Minnesota United FC owner Bill McGuire had already disappeared into the elevator when I realized I’d forgotten to thank him.
This region is where I have most of my friends and family members and most of my net worth. By committing to buy a Major League Soccer franchise and privately fund a venue for the team to play in St. Paul, McGuire has agreed to make my region a little richer and a little stronger.
Expressing a little gratitude seems appropriate.
I must admit, it’s never occurred to me before to say thanks to any of the other major league team owners in our region, but McGuire’s professional sports project isn’t like theirs.
About the only detail worth quibbling about is a plan that keeps the St. Paul property from being taxed. But not collecting property taxes on a site that hasn’t generated property taxes in decades seems hardly worth even calling a cost.
McGuire dropped by for a lengthy conversation this week, just days after he and local officials in St. Paul formally announced a plan for an MLS team to move into its new home stadium in St. Paul in 2018.
McGuire is the principal owner of the new MLS team, having gotten involved in the sport in 2012 when he acquired the local team that plays in the second-tier North American Soccer League. Not long after that he started working on getting a Major League Soccer franchise.
That’s quite a different league, of course. The MLS franchise fee alone is reportedly north of $100 million, and the only way to win the right to pay that much is by promising also to have a new stadium just for soccer. Here, that meant privately financing it.
McGuire has attracted some of the savviest business people in our region as partners to his vision for major league soccer, including Taylor Corp. founder and Star Tribune principal owner Glen Taylor, members of the Pohlad family and Wendy Nelson, a member of the family that controls the hospitality firm Carlson.
What’s interesting about all this is that they have agreed to invest in something that’s far from any sort of traditional business deal.
When looking for investors, McGuire said, he started by looking “for people who have been part of the community and will be part of the community for a long time. And they would look at something like this and say, among its virtues, is that it improves the community.”
Each of his partners may have a different idea of just how major league soccer improves the community, he said. Some might like how major league soccer strengthens our connection to the global economy, given that soccer is a true global sport. It’s also the kind of regional amenity that helps attract businesses to the state and helps the employers already here recruit top talent.
His investors also may have considered that the country and our region have become more diverse demographically, and soccer is a sport that appeals to people of many cultural backgrounds, bringing them into a shared community experience.
Part of the appeal for investors may also have come from soccer’s low cost, at least as compared with ticket prices for National Football League games or other sports. Lower-income families should be able to swing the occasional purchase of seats at soccer matches, with average ticket prices in the low $30s. And families won’t even need a car to get to matches once the new stadium opens, with light rail and bus rapid transit to drop passengers just outside the stadium’s gates.
McGuire also described the appeal of the project as a way to ignite the redevelopment of a big parcel on Snelling Avenue in St. Paul that’s languished for years. It’ll be important to him to end up with a striking design for the stadium itself, he said, making sure the design is also a good fit with the area around it.
What McGuire hasn’t pitched investors is the opportunity to collect an annual check for a share of the profits. There is no reason to think there will be any.
“The business model, clearly, almost can only be asset appreciation,” McGuire said. “But it’s a huge amount of capital up front. A quarter of a billion dollars, let’s say, between the franchise and the stadium. Down the road will franchises be worth more than they are now? Well, they have been in every other sport. So [investors] can say sure, I can do this, be part of helping the community and I can have an asset.”
“Can you make a little money operating? Maybe. But even if you make any you are just putting it back into your enterprise,” he said. “In this case we have a stadium that we are building 100 percent, so that means also all the capital improvements will be ours.”
Losing money isn’t exactly unheard of in the MLS, of course. In the most recent analysis of MLS franchise values by Forbes, on average the teams lost money for the 2014 season, even before taxes, depreciation and amortization expense and any costs for interest.
Forbes estimated that the most valuable franchise is the Seattle Sounders. At its estimated value of just less than $250 million, the most successful franchise in the league is worth about what the McGuire group is going to put into a completely unproven soccer venture here.
Is this still going to be a good deal for McGuire and his partners? Maybe. But it’s a relief that they are doing it with their money and not ours.
As he’s gotten farther into the project and the spending of time and capital added up, McGuire said, nothing he’s learned has changed his thinking about why he wanted to go after a new major league soccer team.
“This is good for our community,” McGuire said. “This is really going to be good.”