NASL on the brink: How the dominoes might fall for second-division soccer

Brace Hemmelgarn-USA TODAY Sports

The Cosmos might be done, again, and the future of the NASL hangs in the balance. Richard Farley takes stock of the chaos:

“Fake it `til you make it.” It’s a term you usually hear around startups. Young entrepreneurs using it as half motivation, half braggadocio. Act like you’re big. Somebody might buy it.

That’s what the reincarnation of the North American Soccer League has become, but it wasn’t always like this. Struggling, seemingly on its last legs, the NASL was once a solution for a series of second-division clubs; clubs that, six years ago, were looking for alternatives. Forged from an alliance of United Soccer League breakaways and reborn legacy teams, NASL 2.0 hoped to redefine U.S. Soccer’s system. It wanted to bring the world’s approach to North America.

Now, the tables are turned. Over the past week, various sources reported the league’s flagship team, the New York Cosmos, had furloughed much of its permanent staff and been late paying players throughout the month. The club denied rumors that it’s closing shop, but this blow follows news that two teams (Ottawa FC and the Tampa Bay Rowdies) were prepared to leave the league by self-relegating to the third division. Two others (Rayo OKC, Fort Lauderdale Strikers) face serious doubts as to whether they’ll be able to compete next season. Add in Minnesota United FC’s departure to Major League Soccer, and you’re left with a group of teams too thinned out to be considered a viable second division.

How did that hopeful group that wanted to remake U.S. Soccer end up in such straits? There’s only hubris to blame.

Linking up the Cosmos in 2012 and replacing David Downs as commissioner with Bill Peterson later that year, the league took an antagonistic stance toward Major League Soccer, eventually walking away from a partnership that would have allowed MLS teams to place players at its clubs. Now the Cosmos are reconsidering the NASL, which is doing its part to foster the dysfunction.

Today, a reinvigorated USL, backed by an allegiance with the NASL’s archenemy, is threatening to reclaim its place as the second division. How quickly that comes to fruition, if ever, will depend on what happens in the wake of last week’s NASL Board of Governors meetings in Atlanta. There, owners discussed various crises among themselves as well as with U.S. Soccer, which will eventually have to decide of the league it too crippled to continue at the pyramid’s second tier.

Staving them off, however, starts with the Cosmos:

What’s happening now

Multiple NASL sources familiar with the situation confirmed to FourFourTwo many of the details that have been published at Empire of Soccer and Big Apple Soccer: The Cosmos, whether by choice or out of necessity, are saving every dollar they can.

The same sources also say the extent of the Cosmos’ financial bleeding is more extensive than thought. With a high payroll, expansive commitments to consultants and agencies, and an organization that previously outstretched the size of most NASL offices – both in ambition and personnel -- the Cosmos are said to have lost in the high-seven figures this year, with the range of estimates running between $8 million and $10 million.

That state has led to an about face from Seamus O’Brien, chairman of the Cosmos. Before, he was willing to lead the NASL’s quest to dethrone Major League Soccer, but with the league coming off its most chaotic season yet, and facing another offseason of scrambling to confirm enough teams to stay afloat, it may be time to stop throwing good money after bad.

The reality of the NASL, much like the reality of any six-year-old sports organization, is that there is little good money to be had. Attendance figures ranging from an average of 1,331 (Fort Lauderdale) to 8,573 (Minnesota) mean gate receipts aren’t a sufficient source of revenue, especially for a league where average payrolls range from $1.2 to $1.5 million. Annual league fees alone are $400,000 ($250,000 more than USL’s), and this year, because of new television deals and standards, many teams had to invest $600,000-$700,000 to meet broadcast commitments.

Whether the Cosmos well is drying up or not, O’Brien may be more interested in preserving what’s left of the Cosmos’ brand than continuing with a derailed startup.

If the Cosmos are out

Dennis Schneidler-USA TODAY Sports

Dennis Schneidler-USA TODAY Sports

If the Cosmos don’t come back, the biggest question is whether the league should go on. The NASL hitched itself to the team’s brand four years ago, and it wouldn’t be surprising to see New York’s departure as a deathblow. Still, there may be enough clubs out there that just want to keep playing – clubs that are unwilling to turn to the USL to do so.

Indy Eleven and Miami FC have both developed identities that link them intimately with the NASL’s model. Indy’s is inherited from former club president Peter Wilt, who continues to help recruit teams to the NASL through his work with Club 9 Sports. Miami FC, whose owner, Riccardo Silva, recently funded a study purporting promotion-relegation as a long-term option for U.S. Soccer, is seen as a major contributor to the league’s peril. Silva’s lavish spending on players (by division two standards) has created dissention among other owners.

The Jacksonville Armada, also reportedly cutting back its permanent staff,  currently planning to downgrade to a high school facility for the 2017 season, have stayed committed to the NASL, while four other teams may have no real path to the USL. The expansion San Francisco Deltas haven’t even played a game yet, there’s fear recent lawsuits filed by Tampa Bay owner Bill Edwards could leave many of Fort Lauderdale’s assets in the hands of a new USL owner, while Rayo OKC’s plight leaves most unsure about the team’s future. Expansion Puerto Rico also would be a tough fit in the USL, with sources saying the club’s investors are already discouraged by their time in the NASL.

The league’s other two teams, Carolina and Edmonton, would be logical candidates for a USL move. Sources speculated that Carolina’s loyalty to the NASL stems from having been sold its team last year, in the wake of Traffic Sports’ ownership of the RailHawks. With owner Steve Malik now positioning the to-be-rebranded team for a move to MLS, a cost-saving move to USL makes sense.

Edmonton appears to be in a type of organizational limbo, apparently waiting until Canada’s first division is up and running.

What of expansion? And sanctioning?

San Francisco is still confirmed, with sources saying that Wilt is pushing to get Chicago and San Diego confirmed within the coming weeks. That urgency highlights the game that, if the league survives, will define the NASL in the coming seasons. For every team the league loses, at least one needs to be added.

That makes Peter Wilt the most important person in the NASL, for now. Also trying to get groups in Atlanta and Detroit to sign on, Wilt and Club 9 are waging what amounts to a public relations battle. Will these markets be viable? Do they have strong ownership, or grassroots support? Right now, that’s secondary to the numbers. The NASL needs to be able to say it has commitments now. If that means pushing a few likely-to-fail projects over the line, so be it. The NASL needs to be perceived as a viable league as soon as possible.

If the NASL doesn’t have 12 teams for the 2017 season, it will need a waiver from U.S. Soccer to maintain second-division status. If it doesn’t have teams in the Eastern, Central and Pacific time zones, it will also need a waiver. If all of its teams aren’t playing in minimum 5,000-seat facilities, it will need a waiver, and if each team doesn’t have at least a one-year lease in place 120 days before the start of the season, the league will need a waiver.

There are also a series of clauses in U.S. Soccer’s standards that require teams to show financial viability, which includes the ability to post a bond before the season, have at least one owner with a net worth of at least $20 million, and show a capacity to operate the team for at least three years into the future.

The league is in danger of falling short of U.S. Soccer’s second-division standards. Coming out of Atlanta, some in the league are resigned to a third-division fate, a sad state of affairs given how the league restarted six years ago. Giving up second-division status and being relegated below the USL would arguably be more embarrassing than (again) spending your way out of existence.

And if the NASL does go away?

The USL already wants to be U.S. Soccer’s second division. With 31 teams and stretching across the country, it meets the requirements we can assess from a distance. To the extent teams can’t meet D-II’s financial requirements, USL has the margin to leave some teams behind, or wait for them to acquire additional investment.

In terms of the broader, NASL-against-the-U.S.-soccer-world narrative, USL’s promotion would be a triumph for a league that was dispatched to the third tier five years ago. It will also rid the landscape of the pest that USL’s partner, MLS, has had buzzing around it since the Cosmos and Peterson came on board. And, if a fledgling NASL has to go on hiatus for any period of time, the USL teams that can’t (or won’t want to) move up the second division can form a third division, again dividing the league into USL 1 and USL 2.

Without the NASL as a mutual annoyance, though, smaller issues between USL and MLS may gain more traction. USL commissioner Jake Edwards seems eager to reestablish his league’s independence – to portray the league as more than a reserve league for Major League Soccer. Teams within the USL are already talking about advantages their MLS reserve teams have, like carrying lighter operations and marketing loads.

With the NASL in the picture, those are problems the USL may not even want to solve. Every appearance of strength, even MLS-enabled, is a plus. Without the NASL around, there may be an even greater desire for the USL to forge its own world.

If that’s a consequence of what might happen to the NASL, consider it a small one, especially in light of what fans in Indianapolis, Fort Lauderdale, and other league markets could soon go through. Those fans wouldn’t see their teams move to the USL; in the case of Indy, many fans wouldn’t even want to. Instead, those fans are about to lose professional soccer, and while in a place like Indianapolis, that’s unlikely to be for long, it’s still a reminder: There are more than business interests involved in this chaos.

The game O’Brien, Peterson, the Cosmos and the NASL played was high stakes-high reward, but for soccer fans who’ve adopted these teams, it comes at a high cost. Instead of continuing down the path Downs was paving -- one that would have provided stability -- the NASL took a different course. In search of glory, that choice was understandable, but with the endgame in view, fans in a number of markets are about to bear the cost of their league’s bill of goods.

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Richard Farley is the West Coast Editor of FourFourTwo USA. Follow him on Twitter @richardfarley.