MLS says expansion fee could hit $200 million

Rendering of Sacramento Republic FC’s proposed MLS stadium in the downtown railyard.
Rendering of Sacramento Republic FC’s proposed MLS stadium in the downtown railyard. Sacramento Republic FC

When Sacramento started its pitch for a Major League Soccer franchise, the expansion fee was expected to be a little more than $100 million.

Now, with soccer’s popularity continuing to rise, it looks like the price of admission could be nearly twice as high.

In an interview Monday with Bloomberg News, MLS Deputy Commissioner Mark Abbott said fees could grow to as much as $200 million per franchise in the next round of league expansion, which is expected to include Sacramento.

Although league spokesman Dan Courtemanche said no expansion fees have been finalized, $200 million would represent a steep increase. As recently as 2014, investors paid $110 million for LAFC, the second Los Angeles franchise.

It’s uncertain how a $200 million expansion fee would pencil out for owners in a small market such as Sacramento, where the city’s highly successful Republic FC minor-league club is widely expected to be next in line for graduation to MLS status. Executives with Republic FC declined to comment on Abbott’s statement.

Bay Area business consultant Andy Dolich said he thinks Sacramento could handle an expansion fee that high. Even if the price is too rich for some of the current investors, “there are plenty of people … that would love to be involved in that particular franchise” and could absorb the higher price, Dolich said.

Still, Dolich said, the $200 million figure is something of a stunner. Based on what he heard at last week’s MLS All-Star Game in San Jose, “$125 to $135 (million) is sort of the buzz,” he said.

Republic FC bulked up its ownership roster considerably last year when the Sacramento Kings and several key owners of the San Francisco 49ers agreed to invest in the club.

The team’s owners have already said they’re prepared to spend $225 million on a privately financed MLS stadium in the downtown railyard.

Sacramento has been widely expected to receive a team in the next round of MLS expansion. During a trip to the city earlier this year, Commissioner Don Garber all but promised a team to Sacramento and said a formal announcement could come by year’s end.

The spike in expansion fees is due to the league’s boom in popularity. Team values have soared in the past two years. The average MLS franchise is worth an estimated $157 million, according to Forbes magazine, and three teams are worth more than $200 million.

Dale Kasler: 916-321-1066, @dakasler