Alexi Lalas, former MLS player/GM/President-turned soccer pundit, tossed a couple of logs onto the SaveTheCrew fire, opining in a commentary during halftime of the game between D.C. United and New […]
Alexi Lalas, former MLS player/GM/President-turned soccer pundit, tossed a couple of logs onto the SaveTheCrew fire, opining in a commentary during halftime of the game between D.C. United and New York Red Bulls, that Anthony Precourt and MLS should “rip off the bandaid” and make the move to Austin official. Further, he suggested that as penance (and as a way to get out from under the lawsuit), PSV/MLS should cut a check to Columbus/Ohio in the amount of $7 million, to be used to bring a USL team to the Crew’s former home.
As you can imagine, this caused a bit of a firestorm online, with Lalas engaging in a…spirited back and forth with those who took offense to his comments. I had a brief interaction myself with the man at the center of it all, though my interest was in the legal/practical effect of such an offer.
Now, I have no idea if Lalas’ editorial reflects the thinking of PSV/MLS (though I have my suspicions). But at minimum, since the idea of a USL replacement was thrown out there, I figured I’d look at the legal and practical issues, and see if this is something that could be a thing. So, could it?
Not a chance.
Oh, you wanted some legal analysis? Okay, fine. Let’s look at this step by step.
Could the Plaintiffs and Defendants come to an agreement which included a gift/grant of $7 million for the purchase of a USL team?
Absolutely. The parties to a lawsuit can settle a legal dispute in any (legal) way they desire. Generally speaking, the Court is not in the position of judging whether a settlement is a good or bad deal, except in certain public interest cases, or if there is an issue of fraud or duress (think divorces with an abusive spouse). That’s not to say that Judge Brown wouldn’t reject this deal if he determined it wasn’t in the public interest, but we’ll let that sleeping dog lie. The bottom line is, if the parties agree on the terms of a settlement, the Court generally isn’t going to disturb it.
Is there any chance that the plaintiffs accept this offer?
Ha, no. I don’t know if this is something that PSV/MLS have floated to the plaintiffs. I tend to think not. But what I can absolutely say is that there is no indication that the plaintiffs would accept this deal, and I can understand why.
- Columbus currently has an MLS team (for the time being).
- The plaintiffs have won at just about every stage in this lawsuit thus far, and quite handily at that in most cases.
- The motion to dismiss scheduled for September 4 represents PSV/MLS’ best, last chance to get out from under this lawsuit short of winning at trial, and the chances of winning the motion to dismiss aren’t much better than a coin-flip, if that.
- Most importantly from the plaintiffs point of view, $7 million dollars ain’t much of an offer.
Look at #4. Why would the plaintiffs accept this offer? Recall how much money they spent for the benefit of PSV/MLS:
Now there is a debate as to how much of this was actually for the benefit of the Crew, and PSV and MLS have a convoluted argument about not them currently receiving assistance and that the “owners” of the team didn’t receive any money, but the fact is that Ohio spent the money. At least $5 million and potentially into eight-figures, depending on how you calculate things. So why would the plaintiffs accept a deal that -at best- merely offsets what they originally paid?
If the parties were to come to a $7 million settlement, is such an agreement enforceable as to USL?
Hahahano. This is the next place this idea falls apart. First of all, the USL isn’t a party to this lawsuit, and PSV/MLS have no ability to legally bind them to anything. Second, USL is its own private entity, and there is no way that the USL leadership would abide a third-party agreement interfering in how they choose to operate or expand their business. Unless the partnership between USL and MLS has some insane provision which subjugated USL to the business demands of MLS. But again, that would be insane (cue nervous laughter)…
Let’s move on.
Assuming USL wanted to be in Columbus, $7 million would get a team ready to go, right?
Well, not really. First of all, the expansion fee to enter USL is now at a tidy $7 million, so that eats all of that money. That doesn’t include any of the start-up costs associated with launching a team (front office, players, marketing, technical staff, etc…). Granted, USL could reduce or even waive the fee, but there isn’t any indication they’d be willing to do that. Either way, you still need someone who can front all those costs.
Still $7 million should be able to entice an owner to come forward.
It probably would entice several prospective owners. And therein lies the problem. Assuming that the City of Columbus doesn’t want to get into the business of operating a team (and given the perils of running a lower division team, why would they?), someone is going to have to come in and purchase a USL team and run it. So, how would Columbus decide? Why would they want to? Typically, funds from a settlement would be used to reimburse those affected by the violation of the law. In this case it’s more of an abstraction; the people of Ohio/Columbus are the “victims.” Since you’re not going to send out a check to everyone for $.75 (or $9 if you limit it to Columbus residents), you’re probably just going to put it into the general fund for the welfare of the citizens at large.
Even if you specifically designate the funds be used to procure a USL team, and a judge signs off on that, AND such an agreement survives the inevitable lawsuit from citizens (which will cost money), you STILL have to decide between various prospective ownership groups. Which means you have to probably put this “grant” out for some sort of bid/request for proposal process, AND you have to hope THOSE who don’t win don’t sue. In short, the City is looking at a massive legal/logistical nightmare that will probably end up costing the public millions of dollars, so that a private party can spend $7 million to own…a USL team?
Finally, there is the small matter of the political considerations in entering a deal that results in the end of the Columbus Crew in MLS for $7 million. I say that because it was pointed out to me that the Columbus City Attorney may only settle claims on their own that don’t exceed $20,000. The Columbus City Council must approve settlements in excess of that amount. How do you think a vote is going to go over where the Crew leave the city, and they receive $7 million in return, which under this scenario the public doesn’t even get the benefit of, since it is being used to let a private entity purchase a USL franchise?
Okay, you’ve sufficiently dissuaded potential owners from this idea. Any other cherries on top of this sundae?
I can offer a nail for your coffin, if that helps. Because you’ve forgotten about the friendly folks at U.S. Soccer. Even if you’re able to find someone willing to take on this enterprise, there is a little thing called: Professional League Standards. Every league has to comply with them at the Divisional level which the league wants to compete at. For USL, that’s Division II. There are a number of requirements that each league must satisfy, and each team within that league must also comply, or request waivers. I’m going to ignore the ongoing litigation between NASL and USSF/MLS, and just talk about what else is needed for a team to compete at the Division II level from a financial standpoint.
To recap: A prospective ownership group of a Division II team must have at have at least on person owning 35% of the team, and that person must have $20 million in net worth, and your home doesn’t count. These requirements have dissuaded others from getting into business with USL, and the prospects of lawsuits as I outlined above probably won’t help.
Any other dirt you want to shovel on this idea?
Just this: Beyond all the legal and financial issues, you’ve still got to have a place to play games. Many of you assume that a prospective ownership group play at Mapfre. Of course, there is currently a lease which governs that facility. Said lease is held by the Ohio Expo Center. The lease actually has several provisions for dealing with a default, two of which I’ve highlighted here.
As the holders of the lease, one presumes that any change to the lease requires buy-in from the OEC (should they be in this lawsuit as an indispensable party? Not sure it matters since they were created by the Ohio legislature). Sure they can agree to lease it to a prospective USL owner either due a default or agreement, but what kinds of terms can they expect from a USL owner operating a team in an aging stadium? Is the OEC or the government going to put additional funds into renovating the place for a USL team? Would a USL owner do it for a property they don’t own for a team playing in Division II soccer with no prospects to get back to MLS? Maybe the OEC would prefer that PSV/MLS demolish the site (on PSV/MLS’ dime) and return it to its pre-MLS state.
I hope this provides a concise, yet detailed look at why Lalas’ MLS2USL4Columbus idea isn’t going to go anywhere. There are just too many logistical and legal issues to work through to ever make the idea viable, especially when we’re talking about a Division II league whose teams (outside of a couple) haven’t shown much financial viability. This also doesn’t even account for the main issue: I am hearing there is no way the plaintiffs would accept such an offer. Seven million dollars as a start-up might sound enticing, but as the old saying goes: Beware the poisoned chalice.