St. Louis Voters Refuse to Kick in $60 Million For MLS Expansion Bid's Stadium. Now What?

St. Louis deserves an MLS team, but they might get punished for making the right choice.

by Aaron Gordon
Apr 5 2017, 3:05pm

Yesterday, St. Louis held a referendum on whether to give $60 million in new tax proceeds to a group called "SC STL" to help build a new soccer stadium. The ballot measure, Prop 2, would have all but guaranteed St. Louis a slot in MLS's next round of expansion. Instead, Prop 2 was narrowly defeated, 52.7 percent to 47.2 percent. Now, that tax revenue will go toward expanding the light rail system and other public services.

MLS Commissioner Don Garber lobbied hard for Prop 2, including visiting St. Louis in March when he declared (threatened?), "If you want MLS, that proposition needs to be successful." Obviously, that didn't happen, and if Garber's words are to be taken literally, that means St. Louis won't be getting an MLS team this go around.

Garber's position is hardly surprising, given that this is pretty much the name of the stadium game in America for the past 30 years: no public money for stadium, no team. This is how North American sports franchises increase their values—use other people's money to buy them things—and it has worked exceedingly well for them. Garber, who worked for the NFL before taking over as MLS commissioner, knows how this works. He framed Prop 2 as an either/or: either you partially fund the stadium with tax dollars, or you don't get a team.

After the vote, MLS didn't exactly walk any of that back, calling the results "clearly a significant setback for the city's expansion opportunity."

This is a false choice. The team's ownership group has more than enough means to privately finance the stadium. Its lead owner is Paul Edgerley, co-founder of Bain Capital. Edgerly has two things: lots of money, and the know-how to raise vast amounts of capital. If anyone could come up with another $60 million—to supplement the $95 million the group is already putting towards the stadium—it's Edgerly.

So why don't they do this? Well, it's possible they still could. It's always nice if someone else will pay for the thing you want, but if they don't, then you suck it up and pay for it yourself like a grown-up. But Garber's hard line puts everyone in a tough spot. Either he walks back those threats—which the other 11 prospective MLS cities will surely notice—or he sees them through, which would be a massive bummer for St. Louis, which did the objectively correct civil society step by voting for tax dollars to be put towards public services instead of private enterprise.

The other possibility is that the SC STL group has done the math on what a solid return on investment looks like based on MLS's business model and is bearish on sinking another $60 million into it. But let's not go too far down that rabbit hole because it requires speculating about MLS's opaque business model, which is still not profitable. But Garber never passes on an opportunity to remind us it totally could be if they wanted to focus on profitability. Then again, I'm sure the co-founder of Bain Capital, a firm that specializes in leveraged takeovers, has no strong opinions on this.

Either way, passing on St. Louis would be cutting off MLS's nose to spite its face, since St. Louis checks off every single other box for being a successful, vibrant soccer city. It has one of the richest soccer traditions in America. Although it was just one game, in 2015 the city sold out Busch Stadium for a World Cup qualifier against lowly St. Vincent and the Grenadines. 43,000 people to watch a crappy soccer game bodes very well for MLS's prospects there. When the league announces the next round of expansion, we'll know for sure which business MLS is in: the soccer business, or real estate.

This season, the Minnesota and Atlanta franchises began play to put the league at 22 teams. LAFC is slated to begin play in 2018, and while a Miami franchise is designated as the 24th team, no formal stadium proposal exists. MLS aims to add two more teams this year at expansion fees of $150 million each, which will begin play by 2020. The league eventually wants to add two more teams, bringing the total to 28. Whether St. Louis is a part of all this expansion is now yet to be determined.