Dispute flares over control of Sacramento Republic FC brand. Will it imperil Major League Soccer chances?

Mayor Steinberg intervenes in fight over Sacramento Republic brand

Mayor Steinberg intervenes in ownership dispute as MLS bid is pending.
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Mayor Steinberg intervenes in ownership dispute as MLS bid is pending.

Barely 24 hours ago, Sacramento appeared to be a leading candidate for a Major League Soccer expansion team. On Wednesday, the city’s MLS bid was plunged into chaos amid a dispute over control of its minor league team, Sacramento Republic FC, and the Republic FC brand.

Simmering behind the scenes for months, a rift between lead investor Kevin Nagle and Warren Smith, the team’s founder and president, erupted in public when Smith accused Nagle of violating his agreement with the club by formally submitting a bid to MLS that omitted the Republic brand. Nagle, however, said he doesn’t control the team or the rights to the Republic brand – and hasn’t yet been able to close a deal with Smith to secure control. That meant he had to submit the expansion bid without Republic’s stamp on it to meet a Tuesday deadline set by MLS officials.

League officials declined to say if the absence of Republic FC would imperil Sacramento’s chances for a team, although Deputy Commissioner Mark Abbott said “the people in Sacramento believe presenting a unified front is the best way to proceed. … We should give those discussions time to play out.”

Nagle and Smith apparently can’t agree on a value for Republic FC and its brand, whose extraordinary popularity helped pave the way for Sacramento’s MLS bid.

“Is it ever not about money?” said Mayor Darrell Steinberg, who is trying to broker a settlement.

Worried about the impact on Sacramento’s MLS chances, he scheduled a meeting for Thursday with both men at an undisclosed time and location. He called the dispute “eminently resolvable” and “a momentary issue” but added, “I’m not guaranteeing an outcome.”

Steinberg said he will remind Nagle and Smith that “the public’s interest must come before the private interest.”

Speaking to reporters at City Hall, the mayor said he met with Nagle and Smith when the issue arose several months ago and thought a deal had been worked out, only to see it collapse.

“The best deals break apart two or three times” before being resolved, he said, recalling his days brokering budget agreements as president pro tem of the state Senate.

For now, at least, the two sides appear to be approaching a state of war. Republic FC issued a blistering statement accusing Nagle of violating his agreements with the team.

“This is deeply troubling to us. … If the bid submitted yesterday by Mr. Nagle did not include Sacramento Republic FC, it was in violation of our agreements and without our authorization; and we will take this up with the appropriate parties immediately,” said the statement, released by Republic FC spokeswoman Erika Bjork.

Smith has been unavailable for comment. In response to Republic FC’s remarks, Nagle repeated his commitment to making a deal with Smith.

“We have always been and are committed to finalizing a compelling partnership and we will work with all parties in good faith to ensure this happens,” he said in a prepared statement. He added that he appreciated Steinberg’s efforts to bring peace to the situation.

In an interview late Tuesday, Nagle said “my preference would be to keep the Republic name” if Sacramento’s bid for an MLS team is successful. So far he and Smith haven’t been able to agree on a price.

Nagle submitted the bid to MLS headquarters under the name of Sac Soccer & Entertainment Holdings, a corporation he controls. Eleven other cities submitted bids in addition to Sacramento. Four spots are up for grabs, with MLS expected to choose the first two later this year.

In a conference call with reporters, Abbott tried to downplay the controversy.

“I’d like to minimize some of the brouhaha and hysteria about this,” the MLS official said. “I think it’s fairly straightforward when you take a look at it.”

He added that MLS Commissioner Don Garber has been aware of the situation between Nagle and Smith since last fall and “was personally involved in those discussions.”

Internal friction doesn’t necessarily doom a community’s attempt to get an MLS team; Minneapolis-St. Paul was awarded a team in 2015 even though two competing ownership groups submitted applications.

Until now, Sacramento seemed to be on track for a team. Garber all but awarded a franchise to the city when he visited in April, saying Sacramento was far ahead of the other contenders. Nagle, a retired pharmaceutical executive and minority owner of the Sacramento Kings, had assembled an ownership group that includes the Kings and San Francisco 49ers principal owner Jed York. On Tuesday, he announced that Silicon Valley executive and former gubernatorial candidate Meg Whitman also had agreed to invest.

Hours later, confusion and concern about Republic FC’s role in the Sacramento MLS bid began spilling out on social media, where Republic FC fans accused Nagle of abandoning the team’s brand.

“Why would Major League Soccer exclude (the) team that put Sacramento on the map?” wrote Jason R. Riley on Twitter in one typical comment.

The Tower Bridge Battalion, the vociferous Republic FC fan group, said on its Twitter feed: “TBB has, is and always will be (Sacramento Republic FC) until we die. All of the money Kevin Nagle has to offer won’t change that.”

Nagle, in the interview, said Sac Soccer & Entertainment has always been the corporate entity for pushing the MLS bid.

Smith, an entrepreneur who founded the Sacramento River Cats, got Republic FC up and running in 2014. The team has been a runaway success, winning the USL championship in its inaugural season and playing to sellout crowds at its temporary home at Bonney Field at Cal Expo. Nagle signed on as lead investor partway through the 2014 season.

But Smith and Nagle haven’t yet consummated a deal that would allow Nagle to use Republic FC as the vehicle for applying for the MLS franchise. Because of the league’s deadline, he said he had to move forward without the Republic name.

Steinberg said that while he loves the Republic FC brand, he’d hate to see Sacramento’s MLS hopes die because of a dispute over branding.

“We want Major League Soccer, period,” he said.

MLS has 22 franchises and will christen a 23rd in Los Angeles in 2018. The league expects to name two new expansion teams sometime this year, and two more at a later date.

Because it could be months before MLS makes a decision on expansion, Nagle said that leaves time for him to continue negotiating with Smith.

Managing partner Kevin Nagle expresses confidence in Sacramento's chances for expansion team.

Marcos Breton: 916-321-1096, @MarcosBreton

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