fast.
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