Building for a Future Full of Uncertainties: Stadiums in MLS

After 20 years, Major League Soccer (MLS) has checked off quite a few boxes.  The league emerged from some dark days when it was forced to contract to 10 teams for the 2002 season.  Average attendance dipped each year from the inaugural 1996 season until 2001.  Soccer specific stadiums were elusive (and still are for some teams) and regular national television programing was a pipe dream.

Part of this unprecedented growth in MLS since 2005 has been a result of the improved play on the field, grass roots supporter culture, and clubs opening up their checkbooks.  Club owners have been more willing to invest to bring in top talent from around the world and build a stadium around which the community can rally.  Houston Dynamo, San Jose Earthquakes, New York Red Bulls, and Sporting Kansas City are examples of clubs (and fans) who have reaped the benefits of having a soccer-specific stadium built after years of playing in alternate locations.

The story continues for clubs such as D.C. United, Orlando City SC, and future MLS club LAFC.  Orlando City is already in the process of building their new home.  D.C. United had their stadium plan approved by the town council in December of 2014, and LAFC recently announced their plan to build a stadium at the site of the Los Angeles Sports Arena in downtown Los Angeles.

READ: DC United Celebrate as Stadium Plan Approved Though Eminent Domain Still Looms

The financial commitment of these clubs is unquestionable.  However, there are hidden risks in building new stadiums.  FIFA has been under fire in the past decade for demanding that World Cup nations build massive stadiums that go unused after the summer tournament is over.

Clubs need to find a healthy balance between building a reasonably-sized stadium that will last for decades, while also considering expanding the stadium for additional fans.  For example, in Orlando City’s first 6 matches in MLS they have averaged 37,446 fans in the Citrus Bowl, their temporary home.  Orlando’s initial plan, however, is to build a 19,500 seat stadium.  Both fans and the club have been divided on whether they should modify plans and build a larger stadium.

Building a larger stadium would mean a larger investment in time and money from both the club and the community.  Local tax dollars are being used to build the newest MLS stadium, another aspect to consider.  Early signs indicate that Orlando City SC will have one of the league’s highest average attendance figures by season’s end.  A larger stadium would increase matchday revenue for Orlando City SC, to be sure, however, if the club builds a 30,000 seat stadium and the allure of a new club begins to wane in the city, the club would be scrambling to find bodies to fill empty seats, game after game – not a situation any club wants to find itself in.  By keeping the stadium at 19,500 with plans to expand when necessary, the club would potentially be leaving money on the table by turning away thousands of fans on matchday because of limited seating, if current attendance trends were to continue in the future.

LAFC plan to tear down the virtually unused Los Angeles Sports Arena to build a 22,000 seat downtown stadium.  With a unique location and strong support from investors, LAFC are making a strong impression to the public.

LAFC still has to weigh the financial risk of building this stadium, though it’s almost requisite at this point for joining the league, so it’s not necessarily a question of ‘if’ they should build a stadium, but more an exercise in optimizing the investment strategically.  The people with power to make decisions to build a stadium never believe that their stadium would go unused, but that it will stand for several generations.  This belief and hope is becoming more of a reality as the league gains momentum, but it’s not a surefire bet for a league that is only 20 years old.  Soccer in the United States has made great strides in the past ten years but it is not quite yet proven like the other major American sports.  In fifteen years, LAFC’s new stadium could end up just like the Los Angeles Sports Arena before it – an unlikely fate given the landscape of the league, but a possibility we must acknowledge.

There is no easy script when it comes to investment strategies for building sports stadiums, and the future is filled with uncertainties.  Building a stadium shows the club has confidence in its product and in the longevity of the team.  But you can’t un-ring a bell.  Once a stadium is built, it cannot be unbuilt, only torn down at the expense of the city taxpayers and a new one built in its place. With the current progression of the sport and development of the league, D.C. United, Orlando City SC, and LAFC all hope this won’t be their fate.

 

What do you think about the investment and relative leap of faith it takes to build a soccer-specific stadium for MLS? Let us know in the comments section below, or via Facebook or Twitter.

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