By DAN KARELL
Chivas USA is officially out of business.
On Monday, MLS announced that Chivas USA has ceased operations effective immediately, coming one day after the club finished the 2014 MLS season with a 1-0 victory over the San Jose Earthquakes. The MLS Board of Governors came to the decision unanimously after meeting earlier this month.
A new ownership group will be revealed on Thursday and the club will sit out until 2017, when they’ll re-enter the league at the same time as the Atlanta expansion franchise. The league’s decision to end Chivas USA is part of their “new strategy” for Los Angeles.
“As part of our new strategy for Southern California — a major hotbed of soccer participation and fan support — we believe that engaging with a new ownership group which has the resources and local community ties, and a plan for a dedicated soccer-specific stadium, provides us with the best chance for success,” MLS commissioner Don Garber said in a statement.
With Chivas USA going on hiatus, the league will conduct a dispersal draft to distribute the roster around the rest of the league.
It was only 10 years ago that Chivas USA entered MLS in the 2005 season as a team that hoped to draw on the large Mexican-American population in Los Angeles. Unfortunately for the club and its loyal fans, the initial goals for the club didn’t come to fruition, both on and off the field.
Chivas USA only finished four seasons above .500, and lost in the Western Conference semifinals all four years, from 2006-2009. The lone positive year came in 2007 when they finished in first place in the Western Conference while playing under head coach Preki.
The club’s troubles deepened recently as former owner Jorge Vergara and wife Angelica Vergara struggled to lead either Chivas Guadalajara and Chivas USA in the right direction, with both clubs plummeting to the bottom of their respective leagues in short succession.
Last February, MLS announced that it had purchased Chivas USA from the Vergaras with the hopes of finding a new ownership group. According to recent reports, the league is expected to turn a $30 million profit, with the new ownership group expected to pay around $100 million to purchase the club before joining the league in 2017.
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What do you think of this news? Glad to see the end of the Chivas USA experiment? Feel bad for the club’s fans? Think the Los Angeles market can support two teams?
Share your thoughts below.
It never ceases to amaze me how loyal and gullible the defenders of MLS are. Some are saying this is a win for the league because they will make $30 million. Very few people actually know how much MLS actually paid to take Chivas back and how much they will resell them for. MLS like any league or business will inflate prices when it works to their favor, they aren’t a publicly traded company publishing accurate and trusted financial results. We writing on this chat board have no clue what the actual expansion fees are, I keep on hearing this NYFC $100 million number, highly skeptical of that figure.
At the end of the day a franchise in MLS just failed and folded. When was the last time that happened in any other major American sport.
Well you’ve spat out a bunch of bs devoid entirely of any factual support.
You are also quite wrong about the accessability of these numbers. I’ve worked on many transactions of this size and there are likely several hundred people scattered across several organizations including the transaction parties, law firms, third party consultants, accountsants, and valuation firms who would require this information to participate. If even a signle one of them (or their admins/bean counters) were to leak information showing the announced numbers to be incorrect, it would be an epic credibility meltdown for the entire organization. Just isn’t worth it to try– there is a near 100% chance of you being called out and likely cratering your career.
And why do you make the statement that this makes MLS fans gullible? What is different about how these transactions are announced compared to any other league?
Lastly, the franchise did not fail, or fold. LIterally everybdy has made money here, and the franchise is still very much alive under the intial charter, and was sold for a huge number. MLS simply decided they could do a better and more expeditious job turning the franchise around themselves than waiting on Vergara, and their assumption has been validated thus far.
I know this wont be a popular opinion here, but the league owes Vergara some thanks. He was willing to invest in MLS when few others would, and put the brand of North America’s largest club behind it.
It didn’t work, but in 2005, the conventional wisdom had CUSA being the runaway success and RSL as the WTF move.
In addition, Vegera wrote a comprehensive new chapter in how NOT to run a team (in a book started by Florida based MLS teams).
kind of ridiculous that the league can throw players around wherever they please without any say from them…
well, sounds like the league was going to pay $7.5M but Torres wants to go to Chivas and help them avoid relegation. MLS apparently won’t stand in the way.
http://www.espn.com.mx/news/story/_/id/2215515/chivas-ya-tiene-su-lista-de-refuerzos-para-la-siguiente-campana
MLS doesn’t need 24 teams, they need 26 or 28. Miami is a must and minneapolis too and teams # 25 and 26 should be Miami and Los Angeles 2
Expansion geek, you only need 25 to get all the markets you just talked about.
with Chivas USA gone, that’s 18 teams. Add NYCFC and OCSC and we’re at 20. Add in Atlanta and Miami, 22. then we’ll add LA2 to bring us to 23. #24 can be Sacramento and then 25 can be Minneapolis.
so if all you want is Miami, LA2, and Minneapolis, you don’t need the “26-28” teams that you claim. or are you just saying that, generally speaking, you want to see those teams plus other, unlisted teams, to bring MLS to 26-28?
You did this to yourself, MLS. And you continue to do such things.
What happens to the Chivas USA academy? From what I understand, despite the sh!t-show that is the first team, is that there academy is pretty good. Seems like the best idea would be to keep the academy running despite no first team so they keep producing players for when the team comes back. Maybe the soon to be announced owners can buy a USL-Pro team that keeps the academy running.
Academy is shut-down as well. The Galaxy academy just got that much better….
if the LA2 ownership group has any clue on how to run a soccer team they would keep that academy running and look to start a PDL or USLPRO team as the ‘first team’ — that’s how you hit the ground running in your first year.
The Academy has been told they will continue. Of course no one knows exactly where. Or even what shirts they should wear to practice tomorrow. Hopefully that will be addressed on Thursday. But with the MLS who knows?
Dream situation: LA 2 to the OC and Cubo to the Galaxy. Perfect So Cal soccer storm.
But who do you bench to make way for Cubo: Keane or Zardes? Or can Cubo play wide as a third attacker like Donovan?
Chivas USA was certainly a failed experiment in bringing in a known name and trying to sell it to a specific fan demograhic. It appears the team will stay in the LA market but I would question whether the market will embrace another soccer team. How many fans in LA are saying “Man I wish there was something other than the LA Galaxy?” It looks as risky as it was before for success when there are many other markets putting together cohesive plans for teams.
On the bright side all of the major sports leagues in America have gone through a period where teams relocate or fold entirely within their first 20 years and even recently in the NBA and NHL…there’s no shame in admitting a failure but learn from the mistakes.
Reports are saying that Torres will not be subject to the dispersal draft like the rest of the players, not exactly shocking to hear. He’s by far the best piece on that team.
A wise move by the league. Take the time to set things up right for success.
There is a lot of talent on that Chivas USA team that will fit on other MLS teams. I hope the players can work on finding new teams ASAP. None of the mismanagement by Vergara was their fault.
Sad day. I feel for Chivas fans. I tip my hat to all of the fans who still went to the games and the reporters who stuck with the club through thick and thin. It’s a sad day for LA soccer; it’s also a sad day for MLS fans.
Anywho…there’s SO much individual talent on that team: Kennedy, Cubo, Jean-Baptiste, Burling, Minda (as beto listed above). This is going to be a superb off-season with the expansion draft. I don’t know if we’ll ever get another like it: 1 team folding and 2 teams expanding. I hate off-seasons, but this is an exception.
I share you sentiments. And the fans got the short end of the stick. I thought that the league’s pitch for not allowing promotion/relegation was to ensure that this sort of thing wouldn’t happen to its clubs. What’s the MLS’s excuse now for not letting the clubs sort it out on the field who belongs in the top division or who does not?
This doesn’t look like it will post where I want it…as a response to Eurosnob. I don’t know about excuse for lack of Pro/Rel. I would doubt they think they need one, but that is just my guess.
But in the Pro/Rel model, they don’t make $30 million profit buying and selling. So isn’t going to push them towards it.
I was going to write this as a seperate comment anyway….amazing how strong MLS is. A franchise takes a questionable marketing strategy, gets crushed, then the league still turns a profit on the deal.
The league might be doing cartwheels over flipping its failed franchise for a profit that the owners will pocket, but Chivas USA fans are screwed in the process. And this could happen to any MLS franchise and its fans. And, yes, MLS needs for not allowing promotion/relegation and is running out of them, because the fans in many areas of this country want to see their teams to prove their ability to play in the top division and are calling for an open system, not a closed one. What is good for MLS owners is not automatically good for soccer development in this country.
I meant to say “needs excuses for not allowing”
Yes. This could happen to any MLS team that shows a decade of ineffectiveness on the pitch and off. If your MLS team has no audience then in might suffer the same fate. It is not like the fans of Chivas are totally screwed. They can watch ChivasMX on TV (or when they come to LA for friendlies) or if they really were MLS fans first and for most the is a great team in LA they might want to watch or wait two years and favor the new one. If Chivas fans really cared about this team it would have been a success from the start.
If MLS had promotion/relegation, you would not have had a club with a decade of ineffectiveness on and off the pitch. Within a year or two, an incompetent organization would have been relegated and replaced by a more deserving club based on sporting principles. It is much better way to do it than MLS serving to its fans decades of incompetence and mediocrity, before finally making a decision at a division meeting to restructure this division of its corporate structure.
“If a frog had wings, it wouldn’t bust its [butt] a-hoppin’.”
~ Nathan Arizona (nee Hofheins)
If MLS had relegation, then putting up $100M for a franchise would be an even bigger risk and no one would do it. Then we wouldn’t have to worry about a whole bunch of bad teams because they never would have been created in the first place. Then again, neither would a whole bunch of really good teams.
And if MLS had promotion, then it would be far cheaper to just invest in a USL team and hope they can eventually make promotion.
Congrats, you just emptied MLS’s treasury.
I agree that it’s sad to see people go through the experience of losing their team. This is not an ending that anybody had in mind at the start, I’m sure.
But to lay this at the doorstep of MLS and a failure to adopt pro-rel is just not in the ballpark for me here. This organization was doomed entirely by Vergara at conception. For every second of its existence, which I would argue was actually prolonged by MLS to the tune of several years compared to a relegation that would’ve been curtains for Vergara’s miniscule interest and he’d have ditched it to any taker for a rebranded do-over. Same sh*t, different division.
History will remember Chivas USA for exactly what it was– a half-witted idea, executed by distracted bozos whose major skill appeared to be somehow making things worse with every passing decision,They would have been a black eye and a failure in any tier of soccer anywhere.
+1 on the feeling for Chivas fans. I have been there when the Sounders folded in the mid 80s. One day you attend every game with very few others, next day, no one goes, no one can go.
Hopefully this turns out as great for their fans, they will miss some great days in the smaller US leagues that I got, but hopefully it all works out perfectly for them.
The new ownership group is not buying the club, they are buying a franchise in LAX.
How much did it cost them to buy and then operate the club for the past year? Is that the $30 million profit less the purchase from the Vergara’s and operating expenses?
finally. some decent pickups on the roster. Cubo Torres, Rivero, Kennedy, Jean-Baptiste, Burling, McNamara, Chavez, Minda, etc.
I don’t know what they will do with the loanees but if they are included all 20 teams could pick up a decent player in a dispersal draft
Most important is who picks #1 and #2, i.e. do you get Cubo Torres or Dan Kennedy.
My guess is OC and NYCFC do.
So Cubo goes from basically creating 2/3 of his team’s goals by himself to being set up by Kaka or playing alongside Villa.
Start the Jeffersons tune ‘cos he is movin’ on up.
Not that such considerations have ever really affected how MLS allocates players, but that wouldn’t make sense. The expansion clubs get first dibs on the Chivas refugees, and then get to pick from the rosters of the other clubs?
I would expect that the current Chivas USA roster is made available in the Expansion Draft and then OCSC & NYCFC go to the END of the dispersal draft list.
I dunno about Dan Kennedy going number 2. A lot of teams have competent keepers. But he might get taken just for his trade value alone.
LA Galaxy avg 22k in a 27k stadium, males sence to give them more competition.
Yep, same situation (and justification) as in New York. Welcome to MLS, where franchise fees drown out any talk of common sense or commitment to existing franchises.
$100 million buys a lot of common sense.
I’m an Angeleno and I do happen to agree with you — I am highly skeptical of some of the numbers as relates to the market size for MLS here. Still 22k is very respectable and probably could be pushed closer to capacity with a few tweaks to ticket pricing (hypothetically, but then where would you grow?)… But no matte– rest assured there are many more fans here…. enough certainly for one team to live happily and grow well into the future. Are there enough for two? Trickier question. Depends in many ways on the other distractions… if the NFL is indeed coming, you’d hate to be out in market trying to sell season tickets aganist them. But that’s LA– always something better to do (in theory strictly).
Make no mistake– this is indeed competition for LAG and they themselves have created the opportunity much as they did with Chivas USA, which was a truly terrible execution for about 100 reasons, allowing the Galaxy were able to see the challenge off fairly easily. (And it was scarcely a direct challenge to begin with, so much as an ancillary strategy to pick up whatever fans LAG couldn’t capture)
However, this LA2 proposition is a very different story and strategy– the new investor group looks ready to take direct and immediate aim at the Galaxy, with stadium location being the “heavy artillary” that will be the cornerstone of the competive strategy. If they can get the stadium built downtown, i think they’ll be in a great position and it may be the Galaxy who find themselves squeezed.
LAG/AEG look like they are getting caught flat-footed more and more often, but the basic problem remains the same — in spite of the on-field achievements, there is a sense for many that the the Galaxy are just aren’t getting people in LA excited enough, and are not universally loved by the soccer community either. You can blame any number of factors for the tepid response compared to – say- the LA Kings popularity during their cup runs. And competiing investors clearly believe that the Galaxy is leaving enough potential MLS fans disappointed that they needn’t fear entering the market.
The brand just seems to have plateaued in town Galaxy is not as big a brand here as it could be, in my view. –…. perhaps some competition will give things a spark. But yeah it’s pretty wack that some other cities don’t get a team. Maybe LAG and LA2 should go with a pro-wrestling style “loser leaves town” agreement.
Who gets to keep Cubo Torres?
That’s the million dollar question, right? However, I might have some insight on how the process works.
According to my sources, it’ll be the 6th team in the Allocation Order that trades for the top spot of the Discovery Claim draft but must be required to part ways with a Designated Slot and relinquish no less than two Homegrown Roster slots assuming it possesses the correct Re-Entry Rights and Torres passes Waivers and they get lucky by receiving a high draft pick in the in the Lottery Draft and trade that for the first pick in the Dispersal Draft.
So, in other words LA Galaxy (who is forced by the league to trade him to NYCFC).
Well done. But you forgot that the first pick in the dispersal draft is decided by a blind draw between the teams who finished the year on double secret probation.
And then they flip a coin between Seattle and LA before that player inevitably gets traded to NYCFC.
Excellent work. You must be a CPA.
I hear the Union are going after Kennedy. You can never have too many keepers.
I would love to see Kennedy or maybe McMath to Portland. I’m crossing my fingers that Ricketts retires in the offseason. Absolutely loved watching him but PDX needs someone new back there soon.
The real question is who gets the young guys. Marco Delgado and Matt Dun could be steals for who ever gets them.
Guadalajara, the new coach already said he wants him and Cubo has said his dream is to go back to Chivas and maybe move to Europe.
Hmmn… unless Cubo has a very unusual contract, it’s not really up to him. The league ought to have an option to buy in the contract, which some reports have stated they plan to do.
That said, Camilo blatantly violated the terms of his contract w/ VWFC to go to Mexico, and it seemed to work out for him in the end.
Yeah, if he wants out, he will get his way and in this case I don’t really even see a fight. Standing in his Cubo’s way would not be a good PR move for the league for many ireasons
Mostly, it would tell the soccer world, “MLS is a confusing and difficult business partner, and some of its clubs are failing. They are in the news today because they are holding up with transfer of Erick Torres, one of the few players to distinguish himself on the pitch prior to the club’s failure.”
BUT that doesn’t mean MLS needs to walk away with nothing. They are right to ask for a consideration not exercising their rightful option, and I’d think asking for some percentage of Cubo’s follow-on transfer fee should he be sold to Europe is very fair, and does not penalize the player
How much did MLS pay Vergara for this?
Then MLS will be able to extract another franchise fee, soon…profit!
Looks like 70; Vergara paid 1/10th of that back in 2005. Nice work.
According to this very article, around $70 million and flipped it for $100 million.
But you know how it is. You have to pay the bank for all the money you borrowed when you bought the dump. Plus you had to get some ceiling fans and some paint, and probably had to pay to have new turf put in and some plants for softer borders on the property. Plus all those inspector fees. Don’t get me started on that.
So the league probably walked away with $5,000 in profit but you can’t put a value on all the experience they got doing some of that stuff for themselves to save money.
Agree that the profit will not be as simple as 100-70=30 when MLS finally gets to close their books on the franchise transfer…. But I still think MLS should be able to book a tidy 8 figure gain on the repurchase and sale. Regardkess, even if they do finish up with only a lousy 5k to show as profit, it is still a great win for MLS management. To be able to get out of one of your all-time worst mistakes without having to recongnize a loss is a very good outcome, and Don G. and MLS did most everything right along the way to keep the story positive and keep the strategy on track…. So I give them their due on this, at least until the new franchise goes off the rails.
LA Rams?
How about LA County and base the crest off of the seal of either LA County or LA City. Both provide great imagery and colors. Play it off – as CHIVAS USA has tried to do recently – as a “We Are LA” theme against LA Galaxy which always comes off as the more posh team.
“As part of our new strategy for Southern California…” ….hmm, sounds like San Diego could be on the table now, rather than just L.A. as previously believed. Not saying that I have insider knowledge, but also not saying that I don’t.
While it is the most southern part of California, San Diego isn’t considered part of “Southern California”, which is usually LA and Orange Counties. San Diego is a different market all together.
I’m going to say you have zero “insider knowledge” if you think this group is looking at San Diego
Plus, it’s pronounced “San Dee-aahh-go.”
Not saying there’s something to it, but re: whether Southern California encompasses San Diego: (1) having lived in Southern California most of my life, I’ve heard plenty of people refer to San Diego as Southern California – it’s not exactly a hard-line distinction; (2) the quote is from Don Garber, not some San Diego/LA provincial; and (3) it is more common to hear Orange County included within the ‘LA market.’ Considering how many times we’ve heard Garber reference the LA market, the use of ‘Southern California’ is a slight change-up that very well may intimate something beyond the OC. I’m keeping an open mind, anyway.
Have to agree with Bornstein, Garber is a New Yorker, and I was born and raised in the same borough Garber was. To us, “Southern California” means – everything south of Sacramento.
i live in San Diego and people constantly refer to San Diego as Southern California. what else would it be?! it’s about as south as you can be while in California.
that said, i agree the OP is way off. the team will be in LA.
San Diego isn’t considered part of Southern California, where is it a part of, Northern Baja? That’s the craziest thing I’ve ever read on this site, and that’s saying something.
It’s San Diego, that’s what it is. There’s a difference between southern California and “Southern California”. The two markets are rarely grouped together or considered the same region, a la the Great Lakes cities or the Eastern Seaboard.
I still think LA2 would do just as well or even better in Orange County. Even at Expo Park or DTLA they’re selling point is still “We’re not the Galaxy”, which didn’t work too well for CUSA. That and trying to separate SoCal soccer fans along ethnic lines…
Eric B, just stop bruh. You are wrong. Nobody thinks that San Diego is not a part of Southern California, except for you.
…and Don Garber, unless you really think he meant LA2 could end up in San Luis Obispo or San Diego, both of which are mentioned on the Wiki entry for Southern California.
Marketing-wise “Southern California” and “San Diego County” have been separate regions (in car dealerships, for example).
Plus, in my experience (also living in SoCal all my life) calling San Diego “SoCal” is like calling Canadians “Americans”; maybe factually correct in one way but they blanche at being associated with their more populous neighbor.
when Garber says Southern California, he means LA only because that is where MLS is set up and the only place within SoCal that they want a team at this point in time. so he doesn’t have to specify. plus, the LA teams, in his mind, are still marketing to the rest of SoCal, including San Diego.
but his phrasing, in no way, shape, or form means San Diego is not part of Southern California.
San Diego IS part of Southern California, as are many other areas within the Southern California region. this is not difficult to understand and you are just arguing to argue. you can drill down deeper, and talk specifically about SD County, LA County, IE, IV, etc. but it’s all still Southern California.
Oakland, San Jose, San Francisco, Sacramento, Fresno, Eureka, etc. are all a part of Northern California but people will discuss the Bay Area, South Bay, East Bay, etc. to drill down. mostly because the Bay Area makes up the largest portion of the population found in Northern California. but it’s all still considered a part of Northern California. all the way up to the border with Oregon.
Yup…
Ohhhh yeah… in “Southern California” there are lotsa Southern Californias in Southern California. Like for instance, you have the Ventura/Santa Barbara region which some like to refer to as Southern california… and of course the diminutive San Bernadino/Riverside area fondly referred to as southern california. The Imperial County region is often completely forgotten… Scholars maintain because it is often completely forgotten and virtually never spoken of so the ancient tribes in the region named it ” “. Oh yeah… last but not least is that area way out east most commonly spoken of as “When the F are we going to get there??!!” It is officially noted on maps by cartographers as “On the way to Vegas.” Strangely, nobody ever remembers a thing about it on the way back.
dude, it’s going to be LA. it’s a guarantee.
+1. $100 million is not a check you’d write for a franchise in San Diego.
True, no one writes that check for regular San Diego. But what about Southern California San Diego?
Is this like that movie Traffic where you could tell when they were on the Mexican side of the border because there was a Sepia tint on the lens? I might drive down tomore SC San Diego tomorrow and check.
Just you stay clear of Flores, okay?
Arliss Coates: Why did you shoot Chivas USA?
Travis Coates: It was sick.
Arliss Coates: Well, you were sick. How come we didn’t shoot you?
Travis Coates: That was different.
I’d like to hear more details on this “dispersal draft”. Though, I wouldn’t be surprised the more details I hear, the more confusing it will be.
I can’t wait to see the “rules” for the dispersal draft for the Chivas players. I’m thinking dice, or roulette wheels, or head-to-head PKs among the GMs. With a heavy dose of “in the judgment of the league,” of course.
They will put everyone’s name on a piece of paper, then throw all those away and announce LA Galaxy and Seattle Sounders get the first two picks and then all the crappy players can just go back to working at WalMart.
You’re probably not far from the truth.
I saw a report a few weeks ago that the league planned to buy Erick Torres (since all MLS loanees have an option to buy in their contract) and send him to LA, Seattle, or NYRB (or maybe NYCFC).
Then, they’ll probably use reverse order of finish (including playoffs) to determine how to disperse the rest of the under contract players.
Didn’t really notice anything different when Seattle joined the league.
I would ask, but I don’t want to hear more whining.
I’m trying to remember all the sneaky-evil-shady favoritism for Seattle. The Clint Conspiracy comes to mind, but what else?
Head to head PKs among the GMs would be satisfactory if they televised it