Wednesday, August 8, 2012

Orlando City moving to NASL?

Orlando City is moving into the final weeks of the 2012 USLPRO campaign with their eyes set on repeating as Champions. And while the focus remains on the task at hand in the playoffs, lots of people around town have been wondering what's next for the club. More specifically, will Orlando move up to play in the North American Soccer League (NASL) next season.

Of course it makes sense from a fans perspective. Orlando has already won a title and are community shield winners for the second straight season, they have proven they can handle USLPRO level competition. Also, there are two other Florida teams in the NASL that would help build some rivalries with Orlando. It seems like a no-brainer. But it may not be as simple as it seems.

We take a look at Orlando's current position in the USLPRO, what's required for a move to NASL, and what the off-season might bring.

Let's start at the most logical place, Orlando City President Phil Rawlins. In previous interviews with us he has stated that he is happy with the place Orlando holds in USLPRO and that the league fits the current business model for the franchise.

Earlier this week I followed up with Rawlins and asked, "does the addition of the NY Cosmos and the existing rivals in Tampa and Ft Lauderdale, give more weight to a potential move to the NASL in the future?" Rawlins response was simple and concise, "our focus remains on bringing MLS to Central Florida and changing leagues does nothing to further that goal."

Does that make sense to the average Orlando City supporter on the street? Probably not, except for the shared focus on MLS. But why would a move up to the D2 league not make sense from a business stand point? Here's a look at the numbers.

According to USLPRO's 2012 Investors Report, the current franchise fee is $250k; that's the fee teams are likely to pay even though the league advertises a fee of $750k on their own site. In addition to the one-time franchise fee, teams pay an annual participation fee of $35k and must also maintain a line of credit in the amount of $50k to ensure continuity of payment to players, facilities, and coaches. Actual operating costs vary per team, but one can assume with the talent on the field Orlando is near the top of the list for USLPRO. And while the team would not reveal it's operating costs both on and off the field, it is reasonable to assume total costs are in the $1M to $2M range per season.

NASL, on the other hand, is a while other story. To meet the more stringent USSF D2 guidelines for sanctioning, the league has pushed it's fees up and requires owners carry a lot more cash on hand. The previous confirmed one-time franchise fee in NASL was in 2011 at $750k, however it is rumored that the fee has increased to $1.5M now that the NY Cosmos are joining the league next season. In addition, the franchise must carry a $750k line of credit with the league to ensure continuity of payments much like the USLPRO requirement. Then there's the USSF's requirement that the principal owner of the team must have a net worth in excess of $20M without inclusion of the franchise as an asset. Lastly, the operating costs, particularly for travel, are significantly more than USLPRO with estimates ranging in the $4M-$5M range.

The interesting consideration about any potential move to NASL is the USSF requirement themselves. While the league has struggled with provisional licenses for the first two season, the USSF D2 guidelines require a total of ten teams by the start of the third season; the NY Cosmos only brings the league to nine teams which begs the question who might be #10. In all likelihood the USSF will sanction the NASL for the 2013 season with just nine teams knowing that Ottawa has already signed on for the 2014 season.

In the end the reason Orlando will stay in the USLPRO until they make the jump to MLS is simple; dollars and SENSE. Minor league soccer, whether NASL or USLPRO, is a break-even proposition at best from an investment stand point. The actual return on the investment, in the case of Orlando, is the ability to sell minor ownership pieces to various investors as the team pushes towards MLS. When (not if) the team moves to MLS, some investors (perhaps even Rawlins) would cash out and see a reasonable return on their initial investments.

With the NASL having higher costs on all levels with no distinguishable difference on player ability, attendance numbers, or television/media contracts, the right call is for Orlando to stay with USLPRO until MLS.

5 comments :

  1. Yea it seems sensible for Rawlins, until Garber looks at them and says why aren't you in NASL can't you afford the requirements for NASL?

    NY can...

    ReplyDelete
    Replies
    1. "NY can..."

      ...Are you kidding?
      The business model for their franchise is *risky* by definition, they still have questionable stadium location plans, a very shaky squad of tentative players, and "unidentified management". Then there's the(fan)speculation that Garber himself is throwing out-of-pocket funds & assistance to get them in MLS quickly, dodging the damnably near $100million(USD)franchise entry fees.
      At this point, the safer option for Garber is to shove the 'Goats(Chivas USA)to NY2/Cosmos, bring in Orlando City, and call it a day.

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    2. Given that Garber and the OC ownership group have been in communication for the last year or so, I think there would be far more interest from OC if they honestly thought it would make a difference.

      The NASL is the second tier in name only. With no promotion or relegation, no real difference in quality of product or fan bases, asking the franchise to put up more cash for only the dubious right to call them "second division" seems totally unnecessary.

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  2. you could go with a more elementary premise...the season tickets already advertise a particular amount of games and specify USLPRO on the marketing propaganda. I cant imagine they would have been that specific if there was a change in the works. In addition, I seem to remember a minimum commitment to USLPRO and to Umbro of 3 years. If Orlando City was to make a leap to MLS, that timeframe would be almost perfect to the rumored plans floating around.

    ReplyDelete
    Replies
    1. Daniel - Well the Austin Aztex sold 2011 season tickets and we all know how that turned out.

      Delete

 
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