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National Sports Center Officially Announce They’re Looking for Investors for Stars Soccer Team

2010 August 17
by Brian Quarstad

The NSC Minnesota Stars announced on Monday they are officially looking for investors for their Division-2 soccer team.

Last winter the NSC non-profit organization spoke of the concept of partnering with other investors. At the time, the NSC announced they believed they were capable of running the team without investors but could do a better job with investors. The short 90 day time span from the announcement that NSC would field a team until opening day didn’t give the organization enough time to properly investigate if a non-profit could partner with investors.

Several weeks ago Paul Erickson, Executive Director of the state run Minnesota Amateur Sports Commission and who oversees the NSC and the Stars soccer team stated that the NSC had held meetings with legal counsel and had decided to move forward with the concept. This was before the USSF placed the new D2 standards on August 9th. The NSC has several advantages over other teams in division 2 soccer in that they own their own stadium and that stadium that was upgraded two years ago and freshened up again this season, is paid for.

The NSC Stars also share staff with the other programs that the non-profit runs, therefore saving money again. At one point this season Stars General Manager and NSC Chief Administrative Officer Kris Bjerkness told IMS that the team only needed to draw 2500 fans per game to break even. However, the Stars hired a ticket sales person Rich Zellmer last spring. After poor gate sales most of the season, the NSC released him a month ago.

Lack of capital and incoming revenue has not allowed the organization to market the team properly and the result has been a dismal attendance figure of around 1,400 per game. The lack of revenue has caused the NSC to step back and see the need for others to help them achieve a goal of 2500 to 3500 fans a game. A very realistic number for a metropolitan area the size of the Twin Cities and historically possible with the numbers the Minnesota Thunder drew the last ten years.

While the NSC has struggled at the gate and have had poor revenue streams, including lower than expected sponsorship support, the USSF has created new tough standards. These difficult standards are meant to better vet teams to combat the 75% fail rate division-2 soccer has seen over the last 15 years.

What the new standards will mean for the Stars is a majority partner of 35% will need to be found who is worth more than $20 million. A more remote possibility is a number of partners are found and that the NSC applies to USSF for a waiver. The principle idea of USSF being that teams need to withstand losses for a number of years with cash calls and assets liquid enough to satisfy those unexpected needs.

The NSC will also need to come up with a letter of credit in the amount of $750,000 with the joint beneficiaries being the Federation and the sanctioning league 90 days prior to the start of the season, which is the middle of January of 2011.

At the current time the NSC does not fit the criteria for the USSF standards. It’s expected that the USSF would not allow a waiver unless an investor steps in and works out a partnership with the non-profit.

Here is the NSC’s press release in its entirety:

BLAINE, Minn. (August 16, 2010) – Last week the United States Soccer Federation, USSF, released new higher standards for Division 2 professional soccer teams playing in a USSF-sanctioned league in 2011. The National Sports Center (NSC), owners of the NSC Minnesota Stars, view is this is a positive development for pro soccer in North America.

“We welcome and support the efforts by USSF to upgrade the standards for pro soccer” said Kris Bjerkness, the Stars General Manager.  “The new standards will necessitate that we find a partner organization or individual in order for the Stars to qualify under the new higher standards. As we stated early on, we are open and pursuing creative public/private ownership model going forward and we look forward to the opportunity”.

“The NSC had many motivations in starting the Stars pro team,” said Paul Erickson, Executive Director.  “But one of our primary reasons was to preserve the long and proud history of Professional soccer in Minnesota at the highest level possible.”

“Ownership of a team based at the NSC is a unique opportunity,” continued Erickson. “The facility boasts one of the best, accessible, soccer specific stadiums in the country, at the largest amateur sports campus in the world, with year-round training facilities for player development. We are proud of what we have accomplished in the past seven months and look forward to the opportunity to continue pro soccer in Minnesota.”

For more information on a partnership please contact  Stars GM Kris Bjerkness.

23 Responses
  1. tomASS permalink
    August 17, 2010

    I don’t think a group of investors can work in this situation. Too many cooks in the kitchen will only water down the taste of the soup

    Put a call into Glen Taylor and tell him it isn’t as bad of an investment as the T-wolves.

  2. August 17, 2010

    Frankly, I cannot get too worked up about how likely investors are. I am fully in favor of any measures that enable us to have a team next year. It would be a shame if they didn’t have more time to learn from their mistakes.

  3. yankiboy permalink
    August 18, 2010

    Do you know how happy we would be if we could get 1400 per game in Baltimore?!?!?

    Might not save our club but it would definitely put us closer to that goal…

  4. Max permalink
    August 18, 2010

    Just before the first game of the season, the NSC Minnesota Stars had a pep rally at the Mall of America. I was a first time soccer fan who had heard of them from this website. I met several players who were there and they were all class acts, as was the coach Manny Lagos.
    I went to their head ticket guy to ask a few questions, and he was, no nice way to put it, VERY mean to me. The rest of the ticket staff was much better and later apologized and answered my questions.
    I wonder if the Stars would have had better attendance this season with a different person selling tickets.

  5. pony permalink
    August 18, 2010

    Good luck, Stars!

  6. Trevor permalink
    August 18, 2010

    How about public ownership? Wasn’t that in their pitch for the team in the first place?
    I’ve been out of MN all year, but I would gladly pay to own a part of my team.

  7. BrazilYinzer permalink
    August 18, 2010

    So what’s the ballpark minimum buy-in for an investor?

    (2,500 tickets/game)*($10/ticket)*(15 home games) = $375,000 to break even on the season… 35% of that is $131,250. Call it around $150-200k from an investor personally worth $20M, plus a fair share of the $750k letter of credit.

    Is that it, or am I missing something and am way off?

  8. August 18, 2010

    They did look into that. The reality is that would have been more of a marketing ploy than anything that actually helped them. Think about it, it you can’t get 2500 people to a game how are you going to get the numbers needed to buy into the team to significantly impact the bottom line. There are other issues with that as well. The way the NSC had wanted to set that up was the fan would buy in and get discounts to some games and some special privileges and access to certain exclusive events. But you would not share in losses with the team. The reality was, they would need to become an open stock company in order to do something like this. So it’s not going to happen and if it did it wouldn’t help.

  9. Jim permalink
    August 18, 2010

    Great moments in wasted press releases, 2010:

    Announcing an available investment opportunity in a sports market that’s currently only halfway to the first intermission of The Tragedy of Favre, Quarterback of Denmark.

  10. tomASS permalink
    August 18, 2010

    The business reality is you absolutely must have liquid assets to support start up costs ( you have to go into thinking the business foundation is not solid) and business growth for the the next 3-4 years and that you will have no return for any investment costs until year 5.

  11. Old Man Defender permalink
    August 18, 2010

    There is so much behind the capital requirements. One of which that gets little discussion, is the ability of the team to pay the players a salary that they can live on. Good salaries doesn’t garuntee great players. But when the player struggles to live and eat decently, it makes it hard for them to perform thier best and stay healthy. Then there is the abillity to provide good medical care when they are injured. All of this comes back to bottom line and dollars of capital and reserve.

  12. August 18, 2010

    You are right on tomASS. I asked the NSC early if they would allow themselves to go into the red the first year or so to establish themselves for the first couple of years, understanding that it would take at least a couple of years to make it back. They told me no, it was the NSC system to make a profit or break even on every module they have, even in the first year. (When I first printed that last spring I had a well known national soccer executive privately contact me and say, “I wish them luck with that”)

    On the one hand its admirable because they are not deficit spending. On the other hand this is extremely impractical when starting a business and not really a good model to getting off on the right foot. The lack of cash on hand to promote the team has been one of the issues this year.

    The NSC has lots of good people who are working their asses off this year to make this happen. But it’s my belief they’ve all been handcuff of sorts because of the lack of capital to work with.

  13. SuezQ permalink
    August 18, 2010

    In past years Thunder would give out a youth ticket to participants at tournaments (All-American, Schwan’s, etc). That one ticket would generate atleast one adult ticket, if not more tickets, plus concessions. Not one Stars ticket was given to tournament participants this year. In fact, when I was in line to check in my child teams for Schwan’s Cup, the Star players were handing out Nickelodeon Universe “Mystery Tickets” for the Mall of America. There was a game on Saturday night, wouldn’t you think they could have handed out one youth ticket to their game? The Stars marketing department and ticket director should be fired!

  14. Soccer Boy permalink
    August 18, 2010

    I would just like to once again thank all of the youth soccer clubs, parents, coaches, BODs and DOCs (especially the DOCs who feel threatened by soccer training programs offered by the Stars that compete with your own training programs) for not supporting professional soccer in MN. You all do such a great job getting your own kid on the C1 team–yet fail miserably when it comes to supporting a higher level of soccer in MN–and actually helping develop youth soccer in your children and our state. Please do not invite me to your pity party where you all sit around and complain about how our kids just don’t seem to get better at the sport. Hmmm, maybe next time you will support your local professional soccer team, right?

  15. tomASS permalink
    August 18, 2010

    @Old Man Defender – spot on, if we are going to call them a professional team then the players need to be paid a wage that at least indicates their full-time job is that of a professional soccer player. I have no clue what the median salary would be for the Stars’ players

    Of course, now that all parents have the legal right to keep their kid on the parent’s own medical insurance policy until the age of 26, there should be some cost savings involved eh? 😉

  16. tomASS permalink
    August 18, 2010

    @SoccerBoy – I can see where you are coming from. But don’t necessarily agree. The product has to be better; and in most cases it probably would have been, but there was also the fear amongst cowardly clubs to be a proponent of the NSC after the tiff betwen MYSA and NSC.

    I would have created a new product to sell and that would not have had to compete with an already saturated market of training camps. How about a series of ” Ladies night out with the Stars” teaching soccer moms the game in a casual “one-nighter” so -to-speak 🙂

    When CC United use to utilize the Thunder Camps – there would be an enormous amount of player’s moms that would hang out just to take in the eye-candy ( because we all know soccer players are the best looking and physically fit athletes).

    Your point about getting the interaction between players and potential fans on a more personal basis is correct and the execution of this was lacking due to poor camp participation

  17. August 18, 2010

    I have even missed that from a perspective that the players used to hang out at the Sweetwater after the game. Both teams. The players would mingle, the fans would mingle with both teams and it was a great way for players to make contacts and reconnect and a fantastic way for fans to get even more involved with their team. That is supposed to take place in the beer garden after the game, but I hardly ever seen anyone there anymore. Fans or players.

    Love the idea of ” Ladies night out with the Stars”. Instead of a fantasy camp as they did for the guys, there could be a chalk talk night.

  18. Aljarov permalink
    August 18, 2010

    No way for the “Thunder’ brand to return at this point?

  19. August 18, 2010

    Brian Quarstad remarked:
    it was the NSC system to make a profit or break even on every module they have, even in the first year. (When I first printed that last spring I had a well known national soccer executive privately contact me and say, “I wish them luck with that”)

    Was the “well known national soccer executive” initials “PW”? ;=})
    Argh. D2 & D3 have to hold it together. The core is there. A cohesive Midwest, involving Minnesota, Des Moines, & Saint Louis would pull in a hesitant Kansas City, Chicago, & Milwaukee. I refuse to believe those latter three cities could not support a D2 side. But won’t happen in one year. Or two. Or probably even three.
    To those prospective investors who can’t tolerate the possibility of losing money for even one year, then you also need to completely drop out of the stock market; and retreat to the absolute safety of treasury bills & bonds. A lot of good that will do you as far as appreciating your income. 3=()
    Supporting soccer in the USA, especially in the divisions underneath D1, is more than merely an investment vehicle: It is a crucial link in the pipeline of identifying and assisting prospective players who can represent the USA on the international level.

  20. August 18, 2010

    Actually, it wasn’t “PW”

    “Supporting soccer in the USA, especially in the divisions underneath D1, is more than merely an investment vehicle: It is a crucial link in the pipeline of identifying and assisting prospective players who can represent the USA on the international level.”

    We would hope so, but so far it doesn’t seem to be doing that.

  21. August 18, 2010

    Hey, BrazilYinzer . Sorry I didn’t answer earlier. It does seem about right but you need to consider that the team needs more money than this year if its to market itself properly and perhaps have a more competitive team.

  22. markinminn permalink
    August 19, 2010

    Does anyone think that always having games at 7:00 pm is a problem. I for one would like to see earlier games on Sat.
    Games late in the day, when I am already in the middle of something makes stopping everything around 5:00 to make it to Blaine from south MPLS just a bit too much.
    If they mixed up the game times they might see a different crowd, at least experiment with different times.

    I hope they succeed.

  23. August 19, 2010

    Pro Sports 101. Keep games times and locations as consistent as possible. It’s actually quite the opposite of what you are saying.

    What is the start time of Wild games?

    On Sunday’s there’s two consistent times for Vikes games, correct? And whenever possible the NFL plays on Sundays.

    The only adjustment I would make to Stars games, and I advised the Stars of this before the season, was to start the weekday games at 7:30 to help avoid the pain in the ass 35W and University traffic. They took my idea into consideration and decided against it for consistent start times both on weekends and on weekdays. This year with all the construction on 35W, I think I was right. But really, we are splitting hairs here. There are much deeper seated problems with the organization in ticket sales than that.

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