Major League Soccer announced on Friday that the expansion team set for Sacramento, California, scheduled to start playing in 2023, is now on indefinite hold after Ron Burkle, the proposed team’s principal investor, informed MLS officials that he “decided not to proceed with the acquisition of an MLS expansion team” in the city because of the impact of the coronavirus pandemic.
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Several sources with knowledge of the situation cited the rising costs associated with building a stadium at the Downtown Railyards site as the main reason for Burkle, who is also a co-owner of the Pittsburgh Penguins of the National Hockey League, decided not to move on. A source said that Sacramento stadium costs went from $ 300 million to $ 400 million, while infrastructure costs increased from $ 27 million to $ 47 million. In addition to these increases, the ability to raise funds from limited project partners, all in the midst of a pandemic, has fallen by some $ 60 million below forecast
“After working for many years to bring an MLS team to Sacramento, the League continues to believe that it can be a major MLS market,” said MLS in a statement. “In the coming days, the League will work with Mayor Darrell Steinberg to assess possible next steps for the MLS in Sacramento.”
MLS announced the team in Sacramento with great fanfare in October 2019, but the deal was complicated. Not only did Burkle and co-investor Matt Alvarez have to pay an expansion fee of $ 200 million, plus the stadium costs, but Burkle and Alvarez also needed to acquire the Sacramento Republic, from the USL Championship, from owner Kevin Nagle. This part of the deal was also not completed.
Doubts began to emerge earlier this year about whether Burkle would go ahead with the project after The Athletic said his group had not signed the long-term contract with MLS. That news was a harbinger, as Burkle informed MLS on Friday that he was giving up on the deal.
“I want to thank Mayor Steinberg for his continued efforts to bring MLS to Sacramento,” said MLS commissioner Don Garber. “Your commitment to the city and delivery to passionate football fans should make all citizens of Sacramento proud.
“The interest in having a club in the Major Football League has never been greater. And I remain incredibly optimistic about the completion of the expansion plans for our 30th team.”
The announcement amounts to a major setback, and possibly a death sentence, for Sacramento’s hopes of expansion. While the Republic of Sacramento remains well supported, finding a group of landlords with sufficiently deep pockets has been a struggle. In late 2017, Sacramento was considered one of the top contenders in the expansion race, but ended up losing to Nashville and Cincinnati when Meg Whitman chose not to invest in Sacramento’s expansion effort.
Burkle was considered Sacramento’s top investor, but now, despite having a venue venue chosen, Sacramento’s future as home to an MLS team is in serious doubt.