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Cosmos owner makes U.S. Soccer $500m investment offer

Cosmos owner makes U.S. Soccer $500m investment offer

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By: SportBusiness International team

Posted:
30 Apr 2018
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New York Cosmos owner Rocco Commisso has offered U.S. Soccer a $500m (€408.8m) investment, if the federation makes certain changes to its running of the game.

Commisso made the proposal in an April 13 letter – subsequently obtained by SportBusiness International – to U.S. Soccer president Carlos Cordeiro. In it, he also offers to buy the US national team commercial rights currently held by Soccer United Marketing (SUM) – the marketing arm of Major League Soccer (MLS) – at a higher price, if U.S. Soccer ended the current contract. The offer carried several conditions (see below).

U.S. Soccer responded to Commisso’s letter on or just before April 20, asking the New York Cosmos owner for greater detail about the other investors in his proposal. Commisso replied with a second letter, asking U.S. Soccer to respond by April 27 with an offer to meet face to face.

The federation had not given a further response at the time of writing. A source said Cordeiro (pictured) has not called a board meeting to discuss Commisso’s offer.

Commisso – who is worth an estimated $4.3bn – claims to have spent four months developing plans to raise capital to “allow new as well as select existing clubs to effectively compete at the highest level of American professional soccer”. An initial round of funding, he writes, could raise at least $500m – based on his “personal commitment” to provide at least $250m as lead investor.

He once again alleges that over the past two decades the national federation and MLS, the nation’s top men’s league, have “so deeply intertwined, financially and otherwise, that the federation has lost its independence and fallen short in performing its duty to serve the best interests of American soccer as a whole”.

The North American Soccer League (NASL), to which the Cosmos is registered, was denied sanction as a second division for the 2018 season by U.S. Soccer. The NASL subsequently has filed antitrust litigation against the governing body and recently amended the filling to include MLS, which it alleges has benefited from collusion with the federation.

Commisso writes that “the main obstacle” to the benefits of his proposed investment “is a hard lesson that I have learned from my experience as a new NASL owner—as long as (U.S. Soccer) remains joined at the hip with MLS, if MLS perceived this new investment as creating a competitive threat, those of us providing the funding would face the risk that USSF would deny or withdraw the sanctioning needed for the clubs we finance to be taken seriously by players, fans, sponsors, and investors”.

The conditions

Commisso demanded US Soccer make certain assurances before he would progress the proposal, including “at a minimum”:

  • Elimination of U.S. Soccer’s deal with SUM. Critics of the relationship between U.S. Soccer, MLS and SUM say this deal allows the USSF to essentially subsidise MLS and that the US Men’s and Women’s National Teams are essentially shortchanged. Commisso requests the deal is replaced by “an open and competitive bidding process”
  • The development and implementation of rules addressing club “poaching” strategies – which Commisso alleges are utilised by both MLS and USL “to destabilise competing leagues” – to ensure “all of the leagues are on an equal footing and none has an unfair advantage over any of the others”. In the last three seasons, NASL has lost four clubs to USL and one to MLS.
  • Equal representation and voting power on USSF’s Board for each professional league. Currently representation via the Pro Council is determined by each league’s attendance
  • Precluding Board members with ties to professional leagues governed by USSF and/or USSF’s business partners from playing any role in the selection of independent directors or Athlete Council members. The letter names Don Garber, MLS commissioner and SUM chief executive, as an example.

As one of the voices who has spoken most loudly in favour of promotion and relegation in the US system, Commisso unsurprisingly also calls for the revision of the Professional League Standards to move toward an open system “no later than the 2020 season”.

He argues that the current PLS is largely meaningless without promotion and relegation. Currently, leagues are given divisional designations but any mobility between the leagues is determined by the ability to pay an entry fee to a higher division rather than by sporting results.

Commisso ends his letter by writing: “In conclusion, with the support of USSF, I stand ready and willing to put capital behind an attainable plan to finally make soccer one of America’s preeminent sports. My sincere hope is that this letter jump starts a productive conversation about how we can achieve that goal by working together.”

At the time of writing, U.S. Soccer appears to have declined to make Commisso’s requested assurances.

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