SEATTLE — Ever since Don Garber played matchmaker by helping to bring together Adrian Hanauer, Joe Roth, Drew Carey and Paul Allen, the Seattle Sounders have enjoyed a remarkably stable ownership group. Up until this year, the only notable change in the ownership structure was when Hanauer bought a small percentage of Roth’s shares in order to become the majority owner in late 2015.
That all changed on Tuesday when the the Sounders announced that 11 new “families” had joined the ownership group as minority stakeholders, buying out the remainder of Roth’s share (Update: three more families have joined the ownership group since the initial announcement). Given the rather unprecedented nature of all this, you probably have a lot of questions. Lucky for you, I’ve got answers.
Are Macklemore and Russell Wilson the new Sounders owners?
Well, kinda. The rapper and Seahawks quarterback are part of this new ownership group, but they each own a relatively small share. The biggest share is still owned by Hanauer, who actually increased his holdings by buying some of Roth’s portion.
Who else is in this group?
First off, it should probably be noted that every new member was brought in with a partner. So it’s not just Wilson, but also his wife Ciara; it’s not just Macklemore, it’s also his wife Tricia Davis; thus the whole “family” thing. It was a pretty clever way to market this, I must admit. Beyond them, it’s a group of people with backgrounds in the tech industry that former tech executive Terry Myerson apparently cobbled together. The most notable names are probably Microsoft CEO Satya Nadella and Microsoft CFO Amy Hood, but it’s a veritable who’s who of local tech industry movers and shakers.
Who was the guy Drew Carey introduced as a new owner at the March to the Match the other day?
That was David Nathanson, who also happens to be a minority owner of Seattle’s NHL team along with Hanauer. Nathanson is a former Fox Sports executive who oversaw their investment in things like the World Cup and is on the board of directors for FanDuel, the gambling company. He also sits on the U.S. Soccer Foundation’s Board of Governors. Well connected guy, for sure.
Should we be worried about having too many chefs in the kitchen?
This question was raised during the press conference, explicitly referencing the ownership group that Howard Schultz put together when he bought the SuperSonics. After joking that he has to give Brian Schmetzer’s phone number to 11 more families, Hanauer insisted he has retained the final say on all ownership decisions. In other words, he does not have to clear every signing with a bunch of different people.
Yea, but I saw somewhere that the combined net worth of this group is less than Roth’s was by himself. Is that true?
Without access to their tax returns, there’s no way of knowing for sure. I suspect that this figure came from Googling “(person x)’s net worth” and adding it all together. These sorts of results are notoriously unreliable, and are probably overstating Roth’s worth given that he’s going through a divorce that will probably cut his wealth in half. Beyond that, I was assured that the combined wealth of this group far surpasses Roth’s, so concerns about the team being under-capitalized are probably unfounded.
Let’s just say the money is the same. Wasn’t Roth the guy with all the big ideas?
I’m happy to allow the possibility that Clint Dempsey’s signing never happens without Roth constantly pushing for it, and as corny as his idea for the unveiling was, it’s still a signature moment in the history of the team. It’s also true that at least publicly, Roth was the guy making fan-friendly pronouncements like “we’ll never get outbid for a U.S. Open Cup final again.” While Hanauer’s statements are often shades of gray, Roth’s were usually black or white. But even when Roth was the majority owner, he never wrote checks for more than his 35 percent ownership share and Hanauer has always been the guy making the big day-to-day business decisions. Roth definitely deserves some credit for making the Sounders what they are, but Hanauer has and will continue to be the owner who has the most influence over the direction of the team.
How are the ownership shares split now?
Prior to this change, Hanauer said he owned 35 percent, Roth had 32.5 percent, the Paul Allen estate had 25 percent — which is now controlled by Allen’s sister Jody and operated by Vulcan Sports and Entertainment — and Drew Carey had 7.5 percent. The Sounders have not confirmed how Roth’s shares were divvied up, but Hanauer did say he and Carey both increased their percentages. It’s been speculated that Hanauer may have actually moved to acquire 50+1 percent of the pie, which would make it impossible for anyone to seize control of the team without going through him.
I heard something about $58.5 million being exchanged.
Yeah, quality sleuthing by GeekWire on that one. They found an SEC filing for “Seattle Futbol LLC” that showed an offering for that amount. It appears that’s the amount of money the new owners spent to buy into the ownership group.
Someone really good at math must be able to figure out what the Sounders are worth, right?
If you knew exactly what percentage was purchased, you wouldn’t even have to be that good at math! Alas, we don’t know that very important variable. Forbes estimated that the Sounders were worth $310 million in 2018. If Hanauer really increased his holdings by 16 percent — which would give him a true majority — this offering would have placed the Sounders’ value at about $360 million. However you get there, a source indicated that valuation is at least “in the ballpark.”
What does this mean for spending going forward?
As Hanauer said during the press conference, “there is no new pot of money,” so we should not expect any massive changes in direction. The money these new owners spent to buy into the Sounders effectively went to Roth, who likely saw his investment multiply at least 10-fold.
Should we be worried about the Sounders spending less?
That doesn’t seem to be of particular concern, either. If saving money was their goal, Hanauer and Carey probably wouldn’t have bought more shares. But beyond that investment, Hanauer teased some “exciting announcements” to come in the summer.
What might those be?
Hanauer half-jokingly suggested some more owners may be announced. I don’t think that’s the kind of announcement he was speaking about, though. More likely, he’s teasing a training grounds announcement. Beyond specifically talking about that possibility during the press conference, the Sounders have also been promising an announcement along those lines sometime in the relatively near future.
Is that really the top priority?
It depends on how you look at it. When the Sounders moved into Starfire ahead of the 2009 season, it was among the best training facilities in MLS. But with new teams coming in almost every year and existing teams building newer facilities, the Sounders are probably no better than the top of the bottom third in that regard. A refurbished Starfire — or an entirely new facility — could put the Sounders back into the training ground elite. But beyond the status that comes with fancy training grounds, there are both the hard and soft benefits. The soft benefits are things like recruitment. The hard benefits are things like increased revenue opportunities like selling the naming rights or renting the space for tournaments.
Any other areas for improvement?
While the Sounders may not suddenly have a lot more money, the new owners bring a host of new ideas and connections. Since the Sounders are already operating essentially as a break-even business — and don’t seem inclined to veer from that path — finding new revenue streams is probably more important than finding owners willing to leverage their personal wealth for good of the fanbase (or personal glory). Hanauer seemed genuinely excited about doing just that, painting a picture of the new owners helping boost revenues by a rather modest sum of $4 million per year, which amortized over five years could pay for a $20 million player investment.
What about a new stadium?
Hanauer has made it known that to the degree all teams would ideally have their own stadium, he would love to have the Sounders playing in a soccer palace on par with the great teams of the world. Last year, renderings apparently commissioned by the Sounders even leaked. But Hanauer is also quick to point out that there are a lot more positives about CenturyLink Field than there are negatives, noting the location, access and amenities (even if Sounders fans don’t get to enjoy all of them). The biggest complaint about CenturyLink might be the lack of grass, something Hanauer brought up — unprompted — as a possible improvement down the line.
Hold up, GRASS?!?
Yeah, don’t hold your breath on that, but Hanauer would clearly like it to happen at some point and I’m sure he’s aware that a permanent natural playing surface would make securing a World Cup hosting right far more secure.
Speaking of stadiums, was there really anything to the possibility that new owners might try to move the team?
Myerson seemed to raise that specter in a blog post about the process behind assembling the group of owners. Hanauer, however, suggested that was never a particularly acute concern. In fact, Hanauer said that while there were other groups of non-locals interested in buying Roth’s stake — and possibly even more than that — he felt they all shared his vision of what has made the club great.
All right, level with me ... Is this change good?
For me, I think it comes down to this: If you’ve liked the way the Sounders have operated during their first 10-plus seasons in MLS, you’ll probably be happy going forward. Hanauer is even more invested in this team — both literally and figuratively — than he ever has been before. He wants to win as bad as anyone. But if you were hoping for some ultra deep-pocketed billionaire to seize control of the team and start using it as their personal vanity project, you’re probably a bit bummed.
Beyond the money, though, I’m genuinely excited at the prospect of having owners who are as invested in this team and the community as the fans are. Hanauer made a big point of saying how the new owners never talked about things like prospective return on investment, and were far more focused on being part of an exciting project. Hanauer insisted that each of them were already fans of the team and were enthusiastic about playing a role in taking it to new heights.
To some degree, we simply have to take Hanauer at his word. But nothing heard during the press conference or in off-the-record conversations afterward gave me much cause for concern. Time will tell, though.