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NASL’s deep ties with Traffic Sports create serious questions

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As the dust begins to settle from the initial reaction to the momentous events that resulted in CONCACAF and FIFA officials being charged with corruption among other charges, questions have arisen about the viability and future of the second-division North American Soccer League (NASL).

On top of the indictment of Traffic Sports USA President Aaron Davidson who was, until yesterday, Chairman of the Board of Governors of the NASL, the day ended on a sour note after all 7 teams that faced third-division USL opponents were eliminated. Hours later, FIFA announced that Davidson, the driving force behind the creation of the NASL, had been banished from all soccer activities worldwide.

Midday Wednesday, the NASL issued a statement regarding its relationship between the league, Davidson and Traffic Sports.:

“In light of the ongoing investigation announced by the U.S. Department of Justice on Wednesday, the North American Soccer League’s Board of Governors has suspended Chairperson Aaron Davidson, along with all business activities between the league and Traffic Sports, effective immediately. Commissioner Bill Peterson will serve as acting Chairperson.

“The Carolina RailHawks, the sole NASL club owned by Traffic Sports, will continue to operate in the ordinary course of business. The club’s management team will continue to manage the day-to-day operations.”

This statement might seem to bring some finality to Traffic Sports USA’s role with the league. However, the reality is quite different. Since 2010, Traffic USA’s press releases have used the following language to describe the relationship between the company and NASL:

“Over the past three decades, Traffic has organized and/or commercialized most of the official international soccer events in the Americas and today holds select exclusive commercial rights to the following premier properties in the region: Copa América, CONCACAF Gold Cup, Copa Libertadores, CONCACAF Champions League, CONCACAF World Cup Qualifiers, Copa do Brasil and the North American Soccer League (NASL).”

The relationship between Traffic and NASL is not merely one related to the ownership of a team and Davidson. It is an intricate commercial relationship. It is not a leap of faith by any means to theorize that without Traffic, NASL would not exist.

Yesterday, Northern Pitch’s Brian Quarstad published an article about the ownership stake in the league held by Traffic. It read:

“When NASL was formed, Traffic was (and is now) the major capital contributor to the venture, and the group owns the majority of B stock (66%) in the league. The league has a class A and class B stock ownership structure. The class A stock (representing all team owners in the league) is diluted each time a new owner enters NASL, according to a 2010 flowchart which was supplied to Northern Pitch. The flow chart also showed Traffic contributing $4.5 million, which would eventually get paid back with payments of $450,000 for the first 10 teams that entered the league. If the 2010 document is accurate, Traffic also received 30% commissions on commercial rights of media, sponsorships and merchandising.

“All NASL owners vote with class A rights. Class B stock does not vote but gives Traffic the control (veto rights) they needed for limited issues, based upon their risk, to control their return on equity and return of equity, if that ever happens.”

World Soccer Talk reached out to NASL for comment and to find out the league’s plans for funding since it has ceased business activities with Traffic Sports USA. However, NASL’s PR spokesperson did not return our message.

NASL now faces a difficult financial road without the involvement of Traffic Sports. Of primary concern must be the continued funding of league operations if more expansion teams and thus expansion fees are not added in the next few months as well as the future of the Carolina RailHawks. Regarding the RailHawks, the league should immediately assume ownership of the club using the precedent set last year when Commissioner Bill Peterson had the league take direct control over the Atlanta Silverbacks organization.

In terms of league funding, NASL’s already stretched owners might be asked to contribute more. Sela Sports, the owners of the New York Cosmos who have extensive business dealings in Asian Football, would be a likely candidate to not only provide stopgap funding but also to take the mantle of commercial rights and marketing that was previously held by Traffic.

Wealthy owners such as Dr. Bill McGuire in Minnesota and the five-man Brazilian leadership team at Fort Lauderdale Strikers might be asked to help alleviate the shortfall and fund Carolina. In addition, the new Miami FC owners who have recently invested in the league might need to make a strong financial commitment to ensure the league finishes out the season with minimal disruption.

Once the league assumes control of Carolina, which appears inevitable at this moment in time, NASL will own two of its eleven active teams. This is a situation not dissimilar to where MLS found itself in 2001 with the Tampa Bay Mutiny and Dallas Burn. The Burn were sold to the Hunt family owners of the Columbus Crew, but the Mutiny were not sold and were contracted instead .

The league is already scrambling to find a buyer for the league owned Silverbacks and now must deal with an ownership issue related to Carolina. A potential solution might be to allow another owner in the league to buy temporary control of either the RailHawks or the Silverbacks. Again, Sela Sports and the New York Cosmos, who represent the most viable brand that has hitched its wagon to NASL, would be the most likely candidate.

NASL faces a rough few months ahead given the events surrounding Traffic Sports and the FIFA/CONCACAF scandal. For the good of the game in North America, fans throughout the region are hopeful NASL can find long-term solutions to these problems. However, no easy answers exist.

 

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23 Comments

23 Comments

  1. R

    May 30, 2015 at 2:20 pm

    I wish NASL would get it over with and just die already. Let the majority of their teams move to USL, who can take back 2nd division status and maybe start a 3rd division league too for the smaller sized and reserve level teams. I don’t see NASL suddenly becoming a good partner with MLS. USL play is competitive with NASL already and they have a good relationship with MLS, they should have the Division 2 sanctioning.

  2. Seth Israel

    May 29, 2015 at 1:40 am

    I totally agree having three leagues makes e proud I get follow MLS corporation marketing league that looks, feels and smell like the NFL, NSAL has a raw feel counter soccer culture, and USL is great for those markets hat will never have an MLS team. We have to stop the your league is better than my leagues because you win more games, bla, bla bla… don’t by into the media dividing the leagues for their own special interest.

    • Tim

      May 29, 2015 at 7:54 am

      Thats great but NASL needs to stop trying to compete with MLS and just be a 2nd tier league which is great IMO. We need a viable second division in North America and they can fill that gap. No matter how tight anyones tinfoil hat is the NASL will never overtake the MLS, ever.

      • Kartik Krishnaiyer

        May 29, 2015 at 8:28 am

        That is the sincere hope. NASL plays an important role in the soccer landscape in the US and Canada and its survival is important. But the desire to compete with MLS which was largely pushed by Traffic has been a fools errand. Hopefully with these developments, NASL will refocus on being the strong lower division/D2 and filling a critical need for player development and entertainment in markets outside MLS.

  3. SL gago

    May 28, 2015 at 6:04 pm

    While England brag having three leagues. Here in Americs, Some in the media continue to root for the collaps of one of their own league and pit American soccer leagues against one another, why is that?

    • Christopher

      May 28, 2015 at 6:11 pm

      That’s the US. In every American pro sport, only one league is relevant.

      Football – NFL
      Baseball – MLB
      Basketball – NBA
      Hockey – NHL
      Soccer – MLS

      They’re not against other leagues existing. What’s ridiculous is a minor league actually thinking they can challenge the premeir division. In America, minor leagues exist for one purpose: to be development teams for the major leagues. Anything else is gets eyerolls from American sports fans and journalists.

      • WSW

        May 28, 2015 at 10:22 pm

        Soccer- MLS….????? all the other sports leagues in U.S. are the best in the world.

        was XFL minor league? No.

        what’s Indy Car vs F1? minor league. NO.

        Everybody has to stop with this is America mentality.

        • Seth Israel

          May 29, 2015 at 1:33 am

          This s American soccer mentality that need stop. It’s great for the media but it is hurting all soccer efforts. If a tiny nation like England can have three league and they are proud they do. I big nation like ours should have three leagues.

          • R

            May 31, 2015 at 1:47 pm

            This is such a straw man argument. Nobody’s saying we can’t have 3 leagues. People would just rather the Division 2 league stop putting itself at financial risk because it thinks it can become the Division 1 league. The fake piousness of NASL supporters is annoying as hell.

        • R

          May 31, 2015 at 1:44 pm

          Actually, XFL was pretty much minor league. It only featured scrubs and died within a year because the product was unwatchable. Had it survived, it probably would have been a de facto minor league.

          IndyCar technically isn’t a minor league, but if any driver had their choice between the two, they’d take Formula 1. Schumacher didn’t become one of the best drivers of all time in IndyCar.

      • Brian

        May 28, 2015 at 11:46 pm

        ABA, AFL, American League…

        Ever heard of them? They all challenged the “premiere division” and ended up on top. In America. All of them ultimately merged in with the prior top-dog, but when they launched they all shared one thing with NASL: Folks like yourself doubting.

        • Jeff

          May 29, 2015 at 3:14 am

          That was a different time. Why would MLS ever merge with NASL, when they can just pick off the most successful NASL teams? They don’t want to be in Edmonton or Cary or to have the Atlanta Silverbacks, but they do want to be in Minnesota, so they’re adding Minnesota United. If they want to add Indy Eleven one day, they’ll do that, too. Not only that, but instead of a merger, they’re getting paid $100 million to add them! Why would they go with a merger instead, and not get the money, and end up with teams they don’t want?? Sometimes you have to realize that history doesn’t tell you everything you need to know.

          • Chris Riordan

            May 29, 2015 at 4:25 am

            They are adding Atlanta.

            • Jeff

              May 29, 2015 at 1:11 pm

              No, they are adding a separate expansion team in Atlanta, not the NASL Atlanta Silverbacks. Which is exactly why there will never be a merger, because MLS would end up with a bunch of teams they don’t want. Currently they add the teams they want, and those teams pay nine figures for the privilege. Why would MLS ever even consider a merger with NASL?

              • KL

                May 29, 2015 at 3:56 pm

                You are right. Especially with NASL getting dragged into the FIFA mess. MLS is very glad they have no relationship with them.

          • Seth Israel

            May 31, 2015 at 10:51 am

            MLS can’t just pick off any NASL team, Jeff. First NASL clubs have more capitol and money to buy a $100,000,000 million dollar franchise fee to enter MLS. None of the USL teams other than one I know of have that type of cash. Do your math.

        • KL

          May 29, 2015 at 3:51 pm

          You don’t know your history. The ABA, AFL, and the WHL all challenged because the dominant league wasn’t expanding. MLS is expanding. Not point in challenging something you can join.

          The NASL is right now a league facing serious questions about its future thanks to Traffic. It is also a league that just got smoked in the USOC to the USL. The product on the field is bad. It is an insult to compare them to the ABA or AFL which had elite players and teams. The NASL is not a tick on MLS’s butt.

        • R

          May 30, 2015 at 2:28 pm

          The ABA isn’t that good of an example. Only four teams made it, they all had to pay expansion fees, the Nets having to pay extra for joining the Knicks territory. They also had to forego sharing in TV revenue and having certain rights in the first few years. Not exactly ending up “on top”

      • Seth Israel

        May 31, 2015 at 10:48 am

        Chris,
        Are you trying to insult the intelligence of your readers and the American soccer sort fans?

        Baseball, Basketball Hockey all have minor leagues and college leagues.

        Baseball has a minor league
        http://www.milb.com/index.jsp

        Hockey has minor league.
        http://theahl.com/

        We have Arena Football league.
        http://www.arenafootball.com/

        Even basketball has minor league with over 93 teams
        http://abalive.com/

        But euro and American soccer snobs continue to root for the collapse of the NASL and that is un-American!

  4. KL

    May 28, 2015 at 3:49 pm

    Right now, the NASL looks like a terrible investment if they start asking the owners for money.

    The clubs should seriously look beyond the league and maybe reach out to the USL. The NASL looks like it might not last.

  5. Jason

    May 28, 2015 at 1:35 pm

    Yeah going 0-7 vs USL teams at the Open Cup 3rd round. The NASL for that lost a ton of credibility with me. USL is certainly the superior league I think. I just wonder how the Cosmos would have done against a team like Pittsburgh or Richmond.

  6. campaign expert

    May 28, 2015 at 1:26 pm

    >Again, Sela Sports and the New York Cosmos, who represent the most viable brand that has hitched its wagon to NASL, would be the most likely candidate.

    Except that USSF no longer allows one owner to own more than one team, single entity have slight leeway in that they need separate ‘management’ team.

    • Jeff

      May 28, 2015 at 11:39 pm

      So single entity ownership has certain advantages that could benefit NASL right now?

      Maybe NASL can become a single entity league, that would be hilarious, and worth it just to see the mental gymnastics that would have to be performed by everyone from Teddy to the NY Cosmos.

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