NASL’s deep ties with Traffic Sports create serious questions about league’s future

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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

  1. campaign expert May 28, 2015
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