Why MLS to Portland is a Good Idea

The Up-Front Cost

So, $85 million…. a lot of money? Not when you consider what it’s buying. When you compare what other cities have put down for stadia, Portland would be getting an absolute steal. Take a look at some past MLB stadium deals, or the NFL, or the NBA. Granted, this data was compiled in 2002 and 2003, but do you think prices have magically fallen? A new stadium for the Cincinnati Reds in 2003, $361 million, of which the county paid $300 million. Pac Bell Park in San Francisco in 2000, built for $306 million, which the city paid $15 million of.

Or heck, look at the entries in wikipedia for baseball venues or NFL stadia(which cite external sources now, of course). The DC Nationals had the city pour in $611 million for Nationals Park. $850 million gets you Citi Field for the NY Mets, $450 of which comes from the city. Speaking of Sodom on the Hudson, the new Yankee Stadium reportedly cost $1.6 billion(!), with $220 million of that coming from the city. The University of Phoenix built a stadium for the Cardinals that cost $455 million. Gillette stadium in Foxborough, MA cost $355 million. Qwest Field just to the north of us required $300 million.

I think you get the picture. Getting ONE stadium built for any of the other major league sports is going to cost 3 or 4 times the total of this proposal, and we’d get two separate major and minor league venues out of it. Which of course raises the question, are Merritt’s figures off? I’m not going to discount cost overruns, fluctuating prices of steel and other raw materials, or other setbacks making this figure premature, but if you don’t believe the numbers are right, do you really believe they’re off the mark by 300-400%?

Bring Major League Education to Portland

“I don’t want my tax dollars to be used on sports when there are potholes to fill and schools to fund.” Hey, I totally agree! And I’m pretty sure Merritt agrees, too. That’s why he’s asking the city to issue bonds that will be repaid through higher rent, ticket surcharges, hotel taxes, player income taxes (given, though, that the last one is pretty low for players not named Darren Beckman). Now, is the city on the hook for these in the unlikely event the Timbers or MLS fold? I don’t want them to be, either, and I think the city’s MLS Task Force absolutely should pin Merritt down on this and find a way to back the bonds that doesn’t require any use of the city’s general fund. Is this possible? I’ll leave it to the people smarter than me to tell me so.

The last remodel was quite a raw deal for the city, and legislators should obviously be gun shy on this for that reason. But I think this proposal is quite different from the last go-round because of the unique situation with MLS, which I’ll get into below. But absolutely, the council needs to be very thorough and make sure they’re not entering a similar deal as with Glickman and the PFE. Common sense demands it. But on the flipside, the council shouldn’t let the past missteps blind them to the opportunity here. Naming the Task Force was an excellent way for the council to examine this deal exactly for the kinds of mistakes that doomed the last PGE Park remodel.

The Alternative?

A common refrain heard from opponents of this proposal is that if Merritt thinks this is such a good deal, why doesn’t he just pay for the renovations himself? Well, the city owns PGE Park, and from what we average citizens can tell, it’s not interested in selling. The city would rather keep collecting rent on the property, and that rent goes way up after renovations. Also glossed over in this argument is the fact that Paulson will be putting down $40 million of his own money to procure the MLS team. Merritt has put up some good faith efforts since buying the teams, including paying down outstanding debt repayments from the last remodel (something he had no obligation to do).

But let’s say the city decides not to do this deal. What vision do the opponents of this deal have for PGE Park? The Timbers’ attendance has been growing steadily, but after a while, it will top off given the second division league they play in and lack of marquee opponents. Say it tops off at 13,000 a game (and I think that’s generous for a USL side, myself). The Beavers’ home attendance hasn’t budged in quite a while from its steady 5,000+ per game average. Remember, the stadium as it’s currently configured seats 19,500. Beavers games are cavernous, empty affairs, and the Timbers suffer from an awkwardly laid out seat configuration and a patchwork field coverings on the pitchers mound and base areas. Neither team has it very good in this, the current situation.

But on the other hand, if the renovations provide an east side stand, a permanent rectangle field, and a new ballpark for the Beavers gives their steady fans a properly-sized home (and a new source of rent revenue for the city), both venues can fill their capacity better on game days, and both sports are showcased in their best possible light.

Let’s also remember that PSU football uses the stadium, too, and are reportedly very supportive of the proposal. If they really want a Division I football program, this stadium paves part of that road and becomes a very good recruiting tool for the school.

“No Economic Impact”

I’ve been reading lately the argument that it’s been “proven” that sports stadiums provide no discernable economic benefit to their communities. Now, I haven’t read the study, and I don’t doubt that the researchers certainly did their homework, but I’m wondering from my own experience how exactly this was quantified. Anecdotes not being the plural of datum, of course, but when I go to a Timbers game, I (with wife and daughter sometimes) get into the neighborhood about an hour early, hit one of the fine local dining (or drinking) establishmentsnearby and drop $30-40 on dinner and drinks. I know I’m not the only one who has this routine, and I live on the east side, so it’s not like I’m going to be headed into northwest or the pearl otherwise (or at least as often). Indeed, I probably wouldn’t be eating out if it weren’t for gameday. So how does this pattern, repeated over some not-insignificant percentage of fellow fans, and repeated again and again over the course of a season, not result in an economic impact?
Part II: Why is MLS a Good Idea?

The League is Not Failing

“Soccer is the sport of the future. Always has been, and always will be.”

For starters, I’m going to tell you the truth. Soccer is not the next big thing, and it doesn’t need to be.

In 1993, as a condition of the USA hosting the World Cup, MLS was founded as the first top level soccer league in the country since the NASL went under in the 80′s. The first season was played in 1996 to full stadia across the country, many fans eager to see what top-level, non-World-Cup soccer looked like. It wasn’t pretty (and I’m not just talking about the inaugural uniforms. Yee-gawds).

Even setting aside the odd rule changes (clocks winding down instead of up, no stoppage time at the end of halves, shootouts to decide draws), the quality was a mixed bag. For every Etcheverry and Valderrama there were 10 other schlubs (ok, they were college products, but for the gulf in talent they may as well have been local plumbers from the sunday leagues), making the promise of a league with high quality quite laughable. The fans responded in droves away from the games, and by 2001, the league was in dire finances.

It was at this point that if the league was going to fold, it would have done so in 2001. I’ll repeat that for emphasis: if the league was going to fold, it would have done so in 2001. Instead, what happened was that the two largest billionaire backers, Philip Anschutz and Lamar Hunt, decided to push ahead. They could have just ended it there, cut their losses, and decided once again that soccer wasn’t going to work in the US. But they saw enough potential to rework their business plan and soldier on.

But at this point, there were only 3 owners for the league’s 10 teams, and only one stadium that a team actually owned. Teams renting cavernous NFL stadia were bleeding money, like a purported half million per game for Giants Stadium in the Meadowlands. The league was paying ESPN for airtime! Roads to profitability in that environment are quite difficult to find.

Now the league has 14 owners for its 16 teams, and TV rights contracts with ESPN, Fox Soccer Channel, HDNet, Telefutura, and may be about to sign an 8-figure deal for international rights. Adidas signed a 10-year contract to outfit the league worth $150 million. New owners include well-backed investors like Toronto’s Maple Leaf Sports and Entertainment, the Oakland A’s’ Lew Wolff, Hollywood mogul Joe Roth, and boxer Oscar de la Hoya.

Add to that the seven stadia MLS teams have built. In Denver, Salt Lake, LA, Chicago, Dallas, Columbus, and Toronto, these teams now have properly-sized venues that, more importantly, allow them to control costs by eliminating or reducing rent, and retain more revenue from parking and concessions.

MLS eventually changed its sponsorships to allow a main sponsor logo to be placed on the front of the jerseys. While you can decry this as unseemly corporate whoring, you can’t deny that it’s meant money in the bank for teams, as this table shows (also, you’re not allowed to denounce it and then turn around and ask how soccer’s supposed to make money when they can’t cut to commercials).

All of these points together change the profitability equation immensely. We don’t know exactly whether the entire league is profitable yet (it’s probably not, in absolute balance sheet terms… the New York Red Bulls still play in Giants stadium, after all. Although when Red Bull Park opens in Harrison, NJ next year, you can imagine one gigantic sucking sound on the MLS balance sheet will cease.), but certainly many individual teams are profitable and have seen their valuations rise significantly.

But why did I start this by saying soccer isn’t the Next Big Thing? Because here’s the thing: it doesn’t need to be. Where the business plan of soccer specific stadia coupled with modest TV rights and jersey sponsors gets you is a place of self-sufficiency. There are plenty of fans of soccer in this country who want to see a home-grown product. Soccer, and MLS specifically, doesn’t need to upend the sports order, and upending the sports order necessarily means MLS has to contradict its slow and steady growth (and their plan to continue same).

No, it’s not as good as the European leagues. It won’t be for some time, if ever. No, it doesn’t need to be. The Ducks or the OSU Beavers play in a conference doubtfully as good as the NFL, and yet continue to do well in the fan support category. All MLS needs, and I think they already have it, is a sustainable plan to exist and keep existing in the future. Don’t let the Freddy Adus or Daniel Beckhams distract you.
Part III: What Will MLS Do For Portland?

Last year’s Timbers finished in last place in the scrappy USL First Division. This after finishing the previous year in second place and being denied a trip to the championship game, losing the semifinal on penalties. The year before that, last place. Last, second, last. Other than two exceptional seasons, in fact, the Timbers have been, well, pretty lousy. I’m one of their biggest fans, but let’s face it, they don’t have a lot to show, trophy-wise, for the 8 years they’ve been back.

But last year saw the largest season attendance average in the club’s modern history. Over 8,500 per game, on average. And in fact, after hovering around an average of 5,000 for a few years, Timbers attendance has ticked upwards steadily each year, despite having owners (pre-Paulson) who cared very little about the team and barely advertised or marketed them.

There is a hunger for soccer in this town. You see it in the strong attendances for the UP Pilots’ men’s and women’s programs. You saw it in 1997 when a World Cup qualifier between the US and Costa Rica sold out in a few hours, and again during the Women’s World Cup matches held here in 2003. You see it in packed bars and even Pioneer Square during the World Cup. Unlike many places in the country, and indeed many cities that already have MLS teams, soccer thrives in Portland.

But probably the best indicator for the sport’s popularity and ability to draw paying customers is to look at the last few seasons of the Timbers, and specifically, the exhibition matches that drew higher profile opponents, however briefly, to Portland. In 2005, the English side Sunderland came to play the Timbers, drawing over 15,000. Since then, a steady stream of exhibitions has followed each year. Coventry City, AC Milan and Juventus youth squads, Mexican sides Morelia and Tigres, and all of these post significant upticks in attendance compared to the regular season matches they feature alongside.

What that says to me is that there is a base of Portland soccer fans that will pay for the product as-is, and there are up to 50-100% more of them that will pay for a much improved product. Bringing MLS here is not just improving that product, but also opening several doors to bring in even better quality exhibitions. I can guarantee you that Merritt will look to maximize his exhibition schedule, and with the step up in talent, he’ll stop playing around with the youth squads and second-tier English clubs, and go for the big clubs.

Could we then be seeing Manchester United vs. Portland Timbers in the near future? Well, let’s not get ahead of ourselves. But renovating the stadium and the already replaced turf (although really, let’s put some grass in there if this works out, okay Merritt?) means almost certainly that MLS awards the All-Star Game to Portland within the first year or three after we join the league. The last three opponents in the ASG were Chelsea, Celtic, and West Ham United, all three of which would certainly sell out PGE Park.

Then you look at who other MLS teams have been able to bring in as opponents, including Everton, Aston Villa, Real Madrid, Barcelona, and you have to say that if Portland has a higher profile team, there’s no reason they can’t attract that kind of opponent, especially with Nike and Adidas headquarters here also (recent sightings of Wayne Rooney and Ronaldinho in Portland are directly attributable to the sportswear giants).

Then beyond MLS, having a stadium configured for soccer, and a passionate fan base means the US National Team may start look to play friendlies and World Cup qualifiers here again, and the US Women would absolutely follow suit.

But let’s look beyond the game days and ask, what will MLS do for Portland in the larger picture? What I think it will do is help cement the structure and visibility of soccer in our community, right down to the youngest levels. A few years ago, MLS passed a rule mandating the creation of youth academies attached to each team, and in return, the team gets first signing rights to players developed in those academies if and when they turn pro.

A Portland Timbers youth academy would provide a pipeline to the team to build depth while simultaneously giving a path for the best talent we’re growing right here in Portland to the MLS and way beyond. I say way beyond because if the Timbers are in MLS, a player has so much more visibility to scouts from the US National team and European clubs. You just have to look at players like Clint Dempsey, Jozy Altidore, Freddy Adu, and Michael Parkhurst to see that MLS has given them platforms to be noticed by much bigger spotlights. Wouldn’t we like there to be similarly great opportunities for our kids?

And as I write this post my mind keeps flitting back to Brian Libby’s wordswritten when the proposal was newly announced:

The point is an investment in athletic facilities, be they with high price tags like Paulsen’s or modest ones like Roosevelt High’s, is that they’re an investment in culture. … Just as we measure the value of our homes by more than much more than square footage, bedrooms or what it would fetch in the market, so too must we look at each of these proposals as how they would be enjoyed by the community.

We outlay money as a community for things we deem important to our culture: parks, zoos, concert halls, art installations, and yes, stadiums for sports teams. Yes, some of these cultural amenities aren’t supported by everyone (as a vegetarian, I’d like to see the Zoo closed yesterday, but the voters have spoken and just gave them a lot more money than Paulson’s asking for), but enough people support them and have their lives enriched by them that they’re considered worth the cost, even if there’s a chance the direct economic costs aren’t repaid.

Absolutely we should take care of the basics first. But this project takes away nothing from our basic needs and adds a higher profile cultural figure to our community. The cost is incredibly cheap compared to similar projects around the country. The city is well positioned for it, and an opportunity like this is not likely to repeat.

Please, Portland City Council, approve the stadium plan and bring MLS to Portland!