By Alex Cooke
The Carolina Railhawks, who compete in the second tier of American soccer, are facing an unlikely crisis. The team rooted Cary, N.C., a suburb of about 150,000 just outside of Raleigh, has been shaken by the recent indictment of its owners in a case of major sports corruption.
The Railhawks are owned by a Miami-based sports marketing firm called Traffic Sports USA, a subsidiary of the Brazilian-based Traffic Group. The group holds a number of television and commercial contracts with various competitions throughout both North and South America, including the CONCACAF World Cup qualifiers, CONCACAF Gold Cup and Copa America tournaments.
President of Traffic Sports USA and former National American Soccer League (NASL) Chairman Aaron Davidson, who was indicted in May, has pleaded not guilty to multiple charges, including bribery and money laundering. However, Traffic Sports USA has pleaded guilty to similar charges. Jose Hawilla, the owner of both companies, has also pleaded guilty in the case and has agreed to forfeit nearly $152 million to the U.S. government. Hawilla has admitted to bribing soccer officials for decades to secure the rights for the aforementioned tournaments.
Needless to say, Railhawks supporters are not happy with their owners being major players in the one of the largest sports corruption cases in history. The team has a small but very passionate and vocal supporter base. In recent matches, protest banners were seen throughout the stands and fans adorned shirts with the phrase “Traffic Out.”
Curt Johnson, the Railhawks' president, has said that Traffic has still put up the money for the club’s budget for this year, even after pleading guilty — going so far as to call the company “reliable and supportive.” Johnson also went on to say that Davidson was closely related to the team, visiting every few months.
Davidson and NASL
Aaron Davidson is often cited as a driving force behind the resurgence of the National American Soccer League. The name is homage to, but ultimately not related to, the original NASL — the now defunct top league in the U.S. throughout the 1960s-80s. Looking to capitalize on the growing popularity of soccer in the United States, Davidson and other owners sought to reorganize the league.
Davidson persuaded a group of owners from the United Soccer League, the now third tier of American soccer, to split from the established system and start a new league closer resembling those in Europe and South America.
This new league system offered far more freedom and control to individual owners, allowing them to make actual business decisions instead of being forced to follow league mandates as is the case in the MLS. The new league also did away with other restrictions often imposed on teams in the U.S., such as getting rid of a salary cap.
With the goal of being able to compete with the MLS in terms of on-field product and finances, Davidson took the role as chairman of the league until his indictment this May.
Traffic Group and NASL
Even though Traffic Sports is the sole owner of only one team in NASL, its connections go much deeper than that.
Ownership in the league is divided into two classes. Class A stakeholders are team owners with voting rights, and since Traffic owns one team, it gets one vote. But there is also Class B stakeholders; this is for people who invested the most money into the league in its infancy. These owners often have major input in league decisions.
According to records confirmed by NASL, Traffic Sports is the majority stakeholder in Class B. While it invested the most money into the league, it currently collects the largest dividend payments.
This means that in all likelihood money that should have been reinvested back into the league and more importantly invested in the Railhawks was actually being used by Traffic Sports and Traffic Group to bribe officials for commercial rights.
What’s next for the Railhawks?
Members of the Triangle Soccer Fanatics, the Cary-based supporters group for the Railhawks, have petitioned the league to strip Traffic of all of its ties not only with the team, but the league. These pleas have gone unanswered the league officials.
Usually the league has a process to assume control of a team if its financial obligations are not being met, but so far the money from Traffic keeps rolling in.
In an interview with the New York Times, Jarret Campbell, founder of the Triangle Soccer Fanatics, said, “We’ve seen no verification that Traffic’s as totally out of the picture as the league has tried to suggest. And locally, unequivocally, they’re still paying our bills here.”
Despite the massive scale of the current situation Traffic Sports finds itself in, fans have been unhappy with ownership for years. The team doesn’t have the greatest track record of securing players; last year its leading scorer quit to study for the LSAT and five other players declined options to resign with the team. Fans blame ownership for this.
In order for Traffic Group to pay off its outstanding balance, it has to sell off some of its assets, and this includes the Carolina Railhawks. If the team does not find a buyer, it could potentially not be able to sign new players to contracts or even have the money to pay the current roster.
Many supporters, including Campbell, would like to see a supporter-owned initiative similar to smaller teams throughout Europe.
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