Finally California’s newest MLS franchise has a home, and it could well be the crown jewel for soccer stadiums in America.
It is all about location
The location of LAFC’s stadium is about as good as it gets.
It is on Exposition Park in the former Los Angeles Memorial Sports Arena – a place with a rich history having been home to the Lakers, the Clippers, some world famous music concerts, and notably, the place John F. Kennedy accepted the nomination to become President. Now, this once preeminent venue is part of another chapter, LAFC’s.
With it, they kick start one of the biggest economic development projects the region has seen – not merely a stadium, but in the process creating an entertainment district befitting of an entertainment town.
This may well become the cultural landmark of LA, but when it comes to a stadium which is soccer-specific, could this be a mark of the future?
What actually makes a stadium soccer specific?
Major League Soccer recognised early that the enemy of an unforgettable game day experience is swaths of empty seats. So they lead their transformation – and in large part their growth – around stadiums. Rather than being tertiary tenants in other team’s stadiums, MLS clubs should have their own homes.
And these were to be designed specifically with the soccer fan in mind – to allow the energy, intimacy and passion of the game to come through. So that is exactly what LAFC has done – a 22,000-seat state-of-the-art venue that is defined by it’s proximity to the action. They have the closest seats from the touchline in the league at 12 feet, and at 34°, their seating will be among the steepest, putting fans as close to the action as possible.
At a cost of $350 million it is also the most expensive soccer stadium in the country, but with an expected $130 million a year economic impact and nearly a third of this already recuperated through sponsorship, it seems like good business.
The $100 million partnership
That is what it costs to attach your name to the stadium, and what Banc of California have agreed to pay over 15 years for the right.
This means LAFC will see $6.7 million each year from the deal, making it the largest sponsorship in the history of MLS. But more importantly this tops similar arrangements in the bigger leagues – for context, the NFL’s Baltimore Ravens naming rights deal with M&T Bank was recently extended for less, at $6 million per year.
Away from monetary value though, this represents what partnerships should be about – more than sharing logos it is about sharing values and leveraging each party’s equity to underscore a commitment to the people they serve.
In this instance, this deal is pursuant to the economic and social benefits of the stadium flowing to local communities first – jobs (nearly 3,000 of them, of which 40% are slated as local hires), education, local infrastructure, better access to capital for local businesses, as well as increased access to banking services.
While this deal is built on bigger footing that just naming rights, it probably also helps both brands share the same black-and-gold colour scheme as they focus on making this the most impactful partnership in MLS.
So $100 million may well be a small price tag for the exposure it could have.
Paying for it
Whereas previous MLS stadium loans included recourse debt (which means the team owners were responsible for paying it back if revenue from the stadium fell short), this loan is collateralized solely with revenue from the facility – the first in the competition’s 20-year history.
This is a massive endorsement in the confidence of the league and where it is up to in terms of its growth. It comes as they prepare to almost double franchise expansion fees to about $200 million (LAFC signed on for $110 million in 2014) and will look to quickly expand the league to 28 teams (before going on to follow a divisional model, not unlike the NBA).
MLS teams are averaging $157 million in value (with three clubs – the Seattle Sounders, LA Galaxy and Houston Dynamo – valued at at least $200 million), and with commitments to new franchises in Atlanta – which begins play next season – and Minnesota in 2018, while the league continue negotiations with David Beckham’s ownership group about putting a franchise in Miami, there is a lot going on to keep the confidence high.
Next for LAFC – the product
While the MLS has been going for 20+ years, only now it is right on the cusp of breaking through to be a global force, and it can be led in part by this team.
But let us not forget, the LAFC of right now is still a club without players or a coach. So with the stadium construction now in motion, shifting focus to soccer-operation matters and the construction of the on-field product is next, namely the player conversation.
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