This weekend features the second leg of Major League Soccer's Eastern Conference Championship, a winner-take-all showdown between the Houston Dynamo and Sporting Kansas City. The series is great for fans, not only because of the talented teams involved, but also because it's being contested in the league's two newest stadiums, Kansas City's Sporting Park and Houston's BBVA Compass Stadium.
That may not initially seem significant, but when these two teams met in the Conference Final round just six years ago, they played in Houston's Robertson Stadium, a decades-old football stadium that has since been demolished. That same year, Kansas City (then the Wizards) played home games at the Kansas City Chiefs' Arrowhead Stadium, far from the ideal home for an MLS team.
In fact, despite the challenges presented by stadiums with massive seating capacities but undersized field space, it was once standard practice for MLS teams to play in college or pro football venues. The Colorado Rapids played at Denver's Mile High Stadium, the Chicago Fire at Soldier Field and the since-renamed Dallas Burn at the Cotton Bowl. Kansas City even moved from Arrowhead to a minor league baseball park for several seasons.
But, as the league came into its adolescent years, MLS teams finally showed a willingness to move out on their own. In fact, 13 MLS teams currently play in a soccer-specific stadium that was built or significantly renovated within the last decade:
Not only have the new stadiums improved both the on-field product and the gameday experience for fans, but team venue control has become a core part of the league's financial success. Teams that operate their own stadiums not only control a larger share of gameday revenue from things like concessions, merchandise and parking, but they also have the opportunity to make money off of non-MLS or even non-soccer events. Just take the Frisco, TX home of FC Dallas as an example.
The newly renamed Toyota Stadium hosted some 260,000 MLS fans at home games in 2013. Yet the stadium complex will welcome a total of 1.8 million people throughout the entire year, thanks in part to events like concerts and the FCS National Championship, and foot traffic is expected to increase to a total 2.9 million after upcoming construction projects are completed. That revenue stream, which FORBES estimates to be worth nearly $5 million, is significant for a team that pays rent of $100,000 to operate the stadium throughout the year but is only guaranteed 17 MLS home games.
The late Lamar Hunt, who is best known for his role in the growth of American football, was the first to invest in a soccer-specific stadium for an MLS team. His Columbus Crew franchise, which originally played home games at Ohio Stadium, needed a new home, and Hunt hoped to build a new stadium with help from local taxpayers. When Franklin County voters turned down the proposed deal, Hunt proceeded to back the plans with his own wealth, fully financing the $28.5 million stadium that the Crew still calls home. The stadium was included in the recent $68 million sale of the franchise, the highest reported sale price for a non-expansion MLS team.
Of course not all MLS owners are as generous as Hunt. By our count, team ownership groups have provided some 46% of the financing for MLS stadiums built since 1999, and six of those 11 stadiums were built with a majority of public money. That's not necessarily a bad thing when the new stadiums attract visitors and encourage spending, thus paying themselves off with increased tax revenue, but there is certainly a financial risk involved for taxpayers picking up the bill.
Perhaps the most public backfire has been in Bridgeview, Illinois, home of the Chicago Fire. Taxpayers covered the full $98 million construction costs of Toyota Park, yet the stadium has reportedly fallen far short of fulfilling its lease obligations. Just last year the village was forced to borrow another $27 million to cover payments on its stadium debt. According to the village's most recent annual report, taxpayers are now facing more than $225 million in general obligation debt.
Chicago's not alone. The New York Red Bulls' home in Harrison, NJ was also responsible for a taxpayer nightmare. The town took on $39 million in debt to fix up stadium land, but the expected redevelopment projects failed to arrive and the town was forced to fire police officers and firefighters. It didn't help that the Red Bulls refused to pay property taxes, claiming the team didn't own the land. A New Jersey court has since ruled the team owes Harrison $3.6 million in back taxes; the franchise plans to appeal the ruling.
But for every Toyota Park or Red Bull Arena there's a Sporting Park, the award-winning tourism hub in Kansas City, KS that was funded by STAR bonds (more on that here), or FC Dallas' Toyota Stadium that was partly financed by the Frisco school district, which in turn gets free use of the stadium and surrounding fields for local athletic events. And as MLS teams become increasingly profitable, the local communities that often see a piece of stadium revenue will also benefit.
The five teams yet to jump on the bandwagon include D.C. United and the Vancouver Whitecaps, which play in government-owned buildings (RFK Stadium and BC Place, respectively) and the New England Revolution and Seattle Sounders, which share stadiums with sister teams from the NFL. The final team is the San Jose Earthquakes, who currently play at Santa Clara University's Buck Shaw Stadium.
But the stadium revolution is far from over. D.C. is exploring stadium options in the capital city, and the Earthquakes are privately financing a new stadium in San Jose that the team will move into for the 2015 season. There are also two new teams planning to join the league that year. The first, in Orlando, FL, has stadium plans in place, with team ownership financing nearly half of the planned $84 million stadium. The other new club, owned by English Premier League team Manchester City and the New York Yankees, will play in New York City. Ownership is still scouting stadium locations, and Yankee Stadium appears to be a potential temporary home until a soccer-specific stadium is built.
More on Forbes
In Pictures: Major League Soccer's Million Dollar Men