Nike Should Takes its Share of Blame in TOA v USL Mess
US and Canadian soccer supporters should hold Nike accountable for the mess it helped to create.
I think by now it’s safe to say most of you are familiar with the story of Nike selling the United Soccer League (USL) to NuRock Holdings. However, there are still a lot of people playing catch up on this story. Umbro purchased the league in increments and then Nike eventually swallowed up Umbro, making the US-based company with the swoosh the undesired owners of a division 2 North American soccer league. If you’re not familiar with the story you may want to get yourself up to speed by reading the 3-part article that Kartik Krishnaiyer and I wrote on the subject. Part 1, 2, 3.
Let’s go back to August 27th of this year when Nike announced the sale of the league to NuRock. If you recall, Jeff Cooper was the original winner of the “sealed bid” to purchase Nike even though the sports apparel company had gotten numerous offers. Cooper, who had been previously passed over by MLS and had just started a WPS team in his home of St. Louis this past season, made a wise decision and immediately met with the TOA to see what their issues were. Now Cooper is a pretty in-touch soccer guy in the US and I have no doubt he was already aware of many of the issues that owners of USL-1 teams had with USL. However, he still sat down with the TOA and for the most part agreed with what the group had to say. On top of that, he showed willingness to work with them.
Mostly likely Cooper did this for two reason: First, he was protecting the investment he was about to make. If he was going to pay a lot of money to purchase a league, he wanted to make sure the league had the value he was paying for. In other words, USL-1 was/is the flagship of the USL. If half the teams in the league bolted from his newly acquired organization, the value of the product would immediately drop. From a business perspective this seems to be a no-brainer. Second, from what I’ve heard, Cooper’s basic beliefs ran much closer to the TOA’s vision than the USL’s vision. Most likely he would have fundamentally changed the structure of USL-1 when he took over.
On the 27th of August, Nike threw all common sense out the window and the situation into a maelstrom when they announced they had sold the league to NuRock Holdings. This when Cooper was said by those inside the TOA to be in the due diligence stage of the purchase and nearing completion. This not only angered and shocked Cooper, who had been working on finalizing the deal for several weeks and had met with Nike attorneys the previous evening, but also angered the parties behind the TOA. In fact, the impact of the 11th hour deal even affected others in the soccer industry in the US. At the time it was reported off the record that several Nike executives were so embarrassed by the dealings of their own company that they actually called Cooper to apologize to him.
It was pointed out to me by a professional sports writer and several bloggers that Nike was free to sell to whom they wanted and that perhaps financially Nike didn’t like what they saw from Cooper. While all that could be true, I would think that Nike would have felt some responsibility to hand the league off to someone who would do the best job of growing soccer in the US and do it in a manner that would be the least disruptive to the process. After all, Nike is the sponsor of US Soccer. Instead, Nike seems to have wanted out of the mess so badly that they quickly back tracked from Cooper and looked to dump the league and boogie with their money. Yes, they have agreed to sponsor the USL but again, USL-1 is their flagship and without that league the value of their sponsorship drops as well. So the question I ask is why did Nike so hastily dismiss Cooper and why didn’t they consider the ramifications of who they were selling to?
When NuRock took the immediate reins of the USL they refused to meet with the TOA as a group as Cooper had done. Instead Alec Papadakis flew to each individual team to conduct private meetings. From what was reported, those meetings often didn’t go well. Rob Hoskins and Alec Papadakis of NuRock instead seemed to draw a line in the sand and pretty much stated that the old way was the correct way. They were willing to make some changes but not the fundamental changes that the TOA felt needed to be made.
NuRock’s line in the sand position seems to have alienated them from most of the teams in USL-1. Last week Charleston dropped down to USL-2 and stated they were frustrated with both parties for not working things out and Rochester announced on Monday they were moving to the TOA/NASL. Two weeks ago Baltimore Crystal Palace and the Tampa Bay Rowdies both announced their move to the NASL. This leaves only 3 remaining teams with USL-1: Austin, Portland and Puerto Rico. From everything I’m hearing, the handwriting is on the wall that the City Stars may be history.
From a business perspective one needs to ask who was smarter, Jeff Cooper or NuRock Holdings? Instead of making an alliance, NuRock seems to have alienated its 2nd division teams and now they own a business that’s not worth what is was just three short months ago when they signed the papers. On top of that, Nike is now in an arrangement with USL to sponsor a league that no longer has the value it once did. Who ended up the winner in this?
While Nike was free to sell the league to whomever they wanted, it’s my belief that their 11th hour deal with NuRock lit a torch under a smoldering fire. Nike’s move may not have ignited the situation but it certainly fanned the flames to the point of no return. Nike needs to own up to their responsibility in this mess that the USSF has to clean up. Behind the scenes, you have to be asking if US Soccer is questioning why Nike complicated matters with their sale to NuRock Holdings – a problem that US Soccer is now left to find a solution for. Nike forced the situation to a point where no matter what the outcome determined by the USSF, there will be many left very unhappy with the decision.
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BQ – nice article. I agree with you, some won’t. You’ve been quite prolific on your website these last few days – thanks for all the info.
Isn’t the expansion FC New York still around, or did I miss something? (Not that it makes a substantive difference).
The NY Franchise is a mess as reported by IMS partner Kartik Krishnaiyer yesterday at Major League Soccer Talk. This was confirmed to me personally last night with a story of a player who attended their tryout. As it was stated, the tryout was sort of a joke.
Evidently they have no money and are not even close to being ready to move into the league.
MLSTalk has another article today on this exact subject.
http://www.majorleaguesoccertalk.com/fc-new-york-what-happened/7399
Again…why does Nike not have the right – as any entrepreneur in America – to sell an asset to whomever it pleases (barring the necessity of government oversight?)?
And – how does anyone who wasn’t actually one of the parties involved really know where to lay blame? It’s speculation.
Thanks for the update BQ. I would be curious to read what Nike would have to say about all this mess. Because if they got more money and a safer agreement I would understand, but they should have thought about the possible fallout.
Another issue: I have not read anything about USSF’s position on the issue. Any hint?
Yes, I have been posting concerning this. USSF is not happy with either party.
Off topic from the main point of the article but it will be a real shame if the City Stars can’t land back on their feet in the USL-2. A club that was looking solid year after year in the USL-2, winning the league title and then moving up to the 1st and just falling apart. I really feel for the City Star fans and hope the best for them.
Very good article. Nobody seems to be holding Nike responsible and they played a very large role in all of this.
As for the City Stars, it appears that things may not be all that bad. According to International Soccer Network, the sale will be finalized next week and USL expects an announcement. He reports that the deal is now “in the hands of the lawyers.”
This whole thing is a mess and as of right now, I’d love to see City move over to the NASL at some point.
Perhaps Ed, or… USL-2 where they came from.
Going back to USL2 would be perfectly fine to me. We’d be one of the top teams again and Krenzler is a great place to watch a game.
Whatever happens, this whole thing has been a mess and I can’t wait for it to be over.
Brian,
Great posting and I could not agree with you more on Nike’s mishandling of the sale AND purchase of the USL. Personally , I don’t think the value ( estimated at about $5m) of the sale was worth a significant effort on their part to vet potential buyers. They chose the path of least resistance with NuRock which would allow for continuity of USL management. The transition for them would be seamless and hassle-free (at least from Nike’s perspective.) So yes they should be held accountable for not only the cavalier attitude toward soccer on the sale but also in the manner which they acquired the purchase in the first place. From all accounts Nike was caught unawares that Umbro owned the league at the time of purchase a couple of years ago. It should have been spun off during that acquisition to investors serious about the growth of soccer.
Nike certainly has a lot of ‘ splainin’ to do!
BQ, I in fact know the complete story from a friend who works at one of the USL-1 teams. You have it exactly accurate as to how this all happened. Nike caused it and if they really care about soccer in the U.S. they should fix it.
I too agree. Its time for them to step up and fix the mess they created.
“Nike needs to own up to their responsibility in this mess that the USSF has to clean up.”
BQ, how do you suggest they “own up”?
“The NY Franchise is a mess”
Much like Atlanta, Minnesota, St. Louis, and Tampa Bay. Neither league has enough healthy teams. Your TOA fandom continues to shine brighter and brighter and it’s getting a bit annoying, and judging from others’ comments it’s visible to them as well. Perhaps IMS can just report the facts instead of rumors that are just fed back upon itself.
“Your TOA fandom continues to shine brighter and brighter and it’s getting a bit annoying, and judging from others’ comments it’s visible to them as well. Perhaps IMS can just report the facts instead of rumors that are just fed back upon itself.”
Personally, I think it has been pretty balanced, and if he has a particular point of view, well, this is his blog, after all. That’s the beauty of the ‘net. You can always start your own blog if you don’t like what others are doing.
Brian, keep it up. Your work and insight is appreciated. Personally, I don’t care who winds up on top in this dispute, as long as it points out the neglect lower-division soccer has faced in this country for years. I don’t know what the answer is, whether it is playing in smaller markets or trying to challenge MLS, but the status quo clearly isn’t working – the pro ranks are dwindling every year.
A side aspect I’ve been wondering on, is how will all of this disorder affect our application to host the world cup?
Stephen,
In general I don’t report rumors, only reports from people that I trust and know are in places that they would know that information and who have solid info. Sometimes they want to go on the record and sometimes not.
I am certainly not in the TOA camp nor the USL camp. Quite frankly Steve, tonight, I am highly annoyed with both parties and I just want a damn pro team in Minnesota come next year with a management team who have their head on straight and can balance the budget the best they can and a league that supports them. Do you want anything different than that?
And why is calling a multibillion dollar company out so offensive to you?
Thanks for the support Steve. With this disorder and the disorder of the players union and MLS, it may very well effect the World Cup Bid. USSF needs to get a handle on all of this and very quickly. While the players union issues are not a USSF issue per se, the fact that FIFA is now paying attention to both issues is a compounded issue that the USSF needs to get a handle on quickly.
Re: Stephen
What exactly is a mess about Tampa, St Louis or Atlanta? Both Atlanta and St Louis owners have existing soccer teams that could fairly quickly shift responsibilities to get things going. Tampa has had tryouts, in Tampa and now in England (@Liverpool no less) and hired a coach.
Brian, spot on with the report. I thank you for all the indepth articles over the last few months to keep us fans informed. We all know USL won’t do it, they are too busy sending out e-letters about how everything is fine, nothing wrong here. Idiots.
I agree with Brian’s last post. All I want for Christmas (and this coming summer) is a guarentee that I can go up to NSC (or soccer specific stadium) on a warm summer night and watch good soccer while I drink beer and talk to my friends. I could care less if they league they play in has a 1970s logo, or they are call the Strikers, Thunder, Kicks or Underwater Basket Weavers.
I certainly don’t have all the information, but the arrogance of Nike seems almost breathtaking. The only way I see anyone getting the attention of the Swoosh at USSF is to tell them their endorsement deal is in jeopardy. I’m sure Adidas (or others) would be more than happy to sponsor the USMNT just a few months short of the World Cup.
I agree that USSF needs to assume the role of the grownup in the room and do what they need to do to try and fix this mess.
Well, now you’ve stated it multiple times.
“Nike needs to own up to their responsibility in this mess that the USSF has to clean up.”
“Its time for them (Nike) to step up and fix the mess they created.”
I’ll ask again. How do you suggest they “own up” or “step up and fix the mess”?
As for, “And why is calling a multibillion dollar company out so offensive to you?”
That may have something to do with Nike orange running through my blood since birth.
“I just want a damn pro team in Minnesota come next year with a management team who have their head on straight and can balance the budget the best they can and a league that supports them. Do you want anything different than that?”
Sure, I’ll take that, but I’m not sure you’d want me there. Out of the eight Thunder games I’ve gone to, I’ve never seen them win. 5 losses and 3 draws (all against my Timbers).
I agree, there has not been a satisfactory answer as to why Nike sold to NuRock after appearing to make the first deal?
In any event I think the USSF has to fix this mess and they have to recognize that the cat is out of the back. I think all but 3 teams choosing to walk is pretty damning to USL, and I think it makes it all but impossible to force the 10 teams back into USL.
Yes there are troubled franchises on both sides, and I do want to know if the Thunder are un-broke yet?
But it sounds like the NSC have positioned themselves either way. They can have a new team in what’s left of the USL, or perhaps they can leverage the debt they hold into a sweet deal for the Thunder in the NASL? I’m reassured, but as is often the case in struggling leagues, we just won’t know.
Stephen, come on now. BQ is very unbiased in his reporting and reports the facts as they are presented to him.When Brian offers his opinion it is offered as just his opinion. The USL looks increasingly silly because at this point they keep making the wrong turn. I still haven’t seen a team come forward and say the USL is great we love it here. More and more teams whether stable or not are running from the USL and not looking back. USL owns a somewhat functional structure that has worked for a few pro teams. TOA/NASL have momentum, Hope, and team owner support and are developing a structure that may or may not work . The USL has to hope for a favorable USSF decision, if the USSF allows the TOA/NASL to belong then the USL pro league is going to be third fiddle till they retool there set up or the NASL folds. I like this competition it is the American way innovate, collaborate, try new things, get knocked down get back up. At this point the powers that be at the USL are like a boyfriend that cant let the girlfriend they mistreated go. They should just focus on there amateur structure and bow out of the pro game for now.
Nike has annual sales of almost $20B (that’s billion with a “b”) – $50M a day. If the $5M sales price (2.5 hours of sales) is accurate then that would be 0.00025 of their annual revenue – and a headache. This may be near and dear to our hearts, but it was never even a blip on their radar screens. They spend more time marketing Ronaldo and Rooney then they probably do on the MNT & MLS combined.
Interesting numbers Tom.
I’m not even sure what Nike could do at this point. It may be too far down the line.
Just a quick correction Tom, MLS is sponsored by Adidas. But I totally get your point and it’s a good one.
BQ – absolutely correct. Interesting to see how much interest either of the big guys might have in the possible new entity.
I find Stephen’s comments annoying and biased.
We should cut Stephen some slack. Put yourself in his shoes. He loves his Timbers and sees the whole USL/TOA-NASL struggle as potentially jeopardizing their 2010 season. Portland hasn’t done anything wrong and is kind of caught in no-man’s land since all they want is to maintain the status quo for one year until they make the jump to MSL.
Tom is absolutley correct. Nike could give NuRock’s money back and reset by selling to the owners.
I think NuRock should be encouraged to sell their rights, but for a loss. NuRock has to assume responsibilty for bad business practices. Not listening to your team owners is just irresponsible and negligent. This fact alone will reign heavy against NuRock in court. It seems that the NASL is united in their stance against NuRock. Fans are behind the TOA and the NASL.
NuRock has done nothing for soccer in America and cannot claim the TOA is ruining a reputation it doesn’t have. The past achievements and success of the USL are credited to the TOA (NASL). The USSF needs to demonstrate that they are the governing body of soccer in America and not NuRock USL.
NuRock can keep the 3 letters (USL) they bought from NIKE, but they can’t buy e respect of soccer fans!
GO NASL!
They should combine the MLS, USL and NASL in 3 leagues and play competitive soccer games. The problem with US soccer is that it s really boring and hasn’t reached to the competitive level. I don’t understand why they can’t form 3 or 4 leagues like everywhere else. We have money and talents also, the foundation but they still can’t play it as it is supposed to be played. They should learn from NASL and MLS past experiences, and start thinking about the game itself more than about their profits because soccer is supposed to be the poor nation and people game.
The former USL fan has got it right. For those few of you who criticize the owners as being wrong, greedy,etc. you should note that the owners lose money every year. So ask yourself the question. Do owners enjoy losing money? or just possibly do they care about elevating the level of soccer in the U.S.? The latter of course.
So why are they in a fight with NuRock? Could it possibly be they feel they can do a better job of elevating soccer in the U.S.?
You vote.