Chivas USA sale reduces options for aspiring MLS investors

BY Kyle McCarthy • February 21, 2014

Chivas USA always loomed as the potential safety valve for investors interested in bringing a MLS club into a new market. If the expansion process didn't proceed according to plan, then they could at least consider the prospect of purchasing the poor relation and transporting it to a new market as a plausible alternative.

On the surface, the concept made some sense. Move Chivas USA turned into a rallying cry over the past few years as the team descended further into chaos. The direction of the club lurched from pole to pole without any coherent vision in sight. The economics never worked at the StubHub Center. The future held few easy solutions. Perhaps another market might offer a fresh start and a brighter future.

The idea of buying Chivas USA to transfer it elsewhere always represented a fanciful notion, though. MLS wants to protect the value of its clubs. Shuffling them around the country isn't good for the brand or for the value of other teams. Leaving the second-largest market in the United States for another city makes little sense from a economic perspective even with the Galaxy in town.

MLS commissioner Don Garber closed the door firmly on any chatter about transitioning Chivas USA – or, more accurately, the franchise poised to revamp its brand and identity once new investors arrive – to another market. Garber said the league is “not interested at all” at moving the club elsewhere and offered an unequivocal endorsement of keeping the team in Los Angeles.

“We absolutely believe that Los Angeles and southern California can support two teams if we get a very committed owner that will come in and be willing to work on developing a soccer stadium, a home that they can call their own and be a strong rival to the Galaxy,” Garber said during a conference call on Thursday afternoon. “We have no doubt that it will be more successful than we've been in the past [with Chivas USA]. I don't think it was a market issue at all. I think it was an execution issue. And we've learned a lot of lessons. We can relaunch and we have the benefit of history and experience to relaunch more effectively.”

Big markets remain a priority for MLS with New York City FC poised to join the league next season and Chivas USA rooted in the Los Angeles market.

By confirming the league's desire to retain a second club in Los Angeles, Garber disappointed any ambitious folks hoping to order moving trucks and reinforced the importance of maintaining a robust presence in large markets. The endorsement of a second Los Angeles side and the imminent arrival of New York City FC next year underscores the importance of succeeding in big cities to the growth of the league in the years to come.

More importantly to aspiring MLS markets, the decision to keep Chivas USA in Los Angeles for the long term highlights the scarcity of potential investment options. There are no obvious candidates to purchase and move at this stage after Hunt Sports Group sold Columbus to Anthony Precourt last year. Miami – barring some stadium-related setback – holds the inside track for the next available expansion berth after David Beckham confirmed his intent to bring a team there earlier this month. Atlanta probably slots next in the pecking order with Home Depot co-founder Arthur Blank on board and a new Falcons stadium on the way, but there are no assurances or guarantees in place at this time.

If Miami and Atlanta eventually gain entrance into the league as the 22nd and 23rd clubs, then MLS places itself in a position to sort through bids from several cities to complete its projected expansion to 24 teams by the end of the decade. Garber mentioned Minneapolis, Northern California (Sacramento, most likely), San Antonio and San Diego as potential candidates in addition to Atlanta. Other cities could still join the list of competitors in the coming months and years.

The ample list of interested locales and the dearth of spots available in the short- and medium-term leaves MLS in the ideal position to cull through possibilities and select the prime candidate. It can demand top dollar for the expansion fee and push the value of its other clubs higher at the same time. It can establish an exhaustive set of conditions to ensure the new club avoids the pitfalls of past expansion teams. It can wait until the right plan emerges in the right city before granting the franchise.

All of those possibilities were already firmly on the table before Garber confirmed Chivas USA would stay in Los Angeles, but they are certainties now. The change in status removes any lingering shred of hope of a creative solution for potential investors and strengthens the league's hand considerably as it plots for the future.


● MLS purchases Chivas USA

● Everything you need to know about the sale of Chivas USA

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