Entrepreneur’s next goal: Bring major-league soccer to Sacramento
08/17/2014 12:00 AM
10/08/2014 12:14 PM
The first time Warren Smith tried soccer, back in high school, he broke his leg and swore off the game.
Now, at age 50, he’s making the sport his livelihood. The minor-league team he created from scratch, Sacramento Republic FC, has been an overnight success in its first year of operation, routinely playing to sellout crowds. Fortified with a potential investment from the Sacramento Kings, the franchise has quickly become a serious contender for a coveted expansion slot in Major League Soccer.
Republic FC is the latest achievement for Smith, a serial entrepreneur who left the telecommunications business in his 30s for a career in sports and technology. He was instrumental in building Raley Field and bringing Triple-A baseball back to the Sacramento region. He co-founded a “clean tech” company that recently sold for several million dollars. And now he could be on the verge of bringing his adopted hometown a second major-league sports franchise.
“My role is really to lay a foundation, to express a vision and then to get people behind the vision,” Smith said in an interview last week at Republic FC’s headquarters on 17th Street near Broadway.
Visionary, yes. But not a starry-eyed dreamer. Mild-mannered, balding, with nerd glasses and a fondness for blue blazers, Smith is painstaking about doing his homework before making decisions, according to people who know him. He started a soccer team only after his market research convinced him he could sell enough tickets to make it work.
“We knew we had the potential,” he said. “Everything pointed to success, but you never know until you execute.”
Bob Hemond, a longtime minor-league baseball executive and Smith’s early partner in the River Cats, said the success of Republic FC is a tribute to Smith’s hard work.
“He’s making it seem a lot easier than most people are aware,” Hemond said. “It’s very similar to what happened with Raley Field. ... He’s been going every day, doing something every day to push the needle a little bit.”
Not everything he’s touched has turned to gold. Smith was a co-owner of Prosper, a Sacramento business magazine that folded in 2007 after a three-year run. The lesson he learned was that being a passive, hands-off investor was a mistake. “I have to jump in,” he said. “I have to swim in the water.”
It was a rare miss. Although associates say Smith isn’t a detail guy, he gets things accomplished by methodically assembling a team that can implement his ideas. The crew at Republic FC includes former employees of the Kings, Monarchs and River Cats.
“I like to call him a rainmaker,” said Sacramento tech executive Michele Wong, whose company purchased a controlling interest in Smith’s clean-tech company, CleanWorld Partners. “He’s really good at pulling people together.”
That concept extends to Republic FC, which has the feel of a startup that knows it’s onto something big. The team’s headquarters, in a former art gallery just north of Broadway, is teeming with enthusiastic employees darting about like kids on a youth soccer team. The exposed brick and scarcity of walls and cubicles adds to the we’re-all-in-this-together culture.
The accent on youth is no coincidence. Smith said he founded Republic FC out of a deep conviction that Sacramento needs to make itself more attractive to young adults. The target audience for MLS is 18- to 34-year-olds. Put the two ideas together and you have a soccer team that has managed to capture a vibe usually reserved for the coolest bars in midtown.
“I couldn’t be more excited about ... how the fans have embraced us,” Smith said.
‘Blind to obstacles’
The story hasn’t gone completely according to script. Republic FC debuted at historic 21,000-seat Hughes Stadium, not far from Smith’s South Land Park home. But even before the season started, MLS officials had encouraged Smith to move out of Hughes, saying the playing field was too small.
It was a big setback. Smith said his reaction was, “What do we do now?”
The answer was typical Smith: He cobbled together a plan for an 8,000-seat stadium, called Bonney Field, at Cal Expo. The makeshift facility was built in a few months and opened in time for the fifth regular season home game.
“The guy is literally blind to obstacles,” said Greg Hayes, a partner in the clean-tech company. “He only sees possibilities.”
Smith was born in Oklahoma, an Army brat who moved around a lot when he was young. He usually played football but, as a high school sophomore in Hawaii, he let his girlfriend talk him into playing soccer instead.
In the first minute of his very first game, an opposing player slid under him and broke his leg.
“I said, ‘I’m going back to football,’ ” he said.
Smith wound up back on the mainland, where he played football and majored in psychology at UC Davis. After graduation, he toured Europe for a while before moving to Lake Tahoe. There, he spent a year skiing and dealing cards at Harrah’s before moving to Sacramento in 1988 to be near his college friends.
Smith got a job selling wireless service to corporations. He did well, but sometimes got static from his bosses for concentrating too much on closing big deals and ignoring the smaller opportunities. His boss at AT&T Wireless called him “an elephant hunter.”
A conversation at his wedding reception in 1995 nudged his career in a different direction. He was leaning over the railing at Rio City Cafe in Old Sacramento, talking baseball with his friend Kevin McClatchy, the newspaper heir who was trying to buy the Oakland A’s and bring them to Sacramento.
The topic of stadium sites came up. Smith looked across the river at an empty patch of land in West Sacramento and said, “How about over there?”
The idea stalled and McClatchy went on to buy the Pittsburgh Pirates (He has since sold the team and is now chairman of The Sacramento Bee’s parent, The McClatchy Co.). But Smith said the idea of baseball in Sacramento was planted in his mind. He began meeting with Hemond, a friend of McClatchy’s and the son of long-time baseball executive Roland Hemond.
Bob Hemond and Smith took West Sacramento’s ambitious young mayor, Christopher Cabaldon, to lunch. He said he was impressed with their vision – and their candor about the road ahead.
“They didn’t have a team, they didn’t have any land tied up, they didn’t have any money,” Cabaldon recalled. “But (they had) everything else – all the heart, all of the passion, all of the drive.”
In October 1997, Smith quit AT&T to pursue baseball full time. His wife, Teresa, was less than thrilled; she had given birth to the first of their two sons just seven months earlier.
“She didn’t understand it,” Smith said.
Bringing baseball to town wasn’t easy. There was considerable political squabbling between West Sacramento and Sacramento over where the stadium should go and how it should be paid for. But Smith and Hemond kept their focus on West Sacramento’s waterfront and found an investor to bring the project home.
The late Art Savage, a former executive with hockey’s San Jose Sharks, bought the Triple-A team in Vancouver, British Columbia, and arranged for its relocation. Raley Field, built for around $40 million, opened in May 2000, ending the region’s 25-year professional baseball drought. Yolo and Sacramento counties, and the city of West Sacramento, issued the bonds; the debt was repaid with revenue generated by the team.
Already a salesman, Smith said he learned a ton from Savage about the business of sports, including the importance of maintaining a strong sales and marketing staff.
“You had to invest ... in the engine,” Smith said. The River Cats caught on quickly and set Pacific Coast League records for attendance.
The team’s success was noticed by the league, which tapped Smith and other River Cats executives for a rescue mission in 2004. The league had taken over the troubled Portland Beavers baseball franchise and essentially hired the River Cats to execute a turnaround.
Also thrown into the deal was the Beavers’ sister club, the Portland Timbers, an ailing soccer franchise in the third-tier USL Pro league.
“We didn’t know anything about them,” Smith said.
It was Smith’s first brush with the business of soccer. He soon realized that the lessons learned with the River Cats applied: Pump money into the sales operation and customers would come. Three years later, the Timbers had tripled their attendance (to 7,000 a game) and had new ownership. Two years after that, in 2009, the team was granted a spot in MLS.
By that point, Smith had left the River Cats and was pursuing clean tech. Using technology developed by a UC Davis professor, he had co-founded a company called CleanWorld Partners. Its product was a “biodigester,” a contraption that turns garbage into fuel. Three of the machines now operate in the Sacramento area.
“He saw the life-changing benefits of this technology and what it could do,” said Hayes, a Sacramento public relations executive and Smith’s partner in CleanWorld. “He saw that years before. That’s the way he operates. He’s looking several years into the future.”
Smith and Hayes sold a controlling interest in the company in 2011 to Synergex Ventures, a technology business controlled by Wong. As Hayes describes it, the deal was somewhat bittersweet; CleanWorld was starting to run low on cash and needed the infusion of dollars.
Terms of the deal weren’t disclosed, but Wong said her company’s investment “was in the millions.”
MLS window closing
Before long, Smith turned his attention back to soccer. It dawned on him that the experience with the Portland Timbers could be duplicated. “We had the belief we could do it in Sacramento,” he said. “Then we started to look at the data.”
In September 2012, Smith was on a trip to Denver with a group from the Sacramento Metro Chamber. Erika Bjork, a Sacramento public relations executive, recalled that over beers one evening, Smith confided to her that he was meeting the next day with Tim Hinchey, a former Kings executive who ran the Colorado Rapids MLS franchise.
It wasn’t a social visit. Smith was “bringing MLS to Sacramento,” he told her matter-of-factly.
Three months later, Smith was awarded a USL Pro team, announcing to a somewhat skeptical media that his ultimate goal was moving to MLS. Buying into his vision, Bjork signed on as vice president of marketing and communications.
The team debuted in April of this year. It has more than fulfilled Smith’s projections, smashing the league’s attendance records and raising hopes that Republic FC could make the leap to the majors.
But there’s been little time for reflection. Soon after the season started, MLS officials told Smith the window was closing on expansion and he had to have a solid bid ready by the fall.
Just as he did with the River Cats, Smith found himself needing a big financial backer. Buying into USL Pro cost less than $1 million; getting an MLS franchise will probably cost $80 million. An MLS-quality stadium will cost another $100 million-plus.
A few weeks ago Smith turned to the Kings ownership group for capital. A deal hasn’t been struck yet, but both sides say they’re confident they’ll reach an agreement.
One uncertainty is what Smith’s role would be if the Kings buy control of Republic FC. Smith said he’s realistic about ceding the operational reins: “In the end, whoever your investor is, they’re going to call the shots.”
In the meantime, he’s enjoying the sport he once shunned.
“It’s like anything – once you spend some time with it, you begin to see intricacies you never saw,” he said. “I’m beginning to love the sport.”
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