Stoppage Time Special: The Search for Investors

Money makes the beautiful game possible, but what happens behind the scenes to fund a professional soccer franchise? This revealing Stoppage Time edition of Pitch to Pro pulls back the curtain on the complex investment structures that can make or break a soccer club.

We dive deep into the critical role of the primary investor in professional soccer, exploring US Soccer's strict requirements and the valuable lessons learned from past failures. The tragic story of the North American Soccer League (NASL) serves as a cautionary tale—despite attracting global stars like Pelé in the 1970s, the league collapsed because owners couldn't sustain the initial years of inevitable financial losses. Contrast this with MLS, where committed investors who weathered years in the red now own franchises worth hundreds of millions of dollars. 

The episode reveals our exciting new partnership with Prospect Park, a group with extensive experience working with family offices nationwide and specific expertise in USL investments. They'll lead our search for a primary investor for the Northwest Arkansas project, with the goal of securing this crucial piece within approximately a year. Once identified, potential investors undergo rigorous vetting by the USL, ensuring they have the financial stability to weather challenges like we saw during COVID-19. Most importantly, we share why our project has become more attractive to investors since shifting to a new development model featuring a mixed-use facility on new land.

Whether you're a soccer fan curious about the business side of the sport, a potential investor, or someone interested in sports franchise development, this episode provides valuable insights into how professional soccer continues to grow in America. Subscribe to Pitch to Pro for more behind-the-scenes looks at bringing professional soccer to Northwest Arkansas, and share your thoughts on what aspects of soccer business you'd like us to explore next.

Episode Transcript

Speaker 1 (00:03):
Welcome to the Stoppage Time edition of the
Pitch to Pro podcast.
This is a highlight reel ofsome of the best moments from
the show so far, and every otherweek we will be bringing you a
special five to seven minutesegment featuring the best
stories, tales and moments ofthe podcast.

Speaker 2 (00:19):
Out of respect for privacy, we can't share names,
confidential stuff.
But we've talked to a lot ofpeople, I'll just leave it at
that, right, um, and we'veraised those, those C capital
funds.
Uh, as you kind of discussed,talk a little bit more about,
like, what does it mean to be alead investor or a primary or a
principal or whatever that means?
And we have to have that.

(00:40):
Per us S soccer rules, that'sright, and the league which
obviously operates underneath USsoccer governance, their rules
as well.

Speaker 3 (00:48):
So the US soccer mandates that you have a lead
primary investor.
They call it right.
So it's X percent of theinvestment into a franchise.

Speaker 2 (00:57):
And it's less than half Yep, less than half.

Speaker 3 (00:59):
Won't share percentages, but why that's
really important is that yearsago right, we have launched
before soccer was ready toreally grow.
In the States, leagues like theNASL, when Pele came and the
stars of the world came, had noinfrastructure, no foundation.
They had owners that couldmaybe afford to just get a team
and support it for a year.

(01:20):
Right, because, remember,you're trying to build this
thing to cash flow and get tobreak even, and that takes
several years to do so.
If that investor came in, let'ssay in 1975, and a team and put
a million dollars, but thenthey needed another million
dollars, did that investor havethat ability to do that?
And that's where things fold,right.
And so the NSL had this massivespike and then poof, it was gone

(01:41):
.
There's a great doc on it.
I can't remember what it'scalled, but if you're interested
, uh, it's pretty cool.
Um, cosmo is leading that way.
Right.
And so, as they built the mls,the smart thing they did was it
was really um one.
They had some really committedgroups of investors at the
beginning.
They talk about people that gotalmost laughed at at the
beginning because they couldn'tturn a profit for years, for

(02:02):
years I I think it was probablywe don't know in a working, so
we're all talking about what wehear and what we know just from
being in industry is the Beckhameffect in the mid-2000s, right,
and the 2002 World Cup was alsoa big one.
Bruce Farina just talked aboutthat actually how that World Cup
really buoyed MLS growth.

(02:23):
And then Beckham, and now yousee messy kind of right and so,
and when we say mls growth,that's just us soccer growth as
well.
Right, that was, that was whatthe model was back then.
And obviously usl has taken awhole new, a whole new growth
and wsl and that's as well,right.
So those things don't exist 15,20 years ago.
Right, because because forthose first 10, 15 years you had
ownership groups thatdisbelieved so passionately what

(02:46):
they were doing that they wereliterally bleeding cash in the
red.
They couldn't get to green.
But now those valuations ofthose franchises that they
bought at making it up $20million, whatever those initial
MLS franchises were, I mean,they were nothing by standards.
Nowadays they're worth hundredsand I think InterMiami is close
to a billion now, like there'sone's over.

(03:08):
So again, it just speaks to ifyou have a willingness to be
patient in pro sports, alignedwith an area that's growing,
aligned with a group that has agood passion and understanding
of how to do this, you have areally good opportunity for
long-term valuation growth.
Right, that's the play Neverwithout risk.
We always say that.

Speaker 2 (03:28):
Oh yeah, Of course I mean, any investment isn't.

Speaker 3 (03:32):
So that leads to where we are now.
So we have now partnered with areally really exciting group.
So we had a group calledProspect Park reach out to us
through.
Again, the soccer community isunbelievable and helps each
other.
We had a partner, kevin Willerlet's say his name.
He was a Chicago guy, beeninvolved in a lot of soccer

(03:53):
teams, a lot of soccerfranchises.
We had some connection toNorthwest Arkansas and we got in
touch.
And then it turns out Warrenand him had crossed paths
several times and so we startedtalking and had some really
great points of feedback fromhim.
One of them at the end of ourconversation was hey, you should
reach out to this or this othergroup is actually interested in
kind of talking to you guys.
They're really interested inUSL and they have some

(04:14):
investment ideas.
I said, yeah, sure, we're opento talk to anybody.
And that was Prospect Park.
We didn't know anything aboutthem at the time and this been
filling each other out forseveral months and exploring
them, exploring the project andus.
We lost learning about them andhow they work.
And they have an immensebackground in family offices.
Right, they relationships withfamily offices nationally.

(04:35):
Um, so this is this search isfor, for a primary is is really
going to be local and regional,national, right and um and they
have um been just tremendouspartners with us, helping us in
terms of kind of how we can setthis up, and then they have a
massive network, right, this iswhat they do, so we can go and

(04:55):
keep building our project andsupport them, but they're the
ones that know how to executethis and have the relationships
and know how to communicate withother family offices, right?
This is a really important partfor us, and so we just started
that, like, literally, you'reabout to announce it and so out
off the press.
Hopefully, this podcast won'tprecede anything it will not,

(05:17):
wes will make sure.
But that's really exciting forus because they as a group have
worked in pro sports already.
They've worked particularly inUSL as well, and they really
like our project and that'simportant because they're going
to spend time on it.
So if they didn't think thatthere was a pathway to success

(05:38):
here, they probably wouldn't beon our list to work with right
and be great partners for us.
So we couldn't be more excitedabout that, and their objective
is to find that primary andthat's.
You know, let's call it a yearfrom this time window.
That's kind of you know wherewe think we can get to and that
usually then just snowballsright.

(06:00):
So we've had several folks thatwe know, that you know, really
interested in being part of this, just maybe not wanting to be a
primary right, right, and sothat's really important.
Come back, this is not a oneperson, one family.
It just doesn't usually workthat way.
Almost any pro sports right,it's usually their structures
and percentages that get brokenout behind a primary right.

(06:21):
So we have a pretty goodfeeling and a pretty good
opportunity to engage.
Some of those other folksre-engage that said they want to
be part of that.
Um, but we got to get thatprimary to kind of put it over
there.
Once that primary comes onboard, they go through a long
and extensive process with theusl.
Yeah, background checks, it'syou know, access to liquid
capital understanding network.

(06:43):
There's really strong criteria.
They're very strict about itbecause they don't want to have
these ups and downs, right, theyneed someone who's reliable and
can come through and managesomething like COVID Can you
sustain no fans for a year andyou can be able to support that
and get through the next yearand that's something that's
important, right?
And so, anyway, we're reallyexcited about that next phase.

(07:04):
It allows us to really focus onbuilding what we need to do and
just supporting them and theirsearch, and then we'll engage
once they kind of say, hey,here's the groups that are
really interested, and thenwe're going to get back to them.

Speaker 2 (07:14):
So that's how that process will work yeah, really,
really excited about thispartnership and these guys and
this team.
They've been absolutelyfantastic and I I think again
another.
I get reassurances all the timebut seeing that this group is
what they do they put dealstogether in this space all day

(07:35):
long for their clients andrelations and they have been
just chomping at the bit soexcited about what this project
could be and represents for theregion and for their interested
investors.

Speaker 3 (07:52):
And much more interested in our newer scenario
new land, new development,mixed in multi-use facility
versus where we were in the oldprogram.

Speaker 2 (07:59):
Yes, much more so.
So that's again going back tothe importance of that shift in
scope.

Speaker 1 (08:04):
Thank you for joining us for this Stoppage Time
special of the Pitch to Propodcast.
If you've enjoyed theconversation, you can click
shift in scope.