Business & Real Estate

Billionaire Burkle to join Sacramento Republic FC. Is a Major League Soccer spot next?

Sacramento’s chances of landing a Major League Soccer expansion team seemed to be languishing in the past year. Three other cities secured expansion spots, and Sacramento struggled to find the billionaire “whale” investor that MLS was demanding as the price of admission.

All that changed Tuesday. Billionaire financier Ron Burkle has agreed to buy controlling interest in Sacramento Republic FC, a move that could put the city within shouting distance of an MLS team. A jubilant Mayor Darrell Steinberg announced the deal to a crowd of civic and business leaders at the annual “State of Downtown” breakfast at the Hyatt Regency.

The 66-year-old Burkle, a supermarket tycoon from Beverly Hills, could represent the final piece that Republic FC needs to convince MLS that Sacramento deserves a place in America’s premier professional soccer league.

The mayor said he, Burkle and others will travel next month to New York to meet with MLS Commissioner Don Garber to update him on Sacramento’s progress in assembling a wealthier ownership group.

“The commissioner laid out a series of markers last year and we went after it and now we have met every one of those markers,” Steinberg said.

Notably, that meant deeper pockets. “We had to show it, and now we have it. Obviously there’s no guarantees, but .... I’m feeling very hopeful and very confident. We’re going to come back winners.”

MLS spokesman Dan Courtemanche said: “We have met with Ron Burkle over the course of the past year about his interest in MLS and are very pleased that he has finalized his agreement to become the lead investor of Sacramento Republic FC. Sacramento remains a strong expansion candidate and we look forward to meeting with Ron soon to discuss his plans.”

David Carter, a sports business expert at USC, said Burkle’s investment represents “an enormous calling card to the league. It delivers stability, it delivers somebody with sports experience .... It certainly moves this a lot closer to the finish line.”

Burkle tends to keep a low profile and wasn’t in Sacramento for the announcement. He issued a statement through his Yucaipa Cos. investment firm that said, “We love the city and the fans are great .... The mayor has really worked to make this a great partnership and I’m excited to be part of it.”

City leaders and Republic FC Chairman Kevin Nagle have been recruiting Burkle for months, since MLS officials made clear that having a billionaire lead investor was required for an expansion franchise. Burkle, who co-owns the National Hockey League’s Pittsburgh Penguins and tried to buy the Sacramento Kings twice, controls a net worth estimated at $2 billion by Forbes magazine.

“It’s game-changing to bring Ron Burkle on board,” Nagle said. “You’re talking about a first-class businessman and sports owner. I think the rest of the country is going to be really impressed by who we brought in as lead investor.

“Ron knows Sacramento. That’s the beauty of it. I was on the phone with him last night and he was singing the praises about how wonderful our community is.”

Republic FC wouldn’t reveal details of Burkle’s deal with the team, but said the financier is investing with the goal of landing an MLS franchise, not owning a team in the second-tier United Soccer League.

Besides taking over the team, Burkle has tentatively agreed to buy Republic FC’s proposed MLS stadium site at the downtown railyard, plus 14 adjacent acres to develop an entertainment district. The land is owned by a company controlled by developer Larry Kelley, a minority owner of Republic FC.

“This larger purchase creates endless possibilities for expediting the build-out of the railyard,” the mayor said, comparing it to the Downtown Commons entertainment complex taking shape around Golden 1 Center.

Burkle’s involvement in Republic FC turns around an effort that once seemed to be a sure thing, but grew increasingly dim in the past year as other cities secured MLS expansion teams.

Burkle will take over for Nagle, a well-respected pharmaceutical executive. Nagle has poured tens of millions into Republic FC since becoming lead investor in 2014, when the first-year United Soccer League team dazzled MLS executives by drawing sellout crowds at a stadium at Cal Expo.

Nagle said he would take on the role of a “senior executive” in the franchise and the lead local investor.

Also joining the ownership team will be Matt Alvarez, a Los Angeles businessman who’s done previous deals with Burkle, according to team officials.

It’s unknown how much money Burkle is prepared to pour into Republic FC. The MLS expansion fee is expected to cost $150 million. Ben Gumpert, president and chief operating officer of Republic FC, said the team’s proposed new stadium could run well over $250 million. Along with the adjacent land development, the entire deal could come to nearly $1 billion, Gumpert said, although that would represent the combined resources of multiple investors, not just Burkle.

Map of proposed stadium site

The proposed soccer stadium is one of several projects planned for the 240-acre former railyard:
1. Kaiser hospital
2. Soccer stadium
3. County courthouse
4. Revolve housing project
5. Foundary office project
6. Affordable housing complex
Map: Nathaniel Levine

Steinberg said the stadium construction will be privately financed. But he said he will propose to the City Council that the city help out by creating an infrastructure financing district on the soccer stadium site and an adjacent 14 acres. That will allow the city to capture increased property tax revenues created by new development at the site to help pay for infrastructure improvements.

He said he also will propose to the City Council that the city give the soccer group electronic billboard rights similar to what the city did for the new Kings ownership group several years ago.

“This has been part of the discussion and negotiation over the past year as well, to recognize where the public can make an appropriate contribution that not only helps bring Major League Soccer, but enhances the overall development of the railyards and adds to our economic vitality,” Steinberg said. “As long as it’s not writing a check or money coming out of our general fund, we’re in.”

Garber visited the city in April 2016 and all but promised Sacramento a team. The MLS commissioner went so far as to say Republic FC might start playing at the major league level by 2020, and team officials and the city accelerated preparations for an MLS stadium at the railyard.

Yet Sacramento’s chances began faltering in late 2017, when MLS officials sent word that they would only admit expansion teams controlled by billionaires. That put Sacramento out in the cold; Nagle has a net worth that’s in the hundreds of millions of dollars, he once told The Sacramento Bee.

In the past year, Sacramento has been passed over by MLS in favor of Cincinnati, Nashville and Austin, Texas. Sacramento was left to compete for the 28th and final spot in MLS’ latest expansion round, although Garber said in December the league could go beyond 28 teams at some point.

Even with Burkle breathing new life into Sacramento’s bid, the 2020 timetable is now probably unrealistic, according to Gumpert.

Republic FC’s quest for a billionaire has been difficult at times. Tech executive and one-time California gubernatorial candidate Meg Whitman (net worth: $3.3 billion) pledged to join the Republic FC ownership roster but then withdrew.

Then Burkle stepped into the picture. Nagle, a minority investor in the Kings, hosted Burkle at a game at Golden 1 Center last March. The Bee, quoting text messages obtained through Public Records Act requests, reported that Burkle toured the railyard stadium site during that same visit, and also held detailed talks with Steinberg about the MLS bid.

The texts also revealed that city officials had met with a separate group that included former Kings player Omri Casspi and two real estate investors from the East Coast. But it appeared that Burkle, who has a much higher profile in the sports and entertainment world, had become Sacramento’s top choice to lead the MLS effort.

Gumpert said coming to an agreement has taken months because “we wanted to find the right person, someone who has an appreciation for Sacramento and for soccer.”

Burkle’s name should be familiar to Sacramento sports fans. He offered to buy the Kings in 2011 , when the former owners, the Maloofs, were trying to move the team to Anaheim. The Maloofs angrily rebuffed his efforts.

Two years later, after the Maloofs had tentatively sold the team to investors from Seattle, he tried again. At the urging of then-Sacramento Mayor Kevin Johnson, Burkle teamed up with Bay Area financier Mark Mastrov to mount a competing bid and spearhead development of a new downtown arena.

However, Burkle withdrew because of a conflict of interest – he had launched a sports agency that represented NBA players. Silicon Valley tech executive Vivek Ranadive took leadership of Sacramento’s effort, and succeeded in blocking the Seattle deal and buying the team. Golden 1 Center, the team’s new arena, opened in 2016.

A grocer’s son, Burkle made his fortune buying and selling supermarket chains such as Ralphs in Southern California. More recently he’s invested in high-tech companies and the entertainment industry, and has produced 17 movies.

He’s jetted around the world with Bill Clinton, who acted as an adviser to Burkle’s investment firm, although their relationship has reportedly cooled in recent years. He has a fondness for trophy real estate; his Beverly Hills mansion once belonged to silent film star Harold Lloyd and in the past two years he’s reportedly spent $28 million buying homes formerly owned by legendary comedian Bob Hope.

For all that, he’s remarkably publicity shy and rarely grants interviews. He’s agreed to speak with the Pittsburgh Post-Gazette once about the Penguins — in 2017, nearly two decades after buying the team. When he came to Sacramento in 2013 to meet with city and state leaders about his bid to buy the Kings, he was kept away from the press.

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