Sacramento Major League Soccer expansion deal collapses. Key investor backs out
Sacramento’s supposedly sure bet on becoming a Major League Soccer city has fallen flat.
In a surprise move, Los Angeles billionaire Ron Burkle on Friday informed the league “that based on issues with the project related to COVID-19, he has decided to not move forward with the acquisition of an MLS expansion team in Sacramento,” according to a statement issued Friday evening by the league.
The deal appeared to have been firmly in place Oct. 21, 2019 when a major announcement was made in downtown Sacramento amid a celebratory atmosphere featuring Burkle, MLS executives, Gov. Gavin Newsom and city officials.
However, Burkle and league officials failed to agree to a final contract deal, with sticking points including the $300 million cost of the stadium, which was to have been built in the downtown Railyards.
Burkle made a point the day of that announcement in saying he was not pleased with the amount required as an entrance fee into the league, a number that had jumped to $200 million from $150 million by the time Sacramento’s entry bid was accepted. But, he said, he felt he could make the deal work.
Since then, the soccer stadium’s costs escalated during a one-year delay caused by the coronavirus crisis that hit last year just months before the team was planning to begin construction.
Although Burkle signed a preliminary agreement in 2019 with MLS, the two sides never came to an agreement on a formal long-form agreement.
What’s next for Sacramento’s MLS future?
MLS officials and Mayor Darrell Steinberg said Friday they had not given up on bringing a team to Sacramento, but cannot do it unless they find new investors.
“After working for many years to bring an MLS team to Sacramento, the league continues to believe it can be a great MLS market,” league officials said. “In the coming days, the league will work with Mayor Darrell Steinberg to evaluate possible next steps for MLS in Sacramento.”
“I want to thank Mayor Steinberg for his continued efforts to bring MLS to Sacramento,” said MLS Commissioner Don Garber. “His commitment to the city and delivering for its passionate soccer fans should make all citizens of Sacramento proud. Interest in owning a club in Major League Soccer has never been higher. And I remain incredibly optimistic about finalizing expansion plans for our 30th team.”
Steinberg issued a statement Friday afternoon saying he was disappointed that Burkle backed out of the deal, but said the city would continue what has been a decade-long effort to move the Sacramento Republic FC team up from the minor-league United Soccer League.
“Sacramento’s rightful quest for Major League Soccer is far from done,” Steinberg said. “It took multiple stops and starts to keep the Kings. We won then, and we will win again.
“I am very disappointed in Ron Burkle’s decision to step out of his October 2019 public commitment to our city,” Steinberg said. “Despite the difficult past year for our city, we have upheld every commitment to Mr. Burkle, the league, and our community. We took major steps steps to welcome Major League Soccer to a new stadium in the Railyards, and we remain prepared to move forward immediately.
“I greatly appreciate the support of Commissioner Don Garber and MLS. They have done right by us, and they continue to stand behind us.”
Both MLS officials and Steinberg told The Bee they feel they have formed a positive and respectful working relationship over the past two years, and that such familiarity could help keep the city’s efforts alive.
“We will still bring MLS to Sacramento, and we will work with the league to find a new lead investor,” Steinberg said. “We are not starting from scratch by any means. We have an approved stadium plan and an approved plan to build and pay for infrastructure. We also have the best fan base in the country – one that has shown time and time again that it can support an MLS team.
“We have only begun to fight for what our city deserves.”
This is not the first time that Burkle, who lives in Beverly Hills and also co-owns the Pittsburgh Penguins of the National Hockey League, has appeared ready to invest in Sacramento sports, then backed out. In 2013, when the former owners of the Sacramento Kings attempted to move the team out of the capital city, Burkle stepped in initially to head a group attempting to buy the team and keep it in Sacramento.
Burkle backed out of that deal, but the team stayed in Sacramento after an investors group led by Vivek Ranadive managed to buy the team.
Burkle was frank during the October 2019 announcement that he had been concerned about what he considered a very high price to enter the league.
“It’s a free market world, and when the price went up to 200 (million dollars), it went to 200,” he told The Bee, sitting next to Garber in a back room of a downtown venue just before the formal announcement. “But the commissioner worked with us ... and we came to a place where we thought we could make the 200 (million) work.”
One-two punch to downtown
The loss of Burkle is the latest setback for downtown Sacramento. An MLS stadium has for years been envisioned as the anchor of the downtown Railyards. It was going to be walking distance from Golden 1 Center, which has sat empty for 11 months like most downtown businesses since the city shut down due to COVID-19.
With few businesses and restaurants currently open downtown, Sacramento’s urban core has been largely deserted.
Now, the potential anchor of the Railyards and a catalyst for development and consumer spending is in limbo without a primary investor in Burkle. At the beginning of the pandemic almost a year ago, the construction of Sacramento’s proposed MLS stadium was viewed as something to look forward to for those who worked to transform Sacramento’s downtown from blighted to thriving.
With Burkle out and the prospect of a Sacramento MLS team thrown into uncertainty, downtown boosters have been stripped a game-changing project.
“The potential for MLS, the development of the Railyards ... and the impact that it could have would be incredible,” said Michael Ault, executive director of the Downtown Sacramento Partnership. “We’re very hopeful someone else will recognize the tremendous opportunity that exists with this opportunity.”
Despite the setback, longtime boosters for Sacramento Republic FC are not giving up.
“I have invested way too much time, money and effort to stop now,” said Kevin Nagle, the primary investor of Sacramento Republic FC, who was going to cede primary ownership of the team to Burkle before the supermarket billionaire backed out.
“My partners and I are committed as ever to bring MLS to Sacramento, which this city and fans deserve so much.When one door closes, another opens. With the help of Commissioner Garber, the mayor and the rest of our ownership group, we will continue on our quest. ... More to come.”
This story was originally published February 26, 2021 at 4:47 PM.