Wednesday, December 24, 2014

Major League Soccer purchases Chivas USA, will rebrand team and keep it in Los Angeles

The league has purchased Chivas USA, its worst-performing franchise, from owners Jorge Vergara and Angelica Fuentes. MLS will operate the club for now, with an eye on selling the team in coming months to an ownership group that will keep it in the Los Angeles area. The team's name will remain Chivas USA through the 2014 season, and will be rebranded for 2015.

Major League Soccer purchases Chivas USA, will rebrand team and keep it in Los Angeles

A typically small crowd for a Chivas USA game at the StubHub Center. The team has been bought back by MLS headquarters, and will be rebranded next year. (Ric Tapia/Getty Images file photo)
A typically small crowd for a Chivas USA game at the StubHub Center. The team has been bought back by MLS headquarters, and will be rebranded next year. (Ric Tapia/Getty Images file photo)

There is a longstanding adage that you should make bad news when as few people as possible are paying attention.

Granting that this might not really be bad news, Major League Soccer delivered a masterpiece on Thursday.

While you were mourning the U.S. women's hockey team's loss to Canada in the Olympics and celebrating the 76ers' trade of Evan Turner, MLS made a stunning announcement.

The league has purchased Chivas USA, its worst-performing franchise, from owners Jorge Vergara and Angelica Fuentes. MLS will operate the club for now, with an eye on selling the team in coming months to an ownership group that will keep it in the Los Angeles area. The team's name will remain Chivas USA through the 2014 season, and will be rebranded for 2015.

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"We will continue to ramp up discussions that we have been having for a number of months with some investors," Garber said on a conference call with reporters Thursday, though he did not immediately clarify just who those investors are.

Garber did, however, note one potential owner who will not be buying the team: Stan Kroenke. The famed entrepreneur owns or part-owns many sports teams, including MLS' Colorado Rapids, the NHL's Colorado Avalanche, English Premier League club Arsenal and the NFL's St. Louis Rams.

Although MLS has historically had individuals or enterprises own multiple teams in the league, Garber said the league wants that practice toe end. So Kroenke's ownership of the Rapids flatly rules him out. 

"We're not interested in any owner owning multiple teams," Garber said. "Those days, for us, are over."

Garber admitted that it is "ambitious" to try to find a new owner for the team by the end of 2014, but "that is the goal."

Chivas USA has had issues for a long time, as I'm sure many of you know. For most of Chivas USA's existence, there was a 50-50 split of ownership between Vergara and Antonio Cue. It dated back to the team's launchfor the 2005 season. In 2012, a mediation process led to Cue selling his stake to Vergara. That's when Fuentes came into the front office.

The goal was to capture the huge fan base in southern California that Mexican parent club Chivas Guadalajara enjoys. That didn't happen.

"I don't believe it was the concept so much as some executional issues that if we could do differently, we would," Garber said. "We're going to take responsiblity to get it back to where we originally intended it would be when they joined the league."

It will go down as a concidence that the Chivas USA sale happened on the same day MLS confirmed that a discrimination lawsuit filed against the club by two former assistant coaches has been settled.

Dan Calichman and Ted Chronopolous filed the suit early last summer, alleging that they were fired because they did not speak Spanish. That led to an investigation by HBO's Real Sports which cast a bright light on the matter, and brought quite a bit of embarrassment to the club and the league.

All of that is finally in the past now, and MLS can focus solely on the future. Garber insisted that the league wants to continue to have two teams in the Los Angeles market, and thus maintain an intra-city rivalry with the Galaxy.

"We're not interested in moving [Chivas USA] at all," Garber said. "We absolutely believe that Los Angeles and southern California can support two teams."

He also said multiple times that the league is "not in a rush" to find a new ownership group.

"We're going to try to find a great local owner, and we're going to try to marry that owner with a strong stadium plan," Garber said. He noted that "the leading concept" for a stadium plan is to develop a venue near the Los Angeles Sports Arena, adjacent to the campus of the University of Southern California.

As far as a rebranding of the team goes, I asked Garber to comment on a report by SB Nation's Alicia Ratterree earlier this week that an entity called "Chivas Guadalajara Licensing LLC" filed papers with the U.S. Patent and Trademark Office to claim trademarks on "Los Angeles SC" and "Los Angeles F.C."

Ratterree is one of the few journalists out there - indeed, maybe the only one - who really pays close attention to Chivas USA on a daily basis. So when she published her report, it got noticed.

Garber said he was not able to specifically confirm whether the "Chivas Guadalajara Licensing LLC" entity was Vergara, but he did confirm that the league did not file the registration.

"The only thing I can tell you there," Garber said, "is that as the Vergaras were going through this to figure out whether they were going to sell or whether they were going to keep the team, my guess is they were thinking about whether they were going to rebrand."

Now the work of rebranding falls on MLS headquarters. Garber knows he and his staff are under pressure to deliver.

"You can only relaunch once," he said. "We know we've got to get it right the second time around."

Here is the full release from MLS announcing the transaction:

NEW YORK (February 20, 2014) – Major League Soccer today announced it has purchased Chivas USA from Jorge Vergara and Angelica Fuentes. Effective immediately, MLS will assume responsibility for operating the club. MLS will appoint an experienced sports executive shortly to serve as the president of Chivas USA during this interim period. Head Coach Wilmer Cabrera, who joined the club January 9, will continue in his position and report to the new president. 

In the coming months, the league will resell the club to a new ownership group that will be committed to building a new stadium and keeping the team in Los Angeles. The league has had initial discussions with a number of very qualified potential owners and intends to finalize an agreement with a new group sometime this year. 

The club will play as Chivas USA during the 2014 MLS season and will be rebranded with a new team name and logo in connection with the sale to a new owner. 

Under the terms of the purchase agreement, Mr. Vergara and Ms. Fuentes retain all branding and licensing rights to the Chivas name with MLS permitted to continue using the Chivas USA brand name on a transitional basis. 

“We thank Jorge Vergara and Angelica Fuentes for their significant commitment to Major League Soccer,” MLS Commissioner Don Garber said. “Jorge was an early believer in the league and he and Angelica have been great partners in MLS. “We collectively agreed that it is best to sell the club to new owners who are committed to securing a new stadium and providing MLS with a strong rival for the LA Galaxy.” 

Vergara was part of the original ownership group that purchased an expansion team that began play in 2005, and he and Fuentes became sole owners of the club in 2012. 

“When Angelica and I gained full operational control of the team for the first time 15 months ago, we were hopeful we would be able to turn it around,” said Mr. Vergara. “However, there is only one Chivas de Guadalajara, and we have realized that it will require more time, further resources, and a level of commitment that would divert too much of our focus from our other business interests. We explored opportunities to sell to other groups, but we believe selling the franchise to MLS on an expedited basis is in the best interests of all parties, including the team’s players and its dedicated fans. MLS has assured us they are committed to keeping the club in Los Angeles and finding the right owners to make the team successful in the future. We greatly appreciate the leadership and collaboration of Don Garber and his colleagues at MLS, which resulted in an efficient transaction that benefits all the parties involved.” 

In connection with the sale of the club to a new owner, MLS also will lead the discussions for a new stadium that would serve as the new home for the team. The club has played its home games at the StubHub Center in Carson, Calif. since debuting in 2005 and will continue to play there in 2014.

About this blog
The Goalkeeper is your home for the latest news about the Philadelphia Union, Major League Soccer, U.S. national teams and the rest of the world's most popular sport. It's also a place for fans to gather and celebrate the culture of soccer and its unique place on the sports landscape.

Jonathan Tannenwald Philly.com
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