Soccer entrepreneur aims for pro Detroit team deal by August

By Bill Shea
Crain’s Detroit Business
Published: July 6, 2014

Local soccer entrepreneur Dan Duggan worked the room, so to speak, at the World Cup in Brazil as part of his effort to bring a professional fútbol team to Detroit next year.

Now, the clock is ticking.

Organizational and financing planning are ongoing, and Duggan said his goal is to have everything in place for a formal announcement before the high-profile, sold-out Manchester United-Real Madrid exhibition game at Michigan Stadium in August.

Duggan, owner of the semipro Michigan Bucks in Pontiac and brother of Detroit Mayor Mike Duggan, announced in April he had preliminary approval from the Tampa, Fla.-based United Soccer Leagues to launch a USL Professional Division expansion team in Detroit in 2015.

USL Pro, as it’s known, is equivalent to Double-A minor-league baseball, but with the potential to eventually become elevated to the top-tier Major League Soccer.

That’s nothing more than a dream until Duggan gets his expansion bid organized and financed.

A June 15 deadline for Duggan to provide the league with financing details for the expansion team and a 5,000-seat stadium in Detroit has passed, but that’s not a problem, those involved said.

“We remain in active dialogue with Dan Duggan regarding his efforts to bring USL Pro to Detroit. It is apparent he is making progress and we support his initiative,” said United Soccer Leagues President Tim Holt via email.

The league doesn’t disclose financial details about expansion teams, but such teams reportedly have been bought for more than $500,000.

The new Detroit team would cost about $2 million to operate annually, Duggan told Crain’s in April, and he predicts a 5,000-seat stadium in the city could be built for up to $5 million.

He’s not identifying potential stadium sites or other investors other than to say that he’s in talks with the Apostolopoulos family, who own the Pontiac Silverdome and previously sought an MLS team for metro Detroit.

Duggan, who last week returned from the World Cup, where he attended games and conducted soccer business meetings, said he could not be specific about what remains to be done on his bid for an expansion team and stadium.

“We are making a great deal of progress with the ownership group and the stadium site, but there are so many moving pieces involved that I have told the league that I am still working through the process of who fits where and how this is all going to come together,” he said in an email.

“The United Soccer Leagues fully understand my current position and the challenges that we have in securing the land to get a downtown stadium built to play in for 2015. That is still our plan, and we are working with several entities to get this accomplished.”

Duggan said he’s not talked with the league about a new deadline for Detroit’s inclusion in the 14-team USL Pro for next season.

Duggan also said the August announcement would happen only if there was a firm deal in place.

“We are working hard to get this done since the soccer world will be in our backyard that weekend, but I will only do this if I have something concrete so that it does not appear that I keep attempting to get in the media to announce that I have nothing to say,” he said.

The league

The USL Professional Division, which began play in 2011, is a developmental league. Its players are paid, and the league is two steps below MLS and one below the North American Soccer League within the Chicago-based United States Soccer Federation’s organizational pyramid. The federation is the U.S. soccer system’s governing body for amateur and pro soccer.

USL Pro expansion teams already on the books for 2015 include Austin Aztex, Saint Louis FC, Colorado Springs Switchbacks FC, Tulsa Roughnecks FC and Louisville City FC.

A Detroit USL Pro team could open the door for potential MLS expansion: MLS and USL Pro agreed in January 2013 that the third-tier league would eventually integrate into MLS’ reserve team system. Every USL Pro team will be owned and operated by MLS teams or have a formalized affiliation.

Duggan has said his long-term goal is to field a profitable USL team that eventually could be elevated to MLS — which is what happened to Orlando City FC. That team, last season’s USL Pro champions who averaged 8,000 fans per game, is shifting from USL Pro to MLS in 2015.

Duggan’s current team, the Bucks, has an affiliation with the Columbus Crew of MLS.

The Bucks, founded in 1996 in Saginaw as the Mid Michigan Bucks, are part of the 64-team USL Premier Development League, the fourth tier of the soccer pyramid and the top amateur level of U.S. soccer. Detroit City FC of the semipro National Premier Soccer League also is a fourth-tier amateur team.

The Bucks have won four league titles, qualified for the playoffs in 16 of 18 seasons and never had a losing record, Duggan said.

The Bucks, which run on a $150,000 yearly budget, play at 5,000-seat Ultimate Soccer Arenas in Pontiac, where the team relocated in 2008. Duggan is the team’s chairman and CEO.

He would be majority owner of the expansion USL Pro team. MLS, on the other hand, is a single-entity league, meaning the league owns all the teams and pays all salaries. Investors buy into the league for a right to operate a team in a certain market.

The stadium

The proposed stadium would seat 5,000 with room for 3,000 more on open hills in the end zones.

USL Pro, league-wide, averaged 2,611 fans per game in 2013.

Duggan said he expects a stadium could be built for $2 million, but expects to spend $5 million.

He’s seeking 2.5 to 7 acres of land for a stadium complex that also would include two outdoor practice fields for adult and youth soccer use. He has said the stadium could be incorporated into an existing developed area or be a stand-alone project.

He looked at sites in Pontiac, Livonia and Canton Township before deciding on downtown Detroit.

The organization

Duggan said he has yet to determine how the ownership of the expansion team would be organized as a business and whether the stadium will be part of it or not.

“These are all pieces of the puzzle that will or could involve individual sponsorship of local Detroit businesses or could all be rolled into one entity,” he said. “The stadium project is also a huge piece to this. It may be that the stadium/soccer complex in the city is owned by the same entity or it could also be a separately-owned structure.

“It really is going to depend on how much the companies we are speaking to want to invest at the initial stage of the project and which piece of land we decide on.”

Steve Apostolopoulos told Crain’s his family is involved in talks with Duggan, but no specifics of the relationship have been disclosed.

The Apostolopoulos family in 2009 bought the Silverdome and has staged soccer games there as part of an attempt to secure an MSL expansion team.

World Cup networking

Duggan spent time at the World Cup in talks with people in the soccer community, and learning from others, he said.

“We went to the first two U.S. games and had several soccer-related meetings in Sao Paulo, Rio, Natal and Manaus trying to put the pieces of the puzzle together,” he said. “It is amazing what you can get done when you have that many soccer power brokers in the same place at the same time, so it was a convenient place to conduct meetings between games.

“The meetings all related to the important integrated parts to our entire structure that include the USL Pro team, a world-class international soccer partner, an eventual MLS partner, (and) structuring our youth academy program that will provide the finest soccer education and training for our youth affiliates, with a major emphasis on continuing the development of the growth of the kids in the city of Detroit.”

Whether a minor-league soccer team succeeds or fails will depend entirely on simple financial math, said Michael Rapkoch, president of Addison, Texas-based Sports Value Consulting LLC.

“It all comes down to economics. With all minor-league teams, what drives investors is the ability to make money or break even,” he said.

Unlike major-league teams, minor-league clubs typically don’t increase in value every year because they lack star players and don’t have media rights deals or major sponsorships. So, there’s little or no ability to sell off a money-losing club for more than the initial sale price, he said.

“It’s fun for maybe the first year, but it’s no fun losing money.”

Crain’s reporter Dustin Walsh contributed to this story.

Bill Shea: (313) 446-1626, Twitter: @bill_shea19

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