No Shortage of Investors for New MLS Club in LA

Just three days after dissolving Chivas USA, MLS announced the creation of a new club that would replace it as Los Angeles’ second team in the league, LAFC. The club is backed by a laundry list of owners led by the trio of Henry Nguyen, a Vietnamese-born entrepreneur, Peter Guber, owner and co-executive chairman of the NBA’s Golden State Warriors and co-owner of MLB’s LA Dodgers, and sports veteran Tom Penn.

LAFC

image courtesy of official LAFC twitter account @LAFC

Though these three make up the principal ownership group of LA’s new club, they are joined by an armada of investors, many of which are quite recognizable in the sports industry. Mia Hamm Garciaparra and her husband Nomar have signed on, as well as Magic Johnson. The full list of investors is not quite complete, as they expect to announce even more in the coming weeks, but so far the remaining ownership group includes: Ruben Gnanalingam, co-owner of the English Premier League’s Queens Park Rangers, Vincent Tan, owner of the Football League Championship’s Cardiff City and FK Sarajevo of the Premier League of Bosnia and Herzegovina, Tony Robbins, America’s #1 life and business strategist, best-selling author, entrepreneur and philanthropist, Larry Berg, senior partner at Apollo Global Management and a co-owner of AS Roma, Allen Shapiro, CEO of Dick Clark Productions and managing partner of Mosaic Media Investment Partners, Chad Hurley, co-founder and former CEO of YouTube and the founder and CEO of MixBit, Rick Welts, President and COO of the Golden State Warriors Basketball Club, Bennett Rosenthal, co-founder and senior partner of Ares Management and a co-owner of AS Roma, as well as Kirk Lacob, Mark Leschly, Mike Mahan, Irwin Raij, Paul Schaeffer, Brandon Schneider, Jason Sugarman and Harry Tsao.

Nguyen was quoted in a league press release saying,

We believe this team can become one of the most outstanding clubs in Major League Soccer and a globally-recognized brand. Today is day one and time for us to focus on developing a world-class stadium for the club to play in and for fans to enjoy.

There have been rumors that the club will play in the LA Coliseum until a stadium can be built, but no official announcement has been made on where the club will play until their new home is match-ready. The new club will be MLS’s 22nd team and will begin play in 2017 alongside four-time MLS champions LA Galaxy. There are some that speculate if there is enough of a fan base to warrant two clubs in the LA market. League commissioner Don Garber offered some points not directly in response to these questions per se, but certainly on a similar topic:

Los Angeles is a diverse, vibrant market with millions of soccer fans, and we look forward to an intense rivalry between the Galaxy and Los Angeles Football Club.

Garber doesn’t necessarily offer much in the way of concrete proof to show that the LA market has room for two clubs, and the Chivas USA 9 year experiment does not do much to boost the confidence of any skeptics, however, in a separate press release from the league prior to the announcement on Thursday, Garber offered further remarks that elaborated on the league’s confidence in this new club and the leagues new strategy for the LA market.

As part of our new strategy for Southern California — a major hotbed of soccer participation and fan support — we believe that engaging with a new ownership group which has the resources and local community ties, and a plan for a dedicated soccer-specific stadium, provides us with the best chance for success.

There are several things that jump out at first glance about the new ownership group at LAFC . First, is the sheer number of people involved: 22 and more are expected. They could field two full teams of their own, without signing any players – not an advisable strategy by any means, however. The number of investors does have a very real and feasible impact however, and that is to give the club some serious liquidity, which no doubt they will look to use on some impressive DP signings, similar to the likes of Orlando City SC with Kaka and NYCFC with Frank Lampard and David Villa. One thing to note however, is that with more investors with money in the pot means more mouths at the table that will want to speak and voice opinion. There will surely be limitations on the level of activity that the secondary owners will play to enable the principal owners to run the ship smoothly without much interference, but it’s still an interesting dynamic nonetheless.

The second thing that’s quite noticeable is the level of experience and relevance within the LA market that this ownership group has with Peter Guber, who will serve as the club’s executive chairman, Magic Johnson, former LA Lakers great and co-owner of the LA Dodgers, among others will serve the club well as they look to make a splash in the Galaxy-dominated Los Angeles market.

Finally, there is no shortage of experience in the soccer industry with Vincent Tan, however controversial he may be, Mia Hamm Garciaparra, and two co-owners of AS Roma in Larry Berg and Bennett Rosenthal (can you say “official partnership” between LAFC and AS Roma coming soon?).

There is certainly a lot of time for the team at LAFC and MLS to work things out in terms of go to market strategy in the LA market and how they balance having LA Galaxy right down the road. And while it isn’t necessarily a great thing to see Chivas USA dissolved, it is nice to see the league had been working on a contingency plan for apparently some time in anticipation of this event, so that fans won’t have to go too long waiting for their new club.

 

What do you think about the announcement of the new LA club LAFC, and it’s vast team of owners? Let us know in the comments section below, or via Facebook or Twitter.

Reporting on the business side of the world's game.