UPDATE: 5/23/2013, 10:55 a.m. EDT. The names of the lawyers from DLA Piper advising Manchester City have been added to the 15th paragraph of this story.
It took a Middle Eastern sheikh, a storied baseball franchise, and six Am Law 200 firms to help bring professional soccer back to Manhattan.
Those were among the elements in play when Major League Soccer announced Tuesday that it had struck a $100 million deal to add its 20th team in 2015 via a joint venture between Major League Baseball’s New York Yankees and the English Premier League’s Manchester City Football Club.
By launching the New York City Football Club—or NYC F.C., for short—MLS is creating a surefire rival for its existing local franchise, the New York Red Bulls, whose home field is in Harrison, New Jersey. That team, which adopted its current name in 2006 after being sold to Red Bull energy drink billionaire Dietrich Mateschitz, was initially founded as the MetroStars in 1995 by lawyer-turned–soccer executive Charles Stillitano.
At the same time, establishing a stronger presence in the nation’s media capital could help the nascent league—founded two decades ago by retired Latham & Watkins litigation partner Alan Rothenberg—give its television ratings a jolt and increase its visibility on the American sports scene.
The terms of the NYC F.C. deal call for the Yankees to invest roughly $25 million toward the cost of launching the expansion team in exchange for a roughly 25 percent stake in the franchise, according to news reports. The Bronx Bombers—experienced in navigating municipal finance and bureaucratic issues after building their own $1.5 billion stadium several years ago—are using their local expertise to help Man City clear the hurdles NYC F.C. is likely to encounter before taking the field.
"We’ve been doing business here a long time and we know how things work," Yankees president and Akin Gump Strauss Hauer & Feld senior counsel Randy Levine said at a press conference on Tuesday. Levine noted at Tuesday’s event that Man City will handle the soccer-side management of the new squad, which could see its games televised on the Yankees Entertainment and Sports (YES) cable network.
Levine, Yankees COO Lonn Trost, and team CFO Anthony Bruno took the lead on behalf of the team in the negotiations that gave birth to MLS’s newest club. Talks have dragged on for the past several months as the league entertained offers from various suitors seeking to bring big league soccer to Manhattan. (Alan Chang serves as deputy general counsel and vice president of legal affairs for the Yankees.)
Last year the Yankees and the holding company that owns the team, Yankee Global Enterprises, turned to Herrick, Feinstein for counsel on the $1.5 billion sale of a 49 percent stake in YES to News Corp., according to our previous reports. Herrick chairman Irwin Kishner, who cochairs the firm’s corporate practice, is also advising the Yankees on the agreement with Man City, along with corporate partner Daniel Etna.
Herrick’s relationship with the Yankees runs through Trost, a former firm partner who came aboard in the early nineties from now-defunct Shea & Gould, where he served as head of that firm’s sports practice. Trost left Herrick in 1997 to become the Yankees’ general counsel, and was promoted to the COO position in 2000.
"The Yankees have built what I consider to be the Roman Colosseum of New York City," says Kishner, noting that his firm advised on the construction of the new Yankee Stadium, which opened in 2009. "They’ve helped rebuild neighborhoods, and they’re going to make excellent partners in this new venture."
Akin Gump corporate partner Ackneil "Trey" Muldrow III also advised the Yankees on the agreement with Man City and MLS, as the firm’s global platform proved beneficial when arranging meetings and negotiations between NYC F.C.’s equity owners, many of which are based overseas.
At the top of that ownership chain is Sheikh Mansour bin Zayed bin Sultan Al Nahyan, a member of the ruling family of Abu Dhabi and deputy prime minister of the United Arab Emirates. Mansour has owned Man City since late 2008, when he bought control of the team from Thai business tycoon and politician Thaksin Shinawatra in a $300 million deal.
A team of lawyers from Shearman & Sterling advised Mansour and his Abu Dhabi investment group on that deal, which saw Mansour begin remaking the club by erasing its crushing debt load and investing in new player acquisitions. Former Shearman associate Simon Cliff became Man City’s general counsel in early 2009, and the firm subsequently grabbed a role advising the owners of the Yankees’ archrival Boston Red Sox on their $481 million purchase of Man City rival Liverpool F.C. in 2010.
Man City completed its turnaround under Mansour by winning the Premiership in 2012, although the team fell short this season and fired its manager. An honorary president of Man City is leading Manchester solicitor Raymond Donn, whose personal injury firm Donns slipped into administration—the British form of bankruptcy—last year. Italian lawyer Alberto Galassi is a member of Man City’s board of directors, as is Paul Hastings real estate of counsel Martin Edelman, one of the most influential lawyers in the United States, according to sibling publication The National Law Journal.
Edelman, who advised real estate billionaire Stephen Ross on his $1 billion purchase of the National Football League’s Miami Dolphins four years ago, has taken the lead counseling Man City on its entry into the New York sports market along with DLA Piper corporate partner Charles Baker and associate Richard Rubano. (Baker, a veteran sports dealmaker who joined DLA in 2010 from Nixon Peabody, counts the English Premier League as a client.)
DLA and Edelman may want to leverage some of Ross’s local real expertise as NYC F.C. seeks a new soccer-specific stadium as its home pitch. New York City Mayor Michael Bloomberg has been pushing a plan estimated to cost between $300 million and $350 million that would build a 25,000-seat facility for that purpose in the Flushing Meadows neighborhood in Queens, east of Manhattan.
While Tuesday’s announcement contained only passing reference to the Queens plan, which has met some political opposition, the Yankees’ Levine did say he was open to the possibility of NYC F.C. playing in Yankee Stadium until a suitable new home can be found. (Yankee Stadium will host an exhibition match between Man City and rival Chelsea F.C. on May 25.)
New York City lobbying records show that Fried, Frank, Harris, Shriver & Jacobson has been busy advising MLS in its pursuit of a new soccer stadium for NYC F.C., receiving approximately $211,579 for its efforts advocating on behalf of the league over the past year.
Fried Frank real estate partners Stephen Lefkowitz, Richard Leland, and Tal Golomb, and associates Jacob Feldman and David Gest are leading a team from the firm advising MLS on all aspects of the project, with a particular focus on obtaining the land use and environmental approvals necessary for building on city parkland.
MLS spent nearly $1.7 million on outside advisers lobbying the city government in 2012 to help push through its plan for a new stadium in Queens, according to reports earlier this year by Crain’s New York Business and the New York Daily News. But some local residents continue to balk at corporate attempts to seize control of the few open spaces—and even nearby junkyards—they use for soccer and other recreational activities. (The New York Times reports that Man City has agreed to spend $90 million to replace parkland it needs to build a new stadium for NYC F.C.)
Now, after lining up ownership for NYC F.C. at a record-setting price (MLS’s most recent expansion team, the Montreal Impact, commanded a $40 million entry fee), the league can focus on figuring out which city will serve as the home for its 21st franchise. League commissioner Don Garber—who last week saw former MLS star David Beckham announce his retirement after a 21-year career—has vowed to expand to 22 teams by 2020. Garber has said publicly that he hopes the creation of NYC F.C. will provide a Beckham-like boost to the league’s future.
In the wake of Beckham’s retirement, an MLS spokesman told Reuters that the league has held talks with the global soccer and fashion icon about owning an expansion franchise. Proskauer Rose, a longtime legal adviser to the league that helped negotiate Beckham’s groundbreaking $200 million contract with the Los Angeles Galaxy in 2007, has been counseling MLS on its expansion efforts and move into Manhattan through corporate partner Jonathan Oram, tax partner Alan Parnes, IP senior counsel Jennifer Paine, and associate Bradley Shron.
One team still hoping to find itself a home in MLS are the New York Cosmos, a reboot of the old North American Soccer League franchise that back in the seventies saw aging players like Pele and Franz Beckenbauer bring top-flight club soccer to the Big Apple for the first time.
Saudi Arabia–based Sela Sport bought the Cosmos brand in 2011 and announced last summer that the team would begin play this year in a revitalized NASL, a second-division league in the U.S. soccer pyramid directly underneath MLS. The Cosmos also unveiled plans in January for their own $400 million soccer-specific stadium in Belmont Park on Long Island.
Cosmos chairman and CEO Seamus O’Brien told Forbes this week that his plans for building that stadium and eventually joining MLS remain unchanged. His logic: if his native London can accommodate 10 professional teams, the metro New York region can certainly support more than two.
Dorsey & Whitney corporate partner Stuart Goldfarb, who joined the firm’s New York office in 2011 from Orrick, Herrington & Sutcliffe, has previously advised the Cosmos organization and the new NASL. He did not return a request for comment on how the Cosmos might be affected by MLS’s expansion deal with NYC F.C.
Other possible cities to which MLS could expand include Miami and Orlando, as the league has expressed an interest in returning to Florida following the failure of two previous franchises, the Miami Fusion and Tampa Bay Mutiny.
Wherever its physical expansion takes it, MLS remains concerned about its shrinking television audience. Currently in the second year of a three-year contract with NBC Sports, MLS could see its already-modest market share further dwindle thanks to the network’s three-year, $250 million deal earlier this year to broadcast Premiership matches in the U.S. beginning with the 2013–14 season. Cahill Gordon & Reindel advised NBC in those negotiations, according to U.K. publication Legal Week, which notes that DLA took the lead for the league.