Everything you need to know about the sale of Chivas USA

BY Kyle McCarthy • February 21, 2014

MLS ended the Chivas USA experiment on Thursday by purchasing the club from Chivas Guadalajara owner Jorge Vergara.

The decision to buy Chivas USA from Vergara represented a bold and necessary step to address the pervasive problems with the team and tap into the potential for a second club in Los Angeles. It also raised a series of questions about the present and the future of a club now owned by the league itself.

Few simple answers exist to explain the unorthodox situation currently unfolding in the red-and-white enclave in Carson. Here are a few of the pertinent points worth absorbing ahead of the uncertain future.

How did Chivas USA reach this point?: The reality never quite matched the vision. The original group of investors – Antonio and Lorenzo Cué and Vergara – alienated a significant portion of the Mexican soccer fans in Los Angeles by naming the team after Chivas in a bid to expand the Guadalajara brand and then failed to spend significant money on top players to tempt them into supporting the team. Cué and Vergara couldn't settle on a direction after the initial experiment with Mexican league castoffs failed and then struggled to get fans into the StubHub Center as the performances crumbled in the post-Bob Bradley/Preki epoch. Vergara bought out the Cué brothers in 2012, but he simply couldn't turn the club around on or off the field.

“Ultimately, the concept didn't work out,” MLS commissioner Don Garber said during a conference call on Thursday afternoon. “I came up with the idea with the folks here at the league. I don't believe it was the concept as much as there were some execution issues. If we could do it differently, we probably would.”

Why did Vergara decide to sell?: A series of unseemly incidents – including an embarrassing racial discrimination lawsuit resolved out-of-court this week – and a red-tinted bottom line increased the internal and external pressure to make a decision about the future of the club. Chivas USA – whether in its original form or as a rebranded team – required a lot of attention, money and time to fix. Vergara decided he wanted to spend his resources elsewhere, according to Garber. There is only one true Chivas, after all.

Instead of committing the necessary resources to turn Chivas USA into a viable club once again, Vergara opted to sell his stake and train his focus on the parent club in Guadalajara.

When did MLS decide to purchase the club? Constructing a time line is a bit murky. Vergara spent much of the past year deciding whether he wanted to sell up or stick it out. He reportedly fielded offers from several interested parties during that time period without reaching a deal. Vergara weighed keeping the team – remember those now irrelevant Los Angeles FC and Los Angeles SC trademarks from earlier in the week? – before deciding to sell it.

The transaction didn't happen overnight, though. As a general rule, it takes a couple of months to pull together a deal of this magnitude given the diligence and the paperwork required. Garber said the Board of Governors approved the purchase within “the last number of days” for “market price.”

What exactly is “market price” for Chivas USA?: Good question. There is no clear answer at the moment. The best way to describe the sum in all likelihood: a figure large enough to protect the value of a MLS club and usher Vergara out the door, yet small enough to ensure the league makes a decent profit when it is eventually sold.

What happens with the club itself until someone purchases it? Chivas USA remains intact for the upcoming season with its current name and club colors. MLS will hire an interim president to oversee local operations and provide him with a budget for the club. He will run the club independently of the league office. Recently appointed coach Wilmer Cabrera will handle the technical matters. And MLS will search for the right investor/operator to purchase the club, rebrand it and strike an agreement on a stadium deal.

So this is a lost year for the club from just about every aspect?: Sure sounds like it, particularly if Vergara finds a way to drag Erick Torres and the other Guadalajara reinforcements back to Jalisco. But a peculiar year under MLS stewardship is probably better than lurching forward under the previous plan and regime.

Is there a deadline to sell the club?: “Our goal is to try to get a new owner by the end of the year,” Garber said. “I think that's ambitious, but that is our goal. As part of that process, the league will - along with our soon-to-be-named local president - lead the discussions on the stadium front and hopefully be in a position to hand those discussions over to a new ownership group. The key thing here is there is no rush. We want to get this right. You can only relaunch once. We know we have to get it right the second time around.”

Did Garber just rule out a move elsewhere with all of that relaunching talk?: Yup. Any prospective investor will need to commit to building a stadium and keeping the team in Los Angeles. “We're not interested in moving the team at all,” Garber said.

Chivas USA will change its brand when a new investor/operator takes charge, but it will not change its Los Angeles location, according to MLS commissioner Don Garber.

If MLS isn't going to move the team, then where will it play in the Los Angeles area?: Right now, the StubHub Center is home. It isn't ideal and it won't help the bottom line, but it'll suffice for the moment. In the future, the club will construct a new stadium somewhere in metropolitan Los Angeles. Garber mentioned an oft-rumored site near the Los Angeles Sports Arena during the conference call. Colorado investor/operator Stan Kroenke owns a now-famous 60-acre parking lot in Inglewood that could prove useful from the league's perspective if other sites fail to materialize and Kroenke is willing to sell. And you can expect the league to weigh any other viable options that might come up along the way.

Speaking of Kroenke, is he going to buy the team and turn it into the LA Gunners?: No. Garber ruled it out categorically. “He is not a candidate to purchase the team,” Garber said. “Those days for us are over. We made a deep commitment to that.”

Maybe David Beckham will jump into the fray instead?: Garber dismissed that idea, too. Plus, Beckham has a few things already on his plate in Miami.

If not Beckham and Kroenke, then who might want to invest?: A group with the resources and the vision necessary to build a team from scratch in the nation's second-largest market. It is a compelling opportunity with some strings attached. This project is going to require a significant amount of capital to fund the purchase price (and you can bet it won't involve a discount given the market size) and the stadium project. Los Angeles isn't short on rich folks with disposable income, but it's going to take more than money to clean up the mess Vergara made.

Will it work?: Garber and MLS think so, but the market might need some convincing. Chivas USA scorched the Earth with its array of errors. The rebranded franchise cannot afford any similar missteps. As Garber noted, the margin for error is slim. It's going to take the right investor/operator, the right amount of resources and the right stadium solution to give this club the best possible chance to succeed.

Most importantly, the new investor/operator must construct a compelling and distinct identity from the outset. Chivas USA faltered because it could not distinguish itself from its parent club or figure out how it wanted to succeed on and off the field. This project is a sales job through and through. It isn't enough to change the colors and the name. The new regime must foster the right culture within the club and set a determined course into the future. Only then will this club start along the path to prosperity and vindicate the league's decision.

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