MLS expansion city profile: Charlotte

Monday February 6th, 2017

Market Analysis

Culturally, demographically, geographically, historically, athletically—pick your filter: there’s not a ton of obvious overlap between soccer and stock car racing. If Marcus Smith has his way, however, soon there will be plenty.

There may be spirited debate over which city is America’s soccer capital, but there’s no question that Charlotte is the center of the NASCAR kingdom. And Smith, 43, is the crown prince. The son of Charlotte Motor Speedway and Speedway Motorsports (SMI) founder O. Bruton Smith, Marcus started out as an assistant in the track’s corporate sales department and now serves as Speedway’s president and CEO. So he knows sponsors and he knows events. Racing and soccer share a common bond through the former, as corporate logos adorn uniforms and can become synonymous with teams. But it’s the latter that really intrigues Smith. He’s accustomed to six-figure crowds at races, and he’s noticed the same color and commotion surrounding the CONCACAF Gold Cup and international club friendly matches staged at Charlotte’s Bank of America Stadium.

“My core business is sports and entertainment, primarily NASCAR, and because we’re in the sports and entertainment business, I keep my ear to the ground and I’m a huge sports fan and I’m an events fan. I love going to events. I love looking at them as a fan, but also as what we in NASCAR call a ‘promoter,’” Smith told SI.com. “There are a lot of similarities and a lot of nuances that are special about every sport. But sports and entertainment bring people together like nothing else, and that’s what I love about it.”

In 2011, some 46,000 fans showed up to a Gold Cup doubleheader at the city’s NFL venue. Three years later nearly 70,000 saw AC Milan play Liverpool in and in ’14, another nearly 56,000 watched the memorable 4-4 Gold Cup tie between Mexico and Trinidad & Tobago.

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“[Those games] got everybody’s attention that something big is happening here, and it certainly got my attention,” Smith said. “I’m seeing the big bets ESPN has made in soccer and that NBC and Fox have made in soccer, and it’s exciting to see. … I’ve taken time to talk to a lot of our sponsors and media partners. Some are involved in MLS, some aren’t. I’m always asking them what they see in the marketplace, who’s doing great things in their world. And MLS kept coming up. So, with that kind of feedback, I saw the growth and the numbers, the attendance and the excitement you see at the matches themselves, and it made me think, ‘now’s the right time.’”

Now he’s ready to bet big on soccer. In the summer of 2016, Smith began speaking with MLS and last week, he formally applied for one of the four expansion teams the league plans to award. He hopes his team will play at a new stadium constructed on the site of the city’s American Legion Memorial Stadium, which opened in 1936. It’s located in Elizabeth, just across the street from Independence Park and about a mile southeast of the NASCAR Hall of Fame and the Charlotte Hornets’ arena in Uptown Charlotte. If racing and basketball are at the city’s heart, Smith hopes soccer isn’t too far away.

“It’s something that people that live here that are soccer supporters, they know that. But I think there are a lot of people outside of Charlotte, outside of the Carolinas, that don’t know that,” Smith said when asked if soccer is a cultural fit. “Having an MLS team in Charlotte would be a fantastic positive statement about our state, our community, and it’s going to build on all the growth we’re seeing in this market.”

Indeed, Charlotte has evolved into an economic and cultural anchor in the American Southeast. It’s the country’s 22nd most-populous metro area and its 22nd largest media market. Last year, Forbes ranked it as the 13th fastest growing city and eighth among the “best big cities for jobs.” Known as a center for banking, energy and healthcare, in addition to racing, the Charlotte area is home to seven Fortune 500 companies. Among them is Sonic Automative, the retailer founded by Bruton Smith.

The city claims to be home to an influx of millennials and Latinos, which arguably are MLS’s two most coveted demographics. During a recent hearing on Smith’s stadium plan, Charlotte Chamber of Commerce president and CEO Bob Morgan told Mecklenburg County officials that the number of residents aged 18-34 increased by 30% over the 10 years ending in 2015, while Latinos now comprise 14% of the area’s population.

Ownership Group

Speedway Motorsports is a publicly traded company that took in $496.5 million in revenue in 2015 but suffered a net loss overall. Sonic Automative, also publicly traded, posted an $86.3 million profit. The outspoken, ambitious and innovative Bruton Smith was on Forbes’ list of the 400 richest Americans as recently as 2006, when his net worth of around $1.4 billion placed him 278th. He’s not currently ranked, but the family as a whole likely is doing just fine. 

Last year, the Smiths expressed an interest in buying the Carolina Panthers should they become available following the death of founder Jerry Richardson. Bruton Smith also once was a part owner of the Kannapolis Intimidators, a Single-A baseball team named for NASCAR legend Dale Earnhardt. Last year, SMI’s Bristol Motor Speedway hosted a college football game between Tennessee and Virginia Tech that drew nearly 157,000 fans.

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Stadium Plan

Marcus Smith didn’t have much time between his initial conversations with MLS and the Jan. 31 application deadline, which was announced in mid-December.

“People are saying, ‘Why is this so hurried? We’re just hearing about this. Why do we have to decide so quickly?’ I tell them the story of the timing and that the timing’s not up to us,” Smith said. “There has been a real effort courting soccer and hosting these big events and international events and thinking that we want to be an MLS city, but nobody realized how quick it would be coming up for a decision.”

The timing apparently wasn’t right for the Charlotte city council, which decided a few days before the application deadline that it wasn’t ready to vote on public funding for an MLS stadium. Under Smith’s proposal, he would pay the $150 million expansion fee and half the cost of a $175 million venue at the 16-acre Memorial Stadium site. Mecklenburg County, which would lease the land to the MLS club, would kick in $43.75 million. The city would contribute another $43.75 million toward construction from money designated for tourism and hospitality expenses. The stadium then would be made available to the city and county for 20 dates each year. Mecklenburg said ‘yes,’ but Charlotte balked.

“I think I have a little more clarity on the council’s perspective on all the questions that have been raised,” Mayor Jennifer Robert told the Charlotte Business Journal. “And the consensus is that this structure and deal is not what council is going to support to go forward on. When we talk about the door being open, it is looking at the future in terms of—we know there are two teams [announced by MLS this year], and there are two teams in the next one to three years. We would be open to hearing something in the future.”

According to the CBJ, the city has contributed significant funds to recent sports and entertainment projects. For example, Charlotte spent $265 million on the Hornets’ Spectrum Center, $200 million on the NASCAR Hall of Fame and $87.5 million on renovations to the Panthers’ Bank of America Stadium (which is owned by the team).

Smith argued that those were worth the money and that the investment would be a good one for the city and Elizabeth, the up-and-coming neighborhood where Memorial Stadium now sits.

“All of those things were met with a lot of resistance from a good bit of the public and a lot of scrutiny, which there would be. But in hindsight, Charlotte is better off with all these great assets,” he said. “There was a time when I was one of the detractors of public investment in things that were private ventures, but I was wrong and I realized that 3-4 years ago. I remember walking out of a restaurant in Uptown and looking around, thinking to myself, ‘The city really is better off with all these great assets that make the city more fun and entertaining.’”

Soccer and Sports Scene

The Speedway opened back in 1960 and is the site of the Memorial Day weekend Coca-Cola 600 and October’s Bank of America 500, among other events. Charlotte’s entry into the major league sports scene is more recent. The Hornets (who left town and then re-emerged as the Bobcats and then became the Hornets again) took to the floor in 1988 and the Panthers followed in 1995. Neither has won a league title. The Hornets play to around 91% capacity and the Panthers routinely announce sellouts. On the minor league level, Charlotte is home to the AHL’s Checkers, who play about three miles southeast of Uptown, and the AAA Knights, whose BB&T Ballpark is a couple blocks from the NFL stadium. The Checkers draw more than 6,000 fans per game and the Knights exceeded 8,900.

The Panthers’ interest in soccer is limited to international matches (although they’re not a Gold Cup host this summer). But Charlotte hosted soccer well before the NFL arrived. Memorial Stadium was home to the Carolina Lightnin’, an ASL team in the early 1980s that was coached by long-time Queens Park Rangers and Manchester City forward Rodney Marsh. Among his players was England World Cup-winning captain Bobby Moore

The Charlotte Eagles launched in 1993 and have played at every level of minor league soccer since then, winning third division titles in 2000 and 2005. The club is part of a Christian organization called Missionary Athletes International and now competes in the PDL at a school eight miles south of Uptown.

Now this is where it gets a bit complicated. The Eagles dropped to the PDL after the 2014 season, leaving the market without pro soccer. In stepped Jim McPhilliamy, a former Hornets executive who started the Charlotte Hounds pro lacrosse team in 2011. The Hounds now are the primary tenant at Memorial Stadium, which McPhilliamy reasoned would be ideal for soccer. He saw the same trends Smith noticed. So in 2014, he founded the Independence, which began play in the USL at a temporary facility located at a suburban soccer complex.

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The Independence are affiliated with the Colorado Rapids and are coached by former FC Dallas manager and Chicago Fire assistant Mike Jeffries. Those are MLS names, and McPhilliamy was thinking big. He commissioned architectural renderings and began negotiating with the city and county on a $24 million renovation and expansion of Memorial Stadium that would house the Independence and later could be expanded to accommodate MLS. Last fall, McPhilliamy was searching for investors.

Smith’s plans and negotiations took McPhilliamy by surprise. In an email to the city council obtained by The Charlotte Observer, he said the Independence was “run over in this process,” and that his team will have “no viable short-term or long-term stadium solution in Charlotte.” In addition, he claimed his renderings were shared with Smith and MLS without his consent. SMI denied that was the case.

McPhilliamy said officials have asked him to partner with Smith. He wrote, “I am being asked by many people to back a bid for Major League Soccer that, if successful, will likely harm both of my teams … We have tried to partner with the Smiths multiple times appealing to their sense of community but to no avail. Meetings with them have produced nothing toward a partnership.”

Smith told SI.com that he’s spoken with McPhilliamy and that the time crunch ahead of the MLS deadline made it difficult to make progress on multiple fronts.

“There’s bound to be a lot of ways we can work together,” Smith said. “I think he’s done a fantastic job. He’s a great marketer and organizer. I think the effort that he has put in is something the city is better off for, and I really hope we can figure out a way to work together.”

This year, the Independence will play at a stadium in Matthews, some 13 miles southeast of Uptown Charlotte.

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MLS Pros

The Carolinas represent a significant hole in the MLS map, and expanding to either Charlotte or Raleigh would make a lot of sense for a league hoping to establish a greater presence in the Southeast. It won’t go to both, but the chances of one getting selected are pretty good. The markets have comparable populations. Charlotte will support its case with its glut of big businesses, its status as a transport hub (CLT is the eighth-busiest U.S. airport) and its history of support for pro sports. MLS has a fondness for investors with ties to other leagues, and welcoming a leading NASCAR figure probably will appeal.

MLS Cons

The longer it takes Smith to work out a stadium deal, the dimmer the prospects get. If MLS is ready to pull the trigger on teams 25 and 26 before he’s ready, that has an obvious impact on his chances. He’ll be leading one of 10 bids chasing just two openings.

Then there’s North Carolina’s political situation, highlighted by the discriminatory “bathroom bill” passed last March. Charlotte has taken the heavy brunt of the law known as HB2. Among the losses are the 2017 NBA All-Star Game and the ACC football championship. Would MLS, which has positioned itself as a modern, progressive league, do business in that climate?

Smith argued that sports, musicians and artists who avoid Charlotte are hurting their fans, not those responsible for the legislation. In fact, the state’s effort to pass the bill began when Charlotte approved an ordinance prohibiting discrimination in public accommodations. In December, negotiations aimed at repealing both the city ordinance and HB2 fell through.

“I’m a businessperson in Charlotte. I think there are a lot of people in the city and the state that behind closed doors probably say, ‘Boy, we could’ve done this differently.’ And there are probably a lot of people who wish it had been done differently,” Smith said. “We’re on track to make things right. We’re on track to make the changes that need to be made. Charlotte, I think, did a great job by being the first to put the changes in their ordinance and then the state reacted. Now it’s in the hands of the state. They’re just getting back in session and this is at the top of the list. I feel like it’s just a matter of time.”

Commissioner's Thoughts

“I don't think it helps or hurts, because our valuation of the market will be very comprehensive,” MLS commissioner Don Garber said in December when asked about Charlotte’s support for the Panthers and Hornets. “I think that's one of the factors that goes into it. I think a lot of the things that we're seeing happening in the state are very intriguing to us.”

Garber added that Smith and his family have “a lot of energy and a lot of professional sports experience.”

Regarding HB2, he said, “It's not something that we've been addressing at this time. But clearly as we get into more detail with [Charlotte and Raleigh], I am sure it will be a factor along with many, many other factors that we have to consider.”

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