Portland Deal with Minor League Soccer Club – What Residents Should Know

Tomorrow, Monday November 13^th, the City Council will be voting on Order 64 to authorize a deal with Portland United LLC to bring Division III club soccer to Portland. This order would authorize the use of Fitzpatrick Stadium as the new team headquarters and would commit Portland for up to fifteen years with the club. What should Portland residents know about this potentially far-reaching arrangement?

Background

For about five years, a local investment team comprised of real estate developers Jonathan and Catherine Culley, Gabe Hoffman-Johnson (two-time All-America soccer player at Falmouth High) and NESN broadcaster Tom Caron (added to the investment team earlier this year) have been fighting to get a United Soccer League (USL) One club franchise off the ground here in Portland. One of the most controversial elements of this endeavor has been the location, form, and ownership of a soccer stadium that can accommodate the franchise.

The first public discussions about stadiums took place in the summer of 2021, when “USL to Portland,” the investment team’s nonprofit advocacy group (led by Hoffman-Johnson,) floated two possible locations, both owned by the City of Portland: Fitzpatrick Stadium and the Preble Street Fields off the Back Cove. These plans were the culmination of behind-the-scenes discussions with the city’s Park Department and Housing and Economic Development Committee members. The Back Cove location was quickly ruled out since it would render the city’s new $40m stormwater overflow system inaccessible for maintenance, leaving only Fitzpatrick as a viable option. Initial plans for Fitzpatrick called for the removal of the track around the playing field, and replacement of the track at either Dougherty Field or Payson Park. However, the club has since been granted a size variance by the league, allowing the team to play on a non-conforming field.

This September, after a year and half with no substantive updates, USL announced that “USL to Portland” had been granted its expansion team and was expected to start in 2025 with Fitzpatrick Stadium as its home. However, at the time of this announcement, the lease agreement for Fitzpatrick had not been made publicly available for review or approved by the City Council.

At an October 10^th meeting, the first publicly available draft of the lease agreement was reviewed (albeit briefly and with almost no comment except from our Parks Director’s endorsement) by the Council’s Housing and Economic Development Committee. The Committee unanimously agreed to send the agreement in its current form to the council for full review and acceptance. That agreement now stands before the Council for approval.

The Agreement in Detail

The agreement between the City of Portland and the newly-formed Portland United LLC is about 30 pages long, appearing between pages 361 and 390 of a 471-page Council Meeting Agenda at time of writing. A fiscal impact analysis drafted by the city precedes the agreement in the agenda as part of a staff memo.

Most of the agreement is boilerplate and noncontroversial. However, specific details are worth further consideration. Accordingly, the points below are intended to inform the reader about key elements that may help consider the practicality and fairness of this agreement. This is not intended to offer a complete overview of all aspects of the agreement, but rather to call attention to select factors that may be important to Portland residents.

Fiscal Impact on the City
(See impact note in agenda, pp. 355-356)

• Because the city is waiving its standard use fee for the first ten years (approximately $128k for 2024), city staff projects a slight increase in the City’s overall property tax rate, an approximately $0.01 increase in the municipal tax rate,for the “duration of [the] agreement.”
• The capital improvements that the Club will make to Fitzpatrick could be understood as partially offsetting the loss in use fee revenue. However, these improvements had not been included in the city’s 5-year Capital Improvement Plan, indicating that the city had not deemed these improvements to be necessary or worthy of public expenditure.
• The signage revenue, which is projected to be $30k for the first year, (discussed further below,) will also partially offset the lost usage fees. But this is not enough to fully offset lost revenue from usage fees.
• City staff correctly acknowledges that the impact on Portland’s budget will be minor and they could be offset more theoretically in the form of broad economic benefits. But in practical terms, this still amounts to a financial cost for the city and taxpayers.

Field Use

• The city must grant 25 regular game days per year to the club, with exclusive field use starting at least 6 hours before kickoff (to accommodate prep and practice for teams.)
• In terms of date selection, the city is required to send the Club a list of 40 “offered” dates (30 weekend dates and 10 weekday dates) before September 1^st of every year. The club then has ten days to choose 25 of those dates. At that point, those dates become final and therefore unavailable to other potential field users like Portland school teams.
• Field paint may be removed and reapplied with city authorization. The agreement requires the reapplication of paint to the city’s satisfaction. However, the agreement sets forth no mechanics or timing for paint removal and reapplication. This may pose additional difficulties for public field use depending on how long reapplication takes.
• In addition to game dates, the city is required to “work with the Club in good faith to provide the Club additional access to the Stadium… for Club practices and other training.”

Financial Elements

• As noted above, the city is waiving regular field usage fees for ten years (through the second 5-year lease period if the contract is extended.) For 2024, the loss in revenue from paying sources is estimated to be $128,000, so the total foregone revenue to the city will be at least $1.28m over ten years. (It will most likely be considerably higher, since typically each year usage fees increase).
• The club commits to performing exactly $1,000,000 worth of “improvements” to Fitzpatrick. However, most of these improvements are specifically required for the club (such as the largest line item: $500k USL-compliant light fixtures,) and not concerning items that were on the city’s radar for more general improvement. Other improvements include cosmetic and technological improvements to the press box for video and streaming, new audio equipment, new locker rooms (although the home team locker rooms are for exclusive use of the club and will not be accessible to the public,) club storage (also exclusive to the club,) a new ticket entrance, and other miscellaneous technology items and “experience elements.” Presumably, all improvements, including non-fixed ones like audio systems, streaming devices, etc. will be owned by the city. However, the contract does not explicitly specify the nature of ownership for these amenities.
• The club is agreeing to pay $200,000 to help install a turf field in another public park in the city. It’s unclear where this would happen, and if there is another park that would be suitable for such a field. Regardless, the cost for new turf fields are estimated to be significantly higher than the club-contributed $200,000. If the field never gets installed, the city must return these funds to the club.
• The city will receive all parking revenue collected by the Club.

Signage

• The city is granting exclusive signage rights to the club for the duration of the contract (up to fifteen years total). This appears to pertain primarily to advertising signage but also applies to scoreboards and Club branding, and even signage for Portland School teams. From the agreement “the Club shall have the right to (1) operate, manage and control all scoreboards and signage at the Stadium at all times during the Term of this Agreement.” The only exception is that scoreboard use will be granted to others outside of Club games.
• The Club will collect all signage revenue and give 15% to the city. Per city analysis, this is estimated to be worth $30,000 to the city in 2024, which means the Club’s portion (85%) would be $170,000.
• The city has the right to place its own signage, but only in places not presently in use by the club. How this comports with previously mentioned provisions is, at present, unclear.

Performance of Physical Alterations

• Lengthy sections of the agreement set forth parameters for the work that the Club will perform to modify Fitzpatrick for its intended use. The Club will submit its initial construction schedule to the city by May 1, 2024. The city has 20 days to approve these plans.
• Generally, construction will be performed between July 1, 2024, and the first day of the USL preseason in 2025.
• The Club agrees not to unreasonably interfere with the “use, occupancy or enjoyment of the Stadium by other Stadium tenants or their patrons” during construction. The agreement reiterates this point stating “[i]n no event will the Club allow its construction or any other activities to prevent any other Stadium tenant or licensee or their patrons from occupying and using the Stadium and the Stadium Premises for an event at the Stadium.” This same protection of use is not explicitly afforded to the general public or for walk-in, unscheduled use.
• The Club is required to submit its specific construction plans to the city for approval. However, this will happen on a “time to time” basis as opposed to according to a strict schedule.

Miscellaneous or Ambiguous Elements

• At time of writing, Exhibit B, “Description of Exclusive Premises,” is blank or missing. These are the areas (such as the home locker room, storage, or perhaps a clubhouse that the public will never have access to). Presumably, these are intended to be completed later. However, this seems like an important part of the contract that should be available at this public approval stage.
• At time of writing, Exhibit C, “Description of Stadium Premises” is similarly missing, presumably for later addition. This also seems like an important part of the contract that should be available at this public approval stage.
• It appears that alcohol can be served at games, without restrictions. Per the agreement, concessions are under the full control of the club, and alcohol is included as part of the definition of “concessions.” Given the notoriety of soccer clubs and rowdy alcohol consumption, perhaps this topic is worthy of greater attention.

Steps Forward

At this late juncture, with strong support from public figures like Governor Janet Mills, it is unlikely the City Council will reconsider this agreement. However, forward momentum and a highly successful public relations campaign should not be confused with good policy. As of now, the only real cost incurred by the city is the time staff has spent negotiating and reviewing this agreement. On the other hand, Club investors have surely spent considerably more time and money throughout this process. However, this private cost should not be a consideration that overrides the interest of Portland residents and taxpayers.

On the other hand, there will undeniably be economic benefits to the region with the arrival of a minor league soccer team. The league believes the benefits to Maine’s sports tourism economy will generate more than $10 million in tax revenue for the region and create upwards of 50 permanent jobs. Residents of Portland may assess the veracity of this claim and weigh these purported benefits against the undeniable costs as discussed above.

One Perspective on Fairness

It is the opinion of this writer that certain components of the deal should be sent back to the drawing board and renegotiated by city staff to ensure a more balanced and equitable arrangement. And, if a more balanced and equitable arrangement cannot be reached, then the arrangement should be rejected in full and the Club should find an alternate location for the Club’s headquarters. Some of the components that should be revised are:

• The waiver of use fees, which are not offset by stadium upgrades that primarily serve the Club.
• Selection of Club-exclusive dates. As worded, Portland public school teams will only have the option to select from dates that have not already been chosen by the Club. This contradicts messaging from owners and club boosters that the Club would be on equal footing with Portland schools when it came to field use.
• The advertising revenue-sharing arrangement, which should be at least evenly split between the parties. The 85/15 arrangement seems highly imbalanced and wrong given that the club is not paying use fees.
• General vagueness surrounding specific plans for the site (see the note above about the blank exhibits). The public deserves to see concrete plans for stadium changes prior to the agreement receiving Council approval.

The writer also believes that the agreement is deficient for the following reasons, and should be revised accordingly:

• The city’s fiscal impact analysis should have captured the potential for additional transportation and field rental costs if Fitzpatrick is unavailable to school teams. Although, admittedly, budgets are unlikely to increase even if such costs are incurred. This means the school department and its students will simply be required to do more with the same amount of funding.
• The agreement should have explicitly protected the track surrounding the field. The agreement does not mention the track, raising questions about the Club’s long-term intentions.
• Related to the first point, the agreement should have included language explicitly shifting the cost burden of any unforeseen expenses related to Portland’s public school teams needing to travel and rent other fields. Team branding materials (such as signage) might also be necessary for both relocated events (for example, home games that need to take place in other facilities) but also for placement of signage over Club signage at school games.

If you would like to offer public comment on this deal, be sure to be present at tomorrow’s City Council meeting at City Hall, November 13^th at 5:00 PM.

B. Beiderbecke –Beiderbecke is a Portland local whose professional background spans public policy and legal writing. He is a lifelong Portlander, a Portland Bulldog, and an active community member.