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Could Philadelphia expansion in 2010 be in peril? And could Joey Saputo step in to save MLS some face in 2010 if Philadelphia is just not ready?
This is the rumor we were emailed, we have no idea where it originated from.
So before any Sons of Bens get too upset please understand that this remains just a rumor.
We publish it because we find it interesting as it seems to support our quick analysis for Philadelphia in our Club By Club Analysis of the Economic Crisis posted here last week.
While we are skeptical that MLS would suddenly switch Montreal for Philadelphia, we don't rule it out in the event that the finances for Philadelphia's stadium collapsed. Indeed, it would be the prudent thing to do to have a backup plan with a stadium and enough capital ready to go at a moments notice. That could be Montreal.
Already telling is the fact that Philadelphia stadium has been scaled back from this design:
To this design:
How much might iStar's financial troubles have an effect? Clearly they have already erased some of the roof, perhaps things have gotten bad enough that the stadium itself is in jeopardy? Who knows?
Anyway on to the rumor:
I Just had a very interesting dinner conversation this evening with someone in the MLS who told me two very interesting things:
1) Montreal may get into the league sooner than we thought as a direct result of serious financial problems of the backers' of the Philadelphia bid.
2) The stadium issue could be a deal-clincher (in the negative sense) breaker for the Vancouver bid.
Let's take these one step at a time:
First, the main backers (financially, at least) of the Philly bid are Christopher and Robert Buccini, co-founders of the Buccini/Pollin Group; Jay Sugarman, chief executive of iStar Financial. iStar Financial has seen it's share price drop 25-1.6/25=93.6% since the beginning of 2008. Wow! So it looks like Mr. Sugarman is much less wealthy today than he was not even 10 months ago. It's not a surprise given iStar's business. Check this out:
Majority Investor Jay Sugarman is the Founder, Chairman and Chief Executive Officer of iStar Financial, a publicly traded investment firm providing custom-tailored capital to high-end private and corporate owners of real estate in the United States. iStar also invests in other targeted areas through its European, AutoStar (auto dealership) and TimberStar (timber) platforms, and in the leveraged finance markets through its affiliate, Oak Hill Advisors. iStar’s current investment portfolio exceeds $20 billion.
Now, $20 Billion is a lot of money (although this was written up as of Feb. 28, 2000, when iStar's shares were still worth north of $20/share. Given the nature of the corporate real estate market and the leverage that many of these firms used to make a killing as real estate prices were rising, the vertiginous drop in iStar's share price is probably an indication of the financial strength (or lack thereof) of the company as a whole and also ann indication of the old adage that "leverage works just as well when asset prices are falling as when they are rising." What's the easiest way to lose $100 million in real estate? Use $2.5 million of your own money and get someone else to lend you 40X that amount to invest in a sure-thing (which we know real estate is, right?) So, given a falling real estate market (both commercial-which is just starting to really decline right now--and residential), a highly leveraged portfolio can see its wealth evaporate lickety-split.
As for the Buccini brothers, guess which industry they made their fortune in? One guess:
Rob Buccini is a founding partner of The Buccini/Pollin Group, Inc., a privately held, full-service real estate acquisition, development and management company with offices in Wilmington, DE, Washington DC, suburban Philadelphia, Baltimore, MD and New York City. Buccini/Pollin has developed and acquired office, hotel, multi-family, townhouse, industrial, retail, and parking properties in the Mid-Atlantic and Northeastern regions of the United States and is the largest privately held office landlord in the Philadelphia region.
On the face of it, then, the news that the Philly investors are having money troubles is not surprising. Moreover, the stadium they were going to (are? will?) build in suburban Philly was meant to be--much like the St. Louis bid--a part of a much larger real estate development. Will the development go ahead? Given the nature of the US (and global) real estate market, the answer is likely no. Are Sugarman and the Buccinis big enough soccer fans to gift the people of Philly a soccer stadium if the rest of the development is a no-go? About that, I plead ignorance.
Now, the story (rumour) is that the Saputo/Gilett group will be asked to fill Philly's slot in the (increasingly likely) event that the Philly money is found wanting.
Oh, and a bonus rumour. Atlanta's money--and the fact that the owner is an NFL owner--seems to have generated a lot of interest from the MLS. I don't understand the NFL owner part--synergies?--but that's the rumour.
Well, I would certainly feel bad for the Philly supporters if they lost their team at this point. However, I always questioned the strength of the soccer market in Philly, even when the new stadium project looked like a sure thing.
I'd have to say that as many as four or five of the current seven cities vying for an expansion team are better suited to do the league and their respective city well, than is Philadelphia.
Think about it, if PHI had not yet been granted a franchise, and was lumped in with the current seven cities, they would probably be around 5th or 6th likely to get a team. This based on all the criteria that has been spoken off. Financing, stadium, passion of supporter base, etc.
Good point^^
I think this a really interesting rumor. Without a doubt this financial situation will really be hard on the league. That's why the next bids might just go to the richest ownership groups over some of the other considerations, like stadium and fan base.... Although I would be a little disappointed if Phila lost their bid because the Fans seems like a good bunch of supporters but the league really has to watch it's ass and not loss financial security of it's expansions.
Keep me posted MLSR to how this financial situ. could affect teams and expansion bids.
Cheers.
There might be something to this. Jack Bell mentioned in The Times last week that Philly's financial health was whispered to be in poor health.
Read here at NYT Goal blog
Interesting read, but still only a rumour. Will it actually happen? I guess you never know...
They ought to pick Portland (they have a stadium too) or Miami for 2010 if Philadelphia fails.
Referred to Major League Soccer as "the MLS", therefore losing all credibility.
I think finding teams that have already been in exisistance, like all the USL teams, looking to get MLS teams should be the first option in the first place. Trying to "make" a fan base that hasn't previously been in place for a locally supported team is a hard thing to do and i don't care if you build a stadium into a town...that doesn't make people interested in soccer.
I would love to have a team in Philly. I think it makes a lot of sense for the eastern conference to have a team there but to think you can just wish a team into the league that has passionate support is nonsense. Portland, Montreal, and Atlanta should be top of the list for expansion.
Portland being my first choice...We don't need too many Canadian teams. One is enough already.
This story has legs. I can confirm that the the top two things my contact at MLS is worried about are 1) The financial situation of iStar and 2) The situation surrounding the lack of progress on a DC United stadium.
Who am I? Just someone with a vested interest in following your blog.
There are a lot of "ifs" with this rumor, both in the article and various other posted comments. Saying that the scaling-back of the initial stadium design CONCEPT - emphasizing that word - with a full, wrap-around roof to the current developed design shows a lack of how the design and construction industries work. Based upon the cost of materials (which are coming down, mind you) and the project budget, the current design is what can be "bought". If the ownership group's finances were in that much trouble, the stadium wouldn't have a roof, there would be metal bleachers, and they'd relocate from the riverside location. As it is, this stadium is being designed for future expansion, something that a full, wrap-around roof would/could prohibit. Oh, and they're moving dirt around at the construction site, so something is happening.
I guess the SOB's are going to be fatherless bastards afterall =P
I got it! Move DC United to Montreal (since Montreal sent them the baseball team. Put Philly on hold til they are ready and allow Portland in, in 2010 for $40 and a commitment to renovate PGE Park.Everyone wins, except DCU fan. I could deal with seeing Emilio and Gallardo up here.
Shut up you mother canucker - United is staying in DC - represent the tradition
FC Barcelona/Claure has ask Gaber to let Miami go in in 2010 will see if they do.
The current economic situation is going to impact MLS in many ways. Any stadium that is not built is in jeopardy. PHI, KC, SJ, NE.
It is a good sign that ground has broke on the stadium. Maybe PHI can find another owner, but I want to see a MLS team in PHI. MLS needs to be strong in the NorthEast.
Montreal makes sense because they have everything already. Team, fans, stadium, owners with money. They should be in MLS next year.
I think KC could be in trouble if they don't get started on their stadium soon. Somebody is going to lose out on expansion and look for another option.
The idea of moving United to Montreal is cute, poor Expos.
Forget about the Phili thing, the more likely aspect of the rumor emailing was that MLS may have decided it cannot swallow the oversized, non-revenue controlled football stadium option in Vancouver.
Kerfoot has money and will keep trying so MLS should do what they did to St. Louis - say no for now in order to push them to keep working on their bid, in their case the waterfront stadium deal.
Bring in Portland and Montreal.
Well KC failing to finance their stadium is probably a good thing. Then they'll have no choice but to move. Just move them to St. Louis and get it over with.
This is so bad, the stadium change has directly lead to a completely different bridge.
To me MLS needs not to relocate teams leave KC and DC where they are.
As for Philly if they can't pay they can't play!!!!! I think Portland would be great mass transportation. I would hope St.Louis would join in 2011.
As for 2010 why is Montreal being the first choice?????????????????
I think Canada is fine to add teams to MLS but, first choice should be USA, grass fields, who can afford it, market size, distance from other MLS teams.
Why would Montreal be first? Because EVERYTHING is in place already. They could start next year if MLS gave them the go ahead.
Is the field in Montreal not grass??? I can't bare the thought of another turf field coming into MLS!
don't worry, the field in Montreal is grass.
To the MLS Rumors staff, was there anymore elaboration on the Vancouver not having a stadium bit that was mentioned in the opening paragraph?
BC Place would be a terrible stadium to watch soccer in.
Simon,
The source of the rumour is a poster on the Voyageurs board. He made another post about how the MLS guy considers Vancouver's bid "not competitive" unless they get the waterfront stadium
Nope, nothing else on the Vancouver non-stadium.
mlsr,
here's the exact link: http://www.canadian-soccer.com/forum/topic.asp?TOPIC_ID=17950&whichpage=1
and here's the exact quote:
"my dinner companion was extremely skeptical of Vancouver's chances considering the stadium situation. I pressed him for more information, but he really seemed to think that without some demonstration of the Whitecaps' ability to get a SSS built in the very near future, that Vancouver's bid is simply not competitive. I found it hard to believe and played devil's advocate (stressing the advantages Vancouver had over rival bids) but he insisted that the stadium issue is huge in the eyes of the MLS."
Thanks for the reply.
As much as I would like to see Van get a team I agree. Watching a game in BC Place would stink.
i doubt this kills philly... they can get another investor and play at the link temporarily if the stadium has problems. mls cannot afford to have the philly bid falter.
forget montreal, miami wants to start playing in 2010 and has a stadium already as well. award miami 2010 and have philly wait a year.
atlanta sounds nice, but miami will have even deeper pockets, and its a way better market. miami and montreal, its pretty obvious at this point.
Canucks stirring it up. They should just start their own league and leave us alone. And when every Toronto game is no longer the equivalent of US-Mexico, we'll see how passionate they are up there.
What's with the hate on Canada? We couldn't start our own league because there aren't enough viable cities up here. however the 3 that are viable are very good.
Canadian teams participate in the NBA, NHL and MLB so I don't see the big deal? Why would it be any different for soccer?
Certainly it won't hurt American soccer to have 2 or 3 Canadian teams that can make revenues for the league? The overwhelming majority of MLS teams would still be American.
"And when every Toronto game is no longer the equivalent of US-Mexico, we'll see how passionate they are up there."
Well keep dreaming buddy. Toronto's season ticket waiting list has now exceeded 13,000
Not to mention that there are several Welsh sides playing within the English system (even though they have their own league).
And Monaco in French Lige1.
And Wellington Phoenix (NZ) in the A-League.
The list goes on-and-on. Montreal is ready for MLS, on and off the feild.