FC Dallas is the first of the “original” MLS teams I’ve done one of these stories on. Formerly known as the Dallas Burn, FC Dallas like the other original MLS sides began their playing history at a large (oversized) NFL/College stadium. This wasn’t a surprise, as nobody in the mid-90s was building soccer specific venues for a nascent league whose prospects for survival were…not assured. The combination of unfavorable lease terms, along with the league suffering from the aftermath of contracting two teams, lead FC Dallas to pull up stakes and move to Dragon Stadium in Southlake, Texas for the 2003 season.
Amid fan backlash, that only lasted for a one season, and FC Dallas moved back to the Cotton Bowl for the 2004 season. Fortunately for the team, during this time they had been negotiating for the construction of a soccer specific stadium. They were able to come to an agreement with the city of Frisco to build a stadium to house the team. Like many soccer stadium deals up through 2011, the location left…something to be desired. Not that Frisco isn’t a fine place; it simply is well far away from…well anything (source: Me. I was there in 2015 for the Sounders/Dallas playoff game).
That said, when this deal was finalized in 2003, there weren’t many options for MLS teams needing stadiums of their own. At least if you didn’t want to pay the full cost of construction. So you took what you can get. This was the third soccer specific stadium to open in the United States (and the first one where significant public funds were used in its construction). As with all of these deals, a Lease Agreement was signed between Frisco and the team, outlining the obligations of each side, along with a Development Agreement (that was amended in 2004). The lease agreement was updated in 2015, to account for the construction of the National Soccer Hall of Fame. Rest assured, I’ll look at that too. But first up, the Redevelopment Agreement regarding the construction of the stadium.
FC Dallas contributed $10 million to the initial construction cost:
However you feel about public financing of stadiums, FCD did pitch in a chunk of money to help fund the construction of the stadium. Additionally, they did agree to fund cost overruns (which we’ll get to later). But Frisco fronted the overwhelming portion of the stadium costs. As a result of that, Frisco asks for some pretty…airtight assurances about having a tenant at the stadium.
What?! This is a pretty amazing provision. If FCD would have ceased to exist, MLS would be obligated put another MLS team in the area to play at the stadium for the duration of the lease. And if MLS were to go out of existences, *another* professional team in the next highest league in the stadium? That’s…not an enforceable provision for at least two reasons I can think of right off that bat. But I’d love to talk to the attorneys who negotiated that clause. Let’s move on to the Lease Agreement.
Original term of lease was fairly close to ending:
Interestingly, this lease term wasn’t very long. FCD was actually nearing the end of the lease in the middle of the next decade.
FCD played their first game in 2004, so this lease was originally scheduled to end in 2025. Again, not a very long lease, especially considering the length of the lease in Chicago. That said, there is an epilogue to this provision which I’ll discuss later.
It doesn’t cost FCD much to rent Toyota Stadium, that’s for sure. The Base Rent is very manageable.
That’s a cheap date. FCD is responsible for maintenance costs, but under the circumstances, that’s a pretty good deal. This has changed, as I’ll discuss below.
This isn’t a one-sided deal as it may appear at first glance. Fresco gets some benefits as well. Including, exclusivity for Thursday/Friday night (american) football.
Football rules all in Texas, of course. There is an exception for MLS Cup, were it to be held in Frisco. Since that’s in December, and high school football is generally done by then, it’s not a big deal.
The parties seem to have worked out a reasonably fair split of the revenues in this lease. FCD controls all revenues associated with the stadium (parking, sponsorships, stadium naming rights), but the City/School District controls all revenues related to high school and related events.
Section 5.1 has to do with the City/School rights to use the premises, and as I said they get the revenues from that, which seems only fair.
Assignment of this lease:
The lease does allow for FCD to assign this lease to a subsequent owner (which is common and in fact happened in the Chicago lease), though that’s not what was interesting. The interesting thing was the slight insight into the ownership requirements for MLS back then. Which required any owner to maintain a certain amount of investment.
That $20 million has undoubtedly gone up substantially since those days (just ask Sacramento).
It’s pretty boilerplate, including provisions for attorneys fees, specific performance and the like. But the interesting thing about this lease…no reference to relocation. There is the above section regarding having a team play there, but as I said, there is some questionable language in that provision. This agreement was signed before the Chicago lease, so its possible that, “relocation language” hadn’t yet seeped into the consciousness of local municipalities at that time (the Columbus lease doesn’t reference it either). I’ll post the default language here for posterity, but it’s pretty standard fare.
Frisco also contemplated the idea that building a new stadium to house another major league soccer team would be a problem. Rather, they thought of it first, since this lease came before Chicago’s. However, the non-compete area is significantly smaller.
So many interesting things about this provision, but mainly that the 20-mile radius doesn’t even get you from Dallas proper or Ft. Worth to Frisco. Granted, good luck getting either Dallas or Ft. Worth to fund a stadium or getting MLS to pay for it, but still. Also, interesting language regarding the remedy, to be sure.
2004 Amended Development Agreement
The original agreement put FCD on the hook for any cost overruns. In 2004, there was an amendment to the redevelopment agreement which outlined how much those overruns were, and modified how they were to be paid. It also addressed some infrastructure issues.
Pretty straight-forward, so lets move all the way to 2015, about 10 years from when the lease was to expire. FCD had a vision to host the National Soccer Hall of Fame. That would require some remodeling of both the stadium and the lease agreement.
2015 Amended Lease:
The desired construction of the Hall of Fame came with some additional provisions in the lease. First: FCD will be in Frisco for a long time.
A long, long time. There has also been a large increase in rent.
The gibberish below the underlined section refers essentially to an offset of the rent, in the even the amount of the stadium remodel comes in at under $39 million. This is basically to account for the fact that Frisco was fronting the money for this reconstruction and addition to the stadium.
Additionally, the City gets an increased number of uses of the facility, and the School District use is updated.
Seems pretty by-the-numbers here. So that’s about it for the FC Dallas/Frisco lease. The terms itself seem pretty even for both sides, though it’s interesting that there is no specific relocation language, even in the amended lease. Either way, this renewal of vows, so to speak, is going to keep FC Dallas and Frisco together for the foreseeable future.
Categories: Stadium Lease Snapshot