Local is better when it comes to MLS ownership

As a long time Columbus resident and Crew fan, I’ve listened to dozens of podcasts, read scores of articles and scanned thousands of tweets over the past few months on the potential Crew SC relocation. The concept of moving the team never felt fair. Columbus has a growing population and strong economy, the recent crest rebrand was a hit, the team itself has done great and 2015 and 2016 saw sellout records at the newly-named MAPFRE Stadium. I wondered, “What could be so terribly wrong?”

Through it all, I’ve seen little discussion of the impact of Mr. Anthony Precourt’s home address on the club’s situation. I did some quick research and found that, since its inception, eight of Major League Soccer’s 25 franchises have never had a majority-local ownership group. Three of those clubs, Chivas USA, the San Jose Clash/Earthquakes (I) and the Tampa Bay Mutiny, either folded or moved. Two more, D.C. United and the Chicago Fire, rank 19^th and 20^th out of 23 teams in average attendance since 2013. The most promising duo of the group, the Houston Dynamo and New York City FC, recently saw large attendance drops in the years following their new stadiums or inaugural seasons, respectively. The remaining team of the eight, my Columbus Crew SC, now faces an uncertain future with relocation looming. Was there a huge issue with non-local ownership? Could that be tied to issues on the business side of the operation, which ultimately leads to a slightly lower attendance rate?

I was intrigued, and was determined to find out: Does it matter where the owner hangs his scarf?

Defining Local vs Non-Local Ownership and Success in MLS

To begin my research, I wanted to define where each ownership group resides. This was straightforward in many cases, but some ownership groups are mixed with both local and non-local stakeholders. For instance, NYCFC is majority-owned by Sheikh Mansour of City Football Group, but has local representation in Yankee Global Enterprises. In cases like these, I went with the home location of the majority owner. Since 2013, I found nine clubs with non-local owners and 14 with local owners.

Local: Atlanta United, Orlando City SC, Portland Timbers, Seattle Sounders, Vancouver Whitecaps, Minnesota United, Montreal Impact, San Jose Earthquakes, Toronto FC, FC Dallas, LA Galaxy, New England Revolution, Real Salt Lake and and Sporting Kansas City

Non-Local: Chicago Fire, Chivas USA, Colorado Rapids, Columbus Crew SC, D.C. United, New York Red Bulls, Philadelphia Union, Houston Dynamo and and New York City FC

Evaluating “success” would be a trickier task. For this article,, I focused on three aspects:: attendance, advertising/sponsorships/naming rights and on--field performance. Attendance data is provided by MLS, so that analysis was straightforward. Based on a recent Austin Parks and Recreation report, advertising/sponsorships/jersey and stadium naming rights comprise 63 percent of revenue for MLS teams, so I wanted to consider what might impact those. For on-field stats, I’d calculate points/season by team and group by owner type, as well as review which owners were winning trophies.

Attendance

After I assigned each club into an ownership category, I used MLS’s regular season attendance figures from 2013-2017, representing 100 team-seasons and 1,700 soccer games. This includes a few specially-located games, like when San Jose played in Stanford’s football stadium, or when NYCFC got kicked out of their home venue and had to play in Connecticut.

Before diving into the attendance figures, quick reminder that mean is the “average”, while median is the middle value of a data set. (There’s an inspiring crop of rap songs dedicated to this, if you’re looking for a rabbit hole.) You’ll see that Atlanta and Seattle are outliers on the high side of attendance, and Chivas USA’s final seasons are an example at the other extreme. These outliers are better dealt with by using median, so I use both mean and median in the analysis.

First, I summed each team’s home attendance for regular season games for the five seasons 2013-2017, then calculated the average for each team. I then ranked all teams, including the now-defunct Chivas USA, and labeled each club as having either local or non-local ownership. (No clubs changed from non-local to local, or vice versa, in this time period.) The results are stark; locally owned teams dominate when it comes to attendance. 10 of the top 12 clubs are locally owned, and the other two clubs were the ones based in the New York metro area, the largest media market in North America.

Taking a different look at it, locally-based owners saw typical median attendance of 20,509 (n=1020) over all 1,700 games in those seasons, while non-local owners pulled in 17,481 (n=680). That’s 17 percent higher attendance for local owners. Using mean (average), the difference is 30 percent.

The plot graph shows each season as a dot, with each team’s five-year average as a dash on the appropriate ownership line. Colors approximately align to team colors. What it shows, in a statistically significant way, is that there is a relationship between higher attendance and local ownership. Even if one ignores the Atlanta, Seattle and Chivas USA outliers, the cluster of seasons on the non-local side of the chart is clearly lower than that of the local side.

Sponsorship and Precourt’s 2013 Central Ohio Rolodex

With team finances kept private, I wasn’t able to do analysis on each team’s profitability. Even when focusing soley on Columbus, without sales data I was hamstrung when it came to sponsorship or naming rights analysis. Tim Myers’ “What’s the Truth?” analysis revealed that Crew SC had a relatively high amount of corporate sponsors, and that tells part of the story. As a member of the Save The Crew group that established over 200 business allies in just four weeks, I can confirm that Columbus does not lack small to mid-sized businesses ready to support Crew SC. What I don’t know is if Crew SC succeeded in its own eyes or in the eyes of MLS when it came to larger-scale partnerships. Was something lacking when it came to reeling in the biggest deals? Were Central Ohio corporations leery of strategically partnering with a firm run by an out-of-town owner?

It makes one wonder what the contact networks of Anthony Precourt and PSV President Dave Greeley looked like in 2013. If they didn’t have a high-quality network in central Ohio, why didn’t they move to Columbus to ensure that the club had the best possible chance for success? Why didn’t they hire a President of Business Operations that had been based in Columbus for the past 10 to 20 years? (Crew SC President Andy Loughnane, hired in 2014, had last lived in Columbus in 2003.)

By contrast, as reported last February by rslsoapbox.com, when Real Salt Lake Investor/Operator Dell Loy Hansen bought into their ownership group in 2009, he utilized his local connections to benefit the team.

“I went out, being a Utah businessman, and networked,” he said. “If I’ve done business with you, I’m inviting you to be a part of it.”

Did Mr. Precourt commit in the way needed to ensure Columbus’ success, especially considering he had never owned a sports organization before? If the jersey sponsorship situation was so dire in early 2017, why not call in a favor with his father’s contacts and get an energy company like Halliburton to find $15-$20 million in their couch cushions? By his mere presence at fundraisers, award dinners and sales calls, hundred-millionaire Anthony Precourt certainly would have influenced more potential sponsors to join into agreements with Crew SC.

To be clear, I have no reason to believe that Mr. Precourt didn’t work very hard at fostering relationships in Columbus. He likely spent many hours on planes and many nights in hotel rooms, away from his family. I know personally how difficult life on the road can be; it can really suck. But by keeping his residences in California and Colorado, and by not relocating the President of The Crew’s holding company (PSV) or bringing on executives with deep Columbus ties, Mr. Precourt likely put his front office in a more difficult position than if he would have moved to Columbus.

On-Field Success

From the 2013 to 2017 MLS seasons, 12 of the 15 major trophies (Supporters’ Shield, U.S. Open Cup and MLS Cup) went to teams with locally-based owners. One could argue that 80 percent is about what you’d expect, since 64 percent of the teams had local owners. Moving on…

During the same period, local owners averaged 48.3 points per season while non-local owners mustered 44 points/season. However, as you’ll see in the graph, there was a trend to the data. In 2013, locally owned teams enjoyed a seven-point end of season advantage over non-locally owned teams. Since that time, the gap has closed to virtually nothing. If you consider that the 2013 and 2014 seasons included abysmal Chivas USA’s final days, maybe the natural difference between these two groups is insignificant. That would make sense to me, as technical staffs make the bulk of decisions that impact on-field performance, and players change hands each off-season. In fact, as Anthony Precourt played soccer himself and has followed the game his whole life, he may actually be one of the most soccer-savvy owners in MLS.

Rebuttals

1.“If you have the right stadium and location, ownership location doesn’t matter.”

In order to better understand the impact of stadium location on attendance, I took the same 2013-2017 attendance figures and compared stadiums within the urban core (within 2.5 miles of the city center) to those outside of it. Downtown stadiums had a median attendance of 22,120 (n=459) while non-urban stadiums drew 18,036 (n=1241), representing a 23 percent advantage for clubs with downtown stadiums. Even if one only considers the clubs with local owners, or only those with non-local owners, increases of 15 percent or 26 percent exist. In Columbus’ case, MAPFRE Stadium is near downtown but is not in the urban core. If it was downtown, based on the performances of other MLS stadiums, it could expect to draw and additional 2,400-4,200 fans per game.

However, stadium site doesn’t tell the entire story, either. There are nine MLS clubs with non-urban core stadiums with average attendance of over 18,500. Eight of those nine clubs have majority-local owners, with the exception being the New York Red Bulls.

One of these clubs, Sporting Kansas City has often been cited as an aspirational model by Mr. Precourt. Sporting’s stadium sits more than 16 miles from the city center of Kansas City, Missouri, but the club still regularly sells out the venue. Columbus and Kansas City are both Midwestern cities of about 2.1 million people in the metro area, are both MLS charter members, have both recently rebranded, have both average 49 points per season over the past four MLS seasons. What the difference? Sporting’s ownership is local to the Kansas City metro area and Columbus’ is not. In fact, Sporting’s resurgence as a club can be attributed to their ownership group changing from being a non-local group to one locally based.

2. “Many MLS 1.0 clubs are struggling, and of that group Columbus is still doing poorly. Ownership location doesn’t matter as much as brands simply aging and not resonating like the newer ones.”

It’s true that many MLS originals are at the bottom of the attendance rankings above. In fact, the bottom five existing teams from 1996 are in slots 18-22, and occupy seven of the eight slots between 16-22. However, four (Columbus, D.C., Chicago, Colorado) of those seven MLS 1.0 teams have non-local owners, and the remaining three (New England, FC Dallas, San Jose) are owned by groups that also own NFL or MLB franchises. Perhaps it’s fair to also qualify that local owners would need to be engaged in the club in order to make an impact. Fans in New England, Dallas and San Jose are better fit to assess that than I. Finally, no original MLS club has an urban core stadium, although D.C. is set to move into one later this year. So the aforementioned MLS originals are also lacking that advantage.

3. “Columbus is simply too small. A bigger market would do better. Ownership location doesn’t matter that much.”

Columbus is not dissimilar in size to Kansas City, Portland, Orlando, Salt Lake City or Vancouver. However, all these markets have the previously determined advantages of local ownership, and three have urban core stadiums. If Columbus had one or both of these key drivers, they would be expected to perform similarly. From an attendance perspective, Columbus outperformed D.C., Chicago, Denver (Colorado) and Dallas, which are all significantly larger metro areas.

Summary, Conclusions and Saving The Crew

So, what did I learn? From 2013-2017:

1. Urban core stadiums’ attendance was on average 15-20 percent higher than non-urban core stadiums.
2. Local owners’ attendance was 23 percent higher than non-local owners’.
3. On field success is not obviously impacted by local or non-local ownership.

If PSV arrived in Columbus in 2013 without an impressive rolodex of Ohio-based contacts, how much harder did the Crew front office have to work than, say, Orlando’s? Than Portland’s? Between that and the Crew’s non-urban core stadium, was lukewarm attendance and corporate sponsorship actually on par with adjusted expectations? Did Columbus, as a market, in fact outperform other similarly-profiled markets? That wouldn’t surprise me. In fact, recent studies by Mike Pendelton and Matt Bernhardt have shed light on how MLS attendance has been “growing” based heavily on the special events of expansion and new stadium openings. In these studies, it was revealed the Columbus was actually driving organic growth.

It is interesting and refreshing to me to conclude that not only would Columbus likely succeed if it had a locally-based owner and urban stadium, but that even only one of these factors would push it close to the 20,000 per game attendance mark. I also wonder what the New York Red Bulls are doing to buck the trend, having strong attendance figures with a non-local, even non-domestic, owner. Is it simply the population density of the New York area, or is it something else?

The personal touch aspect of business being driven through relationships, not metrics, also makes me smile. It reminds me of another mainstay of MLS, that the mystical sway of home field advantage is enormous and real. In 2017, “Home Team” had a PPG of 1.9, which would equate to 65 points, while “Away Team” would have ended with 29 measly points. This is true each season. Being human still matters, even when it comes to the parity-party that is Major League Soccer.

Which brings me to #SaveTheCrew. If MLS aspires to be a top world soccer league, it will need to succeed in smaller markets as well as larger ones. If every MLS club needs local ownership in order to thrive, how can the Crew be saved? I see a few alternatives:

1. Mr. Precourt moves to Columbus, showing a new level of commitment to Central Ohio.
2. PSV sells a significant portion, if not 100 percent, of Columbus Crew SC to a local ownership group.
3. Mr. Precourt takes his franchise to Austin, where he may or may not have an impressive rolodex of contacts. MLS could then award a no-fee franchise to the Columbus Partnership ownership group. A new, locally-based investor/operator is sought out, and in the meantime the team continues to play at MAPFRE stadium through its lease agreement in 2023.

I met Mr. Precourt once, at The Crest Gastropub. He seemed like a nice enough guy, and delayed leaving the place to chat about the team for a few minutes with me. I truly believe he was focused on his endeavor in Columbus and was frustrated by not meeting his expectations of being a standard-bearer in MLS when it comes to attendance and corporate sponsorship.

I also believe that he operated for a long time with a backup plan, eying other markets and hedging his bets on Columbus. As fans, and as citizens, most of us don’t have that luxury. Sports fandom is something often instilled in us at birth, passed down as a family tradition and leveraged to guide us through the most joyous and difficult periods in our lives. Fans don’t have backup plans. If he’s going to mend relationships in Columbus, it’s going to take a drastic display of commitment. A new stadium build would be nice, sure, but a new home build would be even more meaningful.

Even after his evaluation of Columbus as an emerging, millennial-rich city, as he said on Massive Report Podcast episode 208, was he unknowingly destined to fail when he decided not to move to Columbus? Will someone else take advantage of his excellent rebranding and take Columbus to the next level in MLS? Who will ultimately Save The Crew? Once again, I am intrigued to find out.