A topping-off ceremony marking the completion of steel construction at its stadium, the high-profile hiring of Bob Bradley as head coach and the signing of Mexican striker Carlos Vela are the latest milestones for Los Angeles Football Club as the franchise prepares to kick off its inaugural season in 2018.
LAFC’s deep-pocketed soccer-fanatic co-owners are betting big on the L.A. market, having made more than $500 million in capital commitments to the club. The team will become the 23rd Major League Soccer franchise when it begins play in March, but years of work have gone into ensuring the squad – and franchise – will be ready when the first whistle blows.
There are early indicators that LAFC’s grassroots efforts and motto to build a fan base “street by street, block by block” in the community and online are paying off. The team is already among the MLS leaders in terms of merchandise sales, having sold more caps than all but five other franchises.
“When you start at ground zero, it’s hard to build a culture. Every hire is a new employee – every fan is a new fan,” said LAFC Executive Chairman Peter Guber, chief executive of Mid-Wilshire’s Mandalay Entertainment and veteran sports exec.
The team’s aspirations are as large as its ownership group – 27 investors who each have committed money and provided expertise in various areas. The group is headed by Lead Managing Owner Larry Berg and Co-Managing Owners Bennett Rosenthal and Brandon Beck. (See Q&As on page 16.)
Guber, the team’s initial local investor, helped assemble the all-star ownership roster and advisory board, which sport household names that could prove bigger than the team’s potential players. Those co-owners include Earvin “Magic” Johnson, actor Will Ferrell, sports power couple Mia Hamm and Nomar Garciaparra, motivational speaker Tony Robbins, and YouTube co-founder Chad Hurley. Team President Tom Penn, a National Basketball Association analyst for ESPN and former Portland Trailblazers executive, also has a stake.
The group paid a $110 million expansion fee in October 2014 to acquire the rights to operate an MLS team. The franchise rights became available at auction after the league acquired and subsequently shuttered Chivas USA, a troubled team that had shared Carson’s StubHub Center with the Los Angeles Galaxy since 2004.
The composition of the ownership group changed last year when majority control transferred from Vietnam-based venture capitalist Henry Nguyen to the group led by Berg. The entire ownership group sits on an advisory board that meets twice a year.
“There’s no doubt that financial capital is critical, but it’s a commodity,” said Guber. “Knowing how to create participation and collaboration is the key to the whole thing. They are called upon constantly to weigh in on their expertise and are called out if they just put in money.”
Ownership comes with perks and access to game-day amenities. Co-owners will be able to watch games from the director’s box at the center of the stadium, a large suite that holds more than 100 people. Nevertheless, all co-owners purchased their own individual season tickets.
The team has hired about 70 employees to date, including head coach Bradley, who formerly held the same position with the U.S. men’s national team. LAFC might announce several foreign-player signings over the next few months leading up to the league’s December expansion draft, when the team will fill out its 30-man roster.
In the meantime, executives are assembling a roster of sponsors off the field; selling tickets; and securing media rights, which make up the bulk of the team’s revenue.
Penn, the team’s president, described his approach to sponsorships as fielding a team of 11 founding partners similar to the starting 11 players on the field. LAFC has already secured Irvine-based Banc of California as its stadium naming-rights partner and has a deal with Delta Air Lines-Aeromexico as its travel partner. The club expects to sign nine more multimillion-dollar deals with companies in various categories, including the coveted jersey-naming rights.
LAFC’s regular ticket prices range upward from $20 a match in the 22,000-seat stadium.
The team said more than 18,000 fans, comprising an ethnically and geographically diverse base across Southern California, put down season-ticket deposits, and LAFC began the process of converting those supporters into paid season-ticket holders last month.
Seven premium sections spread throughout the stadium, each with access to private lounge areas, are already sold out, with ticket prices ranging from $105 to $588 a match. Those 3,000 premium tickets include club seats, suites and loge boxes. A standing-only section for supporters in the north end of the stadium is nearly sold out.
Game day
MLS mandated that the franchise’s co-owners provide a new stadium, and LAFC committed $350 million to build the venue. Ownership chose the site of the former Los Angeles Sports Arena at the southeast corner of Exposition Park along Figueroa Street, which the league had already identified as a possible site.
Downtown architecture firm Gensler worked with LAFC to design the stadium with unique features, including the steepest seating bowl allowable by building code – a 34-degree angle to the field – so that fans are as close to the action as possible. Some seats are actually located on the field, similar to courtside seats at a basketball game.
Other stadium highlights include a sunset deck, where fans can dip their feet into a water feature, and a speakeasy-style bar.
Glendale-based general contractor PCL Construction Inc. was hired to build the stadium, which is designed to be seen from the 110 freeway and distinguished architecturally by its roof structure.
The standing-only section was designed to accommodate the club’s primary supporters’ group, the 3252, named after the number of seats in the north end.
The section can be converted to regular seating for concerts and other events.
“The design process embodies the club’s desire to embrace fans before they had any players,” said Jonathan Emmett, a Gensler principal. “The process has been engaging with the supporters.”
Penn said he expects the venue to be active year-round with international exhibition matches and an annual Rugby Sevens tournament as well as concerts, community events, corporate receptions and weddings. It can also support events related to games at the Los Angeles Memorial Coliseum, and events and festivals in Exposition Park.
“We see the building as a hospitality venue more so than just a sports stadium,” said Penn.
There are six distinct spaces that can be used for events of various sizes.
LAFC has also partnered with Legends Hospitality to develop an adjacent food hall featuring cuisine from world-class chefs. The hall will be open year-round and accessible to Exposition Park visitors.
Challenges remain
The MLS national media rights deal, which also includes non-World Cup U.S. national team matches, is estimated to generate $90 million a year for the league, a total divvied up equally among teams.
MLS expects to eventually grow to 28 teams and plans to renegotiate its television contracts, which will expire after the 2022 season.
Any increase could depend on attracting more viewers, although cord-cutting trends could alter the landscape of the market by then.
The competition between television viewing and live entertainment leads to even more pressure to deliver a superior fan experience as well as create a team identity and culture, especially in the crowded L.A. sports marketplace.
“What differentiates LAFC is that they’ve had to promote themselves with no players,” said David Simon, president of the Los Angeles Sports Council, a nonprofit that promotes sports business in Southern California. “They’ve been methodical and professional with those things that they do control like the team logo, coach and stadium.”
