Legal Update: The Courts and American Soccer – Vermes and VW

Its been a while since we took a look at some of the ongoing civil litigation and criminal actions involving American soccer personalities, clubs and leagues.  However, with the recent news of Peter Vermes arrest on a DUI, we thought we would take a look at some of the cases that have been prominent over the last year.

We’ll start with Mr. Vermes, who was recently arrested on suspicion of DUI 30 miles Southwest of Kansas City.  The arrest occurred in the early morning hours of August 24.  He spent about six hours in jail, posted a $750 bond and was released.  He will be arraigned on November 9.  Fortunately for Mr. Vermes, harsher penalties recently recommended by a commission in Kansas have not yet taken effect.  Currently, jail time is an uncommon sentence, even after multiple offenses.  To date, there has been noevidence that he has previously been found guilty on a DUI charge.  While the criminal proceeding likely has months until it reaches a resolution, it is unclear what steps the Wizards will take with their coach.  We will update this post as the matter moves forward.

We’ve posted a couple of times over the last few months about the litigation involving DC United.  The gist of the lawsuit is that the plaintiffs (Jones and Mair) are alleging that DC United (Macfarlane Chang DC Soccer, LLC) breached a contract with the plaintiffs regarding the location of potential DC United Sponsors.  Specifically, the plaintiffs allege they were entitled to a 22-25% commission on the deal to make VW the presenting sponsor of DC United.

The case was dismissed (by agreement), in early Summer.  The defendants had filed for Summary Judgment in the Spring and the Court had granted that motion.  As such, the defendants essentially won without having to take the matter to trial. A review of the Motion for Summary Judgment suggests that the plaintiff’s claim was essentially baseless.   There was a 14 month gap between the plaintiff’s effforts to contact VW as a sponsor and the actually signing of the deal.

From a business perspective, the case is interesting because it details United’s efforts (through Kevin Payne), to secure VW as a sponsor.  The relationship began over a search for property in Virgina and ultimate became a presenting sponsorship.  VW’s move to Virginia included a wish to get involved with local properties and with the Honda deal expiring, VW made a perfect target for MLS and DC United.  The courtship included dinners, phone calls, meetings and live games.  United personnel traveled extensively to close the deal and did so in the Spring of 2008.  There is no suggestion the plaintiff’s were involved.

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Deferring to the Open Cup Final

soundersWith the Lamar Hunt US Open Cup Final the event of the evening, we will take a pass on any substantive posts.  The game managed a respectable 17k  for a very exciting event.  Of course, United spent a significant sum advertising the match, and there is a real question of whether the outlaw was sensible.  Nevertheless, it was a cracking game and the good sized crowd certainly added to the event.  Kudos to United for the Wewintrophies website and tour. Congratulations to Seattle.

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DC United Promtions, Garber Interview and Charity Auctions

unitedDC United has long prided itself on passionate supporters groups.  Through “Behind the Badge“, the Team’s official blog, United is hoping to spread that passion to the younger set.  For this Friday’s nationally televised match against New England, United is offering $15 tickets for college students.  In addition to the tickets, the Team is offering tailgating opportunities and further promotions for large groups.  Interestingly, the Team has proactively separated its ticket sales by colleges, offering distinct pages for each University.

United will combine this promotion with a singles night, offering packages with bands, drinks and more pre-game.  The team will promote an after party at a bar in Town to keep the singles happy.  Like with the College night, the Team will offer deals for large groups that want to participate.  We say, why not??  Giving young people an excuse to drink, have fun and watch soccer seems like a pretty reasonable idea.  The weather is supposed to cooperate.  These are simple ideas, but certainly seem worth the try.

League Commisioner Don Garber sat down for a five minute interview on Fox Business Channel to discuss some MLS business basics.  Though the interview did not break any new ground, the exposure for the league in  non-traditional soccer media sources is important.  Topics such as sponsorships, expansion and impact of the economy were explored.  It was interesting to see the Commissioner refer to the two distinct fan groups (i.e. “hard core” supporters and families).  Selling to these very different groups remains a challenge for the League

One aspect of the League that often goes unnoticed is the charitable efforts of MLS W.O.R.K.S. The League’s charitable arm partners with a number of recognizable names such as Nothing but Nets and UNICEF and raises money and awareness via a number of fundraising and outreach programs.  One overlooked aspect of these efforts is the ongoing auction at MLSnet.com.  An array of game worn jerseys, autographed memorabilia and other items are available for auction during the season.  The money goes to MLS W.O.R.K.S and fans have access to a variety of neat items at reasonable prices with the certainty of authenticity.  The League has aggressively promoted the charity in the last couple years and deserves applause for these effortsmls

Stadium Update: San Jose Earthquakes, DC United and more

san-joseLast week, we discussed OnGoal’s efforts to build a soccer stadium on the Bannister Mall site in the Kansas City area.  Today, we provide updates about some of the other stadium projects around the League.  In San Jose, the Mercury News is reporting on positive developments in Lew Wolff’s effort to build a stadium for the Earthquakes.  The city of San Jose has agreed to chop $40 million off the purchase price of a 75 acre parcel that will include the Stadium and additional mixed use development. Mr. Wolff will now pay $89 million for the site (purchased by the City for $81 million). The stadium will seat 15,000 (with additional seating for 3,000 more on a berm at the stadium’s open end) and will use 14 acres of the site.

Though some may object to the City’s willingness to part with $40 million for a no-bid land sale to a developer, it actually seems that the City is displaying some rare foresight.  In the current economic climate, the promise of large commercial development is important as a job creator and economic driver.  The infusion of such a large private development is still a good deal for the City even at the reduced rate.  According to the story, the appraised value of the land has declined by one third since Mr. Wolff signed the original deal in May.  Importantly, because the arrangement provides Mr. Wolff with only a primary option to purchase the land, he can still walk away from the deal.  As a result, this negotiated resolution allows the City to remain confident that the deal will go thorugh, albeit at a reduced price.

In Harrison, New Jersey, Red Bull is moving forward with its construction of Red Bull Arena, a 25,000 seat soccer stadium estimated to cost $150 million.  The new stadium is set to open at the start of the 2010 season, making 2009 the last year for the Red Bulls in the unfriendly confines of Giants Stadium.  The RedBulls have recently announced (are the Mets, Yankees, Giants & Jets listening?), that season ticket prices will not increase from 2009 to 2010.  Pricing information and a stadium tour are available online here.  There is also a recent article about the new arena in the New York Times.

In Maryland, it appears that United’s chance of getting a stadium in Prince George’s County is has come and gone.  The Washington Post is reporting on an 8-0 vote by the Prince George’s City Council refusing to support funding for a study of a potential stadium in Maryland.  It is fairly stunning that a proposal that was so full of promise just weeks ago seems dead today.  It is also suprising that the Council rejected a study so forcefully.  United is now in the unenviable position of having thumbed its nose at the District of Columbia while being left at the alter (or perhaps engagement party) by the State of Maryland.  Now United, one of the League’s mos successful franchises, faces the possibility of being a team without a stadium or a candidate for relocation.united

Around MLS: San Jose Announces Marketing Campaign

san-joseJust weeks after announcing a sponsorship deal with Amway Global, the Earthquakes have announced their 2009 marketing campaign.  The campaign will combine 4 television ads, billboards and bus advertising.  The Quakes will highlight Joe Cannon and Darren Huckerby through all of the mediums utilized by the campaign.

San Jose also announced a new radio partnership with KNBR 680/1050, a sports radio station in Northern California.  The partnership will include advertising, the production of a daily 5 minute Earthquakes report and promotional activities.  According to the press release, there will also be an increased Earthquakes’ presence on the station’s website (not yet apparent).

Local media marketing is always important.  Simply getting MLS on the radar screen of mainstream media and the denizens of sports talk radio is a significant challenge.  Seattle has done this quite well (Freddy L. was trotted out over all the local airwaves when he was signed), while the Revs have gained a foothold thanks to WEEI’s “Planet Mikey“.  Generally, however MLS teams struggle for recognition in local sports talk, so San Jose’s deal with KNBR seems like a good idea.

In stadium news, Steve Goff is reporting that DC United has narrowed its potential Maryland stadium sites to three.  According to Goff, United will submit a contract on one of the sites soon.  Goff also reports that the stadium will be planned with transit in mind.united

The sooner the stadium site is selected, the quicker the process of securing approvals and funding can begin.  As important as RFK has been to the League and U.S. Soccer, it is time for United to get its own home.

United to P.G. County

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A hot topic for both soccer and  mainstream media for the last few days has been DC United’s proposed move to Prince George’s County.  The move got closer to reality following an afternoon press conference in Largo, MD on Monday.   The proposed deal for a 24, 000 seat stadium is estimated to cost just under $200 million with 25% of the funding coming from the team.  According to the Washington Business Journal,

“a feasibility study published by the Stadium Authority in September guessed that the team was likely to produce $65 million to $80 million in economic activity annually, which could mean the equivalent of more than 1,000 full-time positions and bring in more than $5 million in annual tax revenue.”

As is almost a necessity when trying to sell a publicly financed sports arena, promises about dozens of additional (non DC United) events are at the forefront of the proposal.  These include concerts, college soccer, womens’ soccer and more.

Footiebusiness.com will certainly cover the financing of this deal as it moves forward.  But another interesting factor is the potential impact of such a move on United’s devoted fan base.  Will fans from Northern Virginia willingly make the trip to Maryland?   Steve Goff of the Washington Post pulled an interesting quote from DCU president Kevin Payne:

“Our largest fan base is from Northern Virgina… We recognize that we may to change our fan base a little bit.  It’s possible we’ll have more fans now from places like Prince George’s County, Anne Arundel County, Howard County, up into Baltimore.  Perhaps fewer will be able to make it from places like Loudon County.  But our fans are very, very loyal…We expect those fans to come with us.”

Most of the proposed sites are on the Metro which seems to mitigate against the attendance impact of moving out of the city. I suspect that the potential revenue from a new stadium would make up for the loss of some game day attendance.  No more rent and full control of concessions, combined with the ability to rent the stadium to other parties is likely too good a deal to pass up for Victor MacFarlane.

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DC United Moving to P.G. County?

In a recent story of Maryland, it appears that D.C. United is moving closer to a full time move to Prince George’s County. United currently plays in crumbling RFK Stadium and has been trying for years to get financing to build along the Anacostia River at Poplar Point.  According to reports, United pays $1.3 million annually to rent out RFK, but does control concessions and parking.  Would the move to Maryland really be benficial?

Obviously, it all comes down to money, and Victor McFarlane has quite a track record in real estate. In this econmic climate can P.G. County make an attractive pitch to bring the team?  MacFarlane must think so.   A press conference is scheduled for Monday according to the Washington Post, so we will keep an eye on the situation. 

 Many United fans are upset by a potential move to the suburbs, and I tend to agree (compare the attendance/atmosphere in Dallas and Toronto to see the importance of an urban fanbase).  However, P.G. County is on the Metro, so perhaps United will get the best of both worlds.