Detroit is one step closer to its fifth pro sports franchise.
Billionaire businessmen and pro basketball owners Dan Gilbert and Tom Gores formally submitted their joint application to Major League Soccer on Tuesday for an expansion team that could be awarded for Detroit later this year or in the future.
Details were sparse, but a short description posted online by MLS revealed that the Detroit bid calls for a 23,000-seat stadium "in the heart of Detroit’s sports and entertainment district." That matches the $1 billion stadium and mixed-use development plan Gilbert and Gores unveiled last April when they announced their interest in bringing pro soccer to the city’s downtown.
A dozen cities filed bids by the Tuesday expansion deadline. MLS’ plan is to announce two expansion cities in the third quarter of this year, and two more at an undetermined time after that. That would bring the league, launched in 1996, to 28 clubs.
The 25th and 26th teams will begin play in 2020, and their expansion fee will each be $150 million. MLS didn't say when the final two expansion teams would begin play, nor how much those ownership groups will pay to join the league.
Others to submit bids were groups from St. Louis, Raleigh/Durham, San Antonio, Tampa Bay/St. Petersburg, Cincinnati, Indianapolis, Phoenix, San Diego, Charlotte, N.C.; Nashville and Sacramento, Calif.
The league has said it will conduct formal application interviews in coming months. MLS executives have met already with Gilbert and Gores several times.
“I’m energized about what this opportunity means for the city and the region,” Gores said in a statement. “Detroit is rising, reinventing itself. I’m excited to partner with Dan and continue to play a role in Detroit’s resurgence.”
Gores, a private equity billionaire, bought the NBA’s Detroit Pistons in 2011 and is relocating the team to new Little Caesars Arena in September. As part of that deal, he’ll build a team headquarters and practice facility near the new arena. His on-court rival, Dan Gilbert, has owned the Cleveland Cavaliers since 2005 and is best known locally for acquiring vast swaths of downtown Detroit real estate via a fortune made from ownership of Quicken Loans Inc.
“Detroit sports fans are some of the most passionate in the world. Nowhere else can you find as many major league teams in the urban core than in Detroit,” Gilbert said in a statement. “Since soccer is the most popular global sport, we also hope having an MLS team will put Detroit on the map with new audiences, attracting more visitors and more residents to the city.”
The Gores-Gilbert soccer effort has targeted the 15-acre unfinished Wayne County jail site downtown for the 500,000-square-foot soccer-specific stadium for up to $250 million and proposed development of three 18- to 28-story glass towers along with retail, bars and restaurants.
Wayne County has said it intends to complete the jail project, which was halted because of a $100 million cost overrun in July 2013. The Gores-Gilbert group on Monday said it would submit a proposal for a justice complex before County Executive Warren Evans’ Feb. 10 deadline to move ahead with jail work.
The Gores-Gilbert group in April said there is "no Plan B" in terms of alternative sites.
“The stadium will be programmed to enhance urban living within the core of Detroit with a variety of events,” they said in a statement. Designing the stadium is Detroit-based ROSSETTI., while on Monday it was announced that St. Louis-based architecture and engineering firm HOK, the same firm that created Comerica Park and Little Caesars Arena in Detroit, is working on plans for a new county justice center.
MLS Commissioner Don Garber, who attended the Gores-Gilbert announcement in April, has been complimentary of Detroit as a potential expansion side and of the potential joint owners.
In December, he laid out the league's three primary criteria for expansion:
- Who the ownership group is, and its financial ability to pay for everything necessary to field a team and build a stadium;
- the size and location of the market, and the level of corporate financial support for a team, including how many national and international headquarters are in the city, and
- the size of the regional cable television footprint; and a comprehensive stadium plan.
The application was required to include information about the ownership group structure, financials, stadium plan and necessary political approvals. MLS also wants a projection of financial support for a team, naming rights and jersey corporate patch sales. New to the process is the requirement of an expression of fan support from the local soccer community — something Garber didn’t really describe.
It's likely the Gores-Gilbert bid would point to the popularity of the semi-pro Detroit City Football Club that averages 5,000 fans per match in Hamtramck, and the 100,000-plus crowds at Michigan Stadium in Ann Arbor in 2014 and 2016 for elite-level soccer exhibition matches.
“The Metro Detroit market is home to a large base of soccer players, fans and supporters and has developed a passionate soccer culture,” it said. “Detroiters support minor league soccer at a high level. An MLS team will complement the two lower division minor league soccer teams playing in Detroit.”
Gores-Gilbert bill their desire for a pro soccer team as part of the ongoing resurgence in the downtown, where billions have been invested in public and private dollars on new construction and renovation projects.
“We’ve completed an important first step in bringing Major League Soccer to Detroit, and together, we have the experience needed to make a new team successful,” they said in their joint statement. “We know firsthand the power that sports can play in uniting communities. Our hope is this team will play an important role in the continued revitalization of the city.”
The joint ownership group pledged that their effort would benefit the community, and noted that there are 100,000 youth soccer players in Michigan. The statement offered some general concepts.
“Implementation of MLS league initiatives will seek to improve lives and communities at the grassroots level from providing safe play spaces and free after-school programming in underserved urban communities to donating soccer equipment to community organizations,” they wrote. “Part of bringing top-tier soccer to Michigan is being fully vested in youth soccer. Establishing youth academies and partnerships with existing youth soccer clubs will be prioritized to help develop young players in Michigan.”
Arn Tellem, the Gores lieutenant who's been quarterbacking the soccer project for him, told Crain's on Tuesday night that millennial-generation interest in soccer is key.
"So much depends on the young people's support," he said.
From a financial standpoint, Gores-Gilbert notes that “independent studies in comparable MLS franchise markets predict an economic impact to their respective regions of $1.2 billion over 30 years.” They didn’t cite specific studies, and some economists have been deeply skeptical of the predicted financial effects of new sports facilities in U.S. cities.
The addition of a fifth major league team for the city would further bolster one of the world’s most dense sports districts, something that has rankled some critics. When Little Caesars Arena opens in September as home of the Pistons and Detroit Red Wings, it will sit just a couple of blocks from Ford Field (Detroit Lions) and Comerica Park (Detroit Tigers). An MLS stadium would be a couple of blocks past the football stadium.
MLS has 20 teams now and four expansion clubs already awarded: Atlanta will be MLS’ 21st team, in 2017, and Los Angeles gets a second club in 2018. After that, Minneapolis-St. Paul will become the 23rd team. Miami is widely expected to get a team, too, and in his State of the League address on Dec. 9 before the MLS Cup 2016 in Toronto, Garber said an undisclosed deadline has been set for the David Beckham-led Miami bid to resolve its problems finding a stadium site.
Detroit is in the mix after those four cities. And it won’t be cheap. The Gores-Gilbert group hasn’t publicly said anything about financing, but it likely would seek tax subsidies or breaks of some sort to offset costs.
Just buying into the league is costly. Owners of the Los Angeles FC reportedly paid a $110 million expansion fee for their club, which begins play in 2018. Minnesota United FC reportedly paid $100 million. New York City FC's ownership reportedly paid a $100 million expansion fee, while Orlando City FC's paid $70 million
MLS is a single-entity business, meaning all teams are owned by the league and all players are its employees rather than employed by the club. MLS pays the players. Team “owners” pay an investment fee to MLS for the right to operate a team in a geographic area. They become league shareholders rather than franchise owners. Teams keep their own books and budgets.
Gores and Gilbert are the sole members of the ownership group, Tellem said, but others could be added in the future. He also declined to discuss if the ownership is equal between Gores and Gilbert, whose Rock Ventures unit has been handling the real estate portion of the bid.
MLS has publicly said it continues to lose money — as much as $100 million annually.
U.S. soccer hall-of-famer TV analyst Alexi Lalas, a Birmingham native who attended Cranbrook Schools in Bloomfield Hills, commented on the Detroit bid via a statement provided by Gores-Gilbert:
“From pick-up to club to high school to the World Cup, I have been shaped by Detroit soccer. I’m excited about the possibility of Major League Soccer coming to Detroit,” he said. “There’s a vibrant and unique soccer culture and history in metro Detroit and Michigan. I think professional soccer, as a sport and business, fits in perfectly with the rebirth and growth of a city and area I know and love. This impressive and committed ownership group believes in the city and the sport, and the bright future of both.”
Blog adapted from an article written by Bill Shea for Crains Detroit Business. To be directed to the original article, click here.