MLS has a decision to make on Dell Loy Hansen

A wave of backlash Thursday morning turned into tsunami by the evening for Major League Soccer, as incendiary comments from Real Salt Lake owner Dell Loy Hansen sparked calls for him to sell his interest in MLS, threatening his standing as an owner in the league.

By the end of the day, MLS had opened an investigation into alleged racist comments by Hansen based on a report in an article in The Athletic. The story documented numerous alleged racist interactions between Hansen and players of color.

Earlier in the day, Hansen sparked a separate backlash based on his comments in response to most of Wednesday’s slate of MLS games being cancelled. Sports across the country were postponed as the shooting of Jacob Blake by Kenosha, Wisconsin police sparked protests and rioting. During those same protests, a white shooter, Kyle Rittenhouse, was arrested for shooting three protestors, killing two. Rittenhouse was peacefully arrested by authorities in Illinois the next day.

The decision to cancel the games did not sit well with Hansen, who complained about losing revenue from the fans that were to attend. Hansen stated he would not allow fans at future games and implied he would have to fire 40-50 employees as a result of the postponement.

Adding more fuel to that initial brush fire, Hansen complained that the postponement was a personal affront to him. “The disrespect is profound to me personally,” Hansen said. “It’s taken a lot of wind out of my sails, what effort I want to put into recruiting players and building a great team. It just seems that’s not a very good path to take.”

As the brush fire turned into a five-alarm blaze — players swiftly called for him to sell the team — Hansen sought the friendly confines of a local radio show (on a station he owns) to explain himself. His success at damage control was debatable, but just as Hansen was done trying to clean up one mess, the other shoe dropped in the form of The Athletic story. The details are disturbing, the allegations damning. Almost immediately after the story published, the MLSPA called for Hansen’s immediate suspension, and the league launched an investigation.

So where does the league go from here?

MLS has previous experience with owners who have outlived their usefulness. In 2014 the league shut down operations for Chivas USA — an expansion franchise born in 2005 — due to dwindling attendance and alleged mismanagement by its primary investor-operator Jorge Vergara. Shortly after the league purchased Chivas, the LAFC ownership group became an expansion team. The MLS Constitution does outline how the transfer of ownership interests can be facilitated.

The Constitution ironically enough had never seen the light of day until it was disclosed in a lawsuit involving Hansen, RSL and former head coach Mike Petke. Petke was suspended and ultimately fired after making alleged racist comments towards referees after a Champions League game in 2019. Petke claimed a breach of contract and defamation by Hansen, among other complaints, though that lawsuit was ultimately settled after it was sent to binding arbitration.

The process for transferring ownership in and of itself isn’t particularly complicated as far as these things go, but it assumes that there is a willing buyer and seller. In this case, Hansen may not be willing to go quietly into that good night. If he isn’t, MLS does have a safeguard.

Initially disclosed in the 2002 Fraser v. MLS lawsuit contesting free agency, the MLS Constitution spells out how the league can force an owner out for cause.

D. Termination. Each Operating Agreement provides that, under certain circumstances, the Board of Governors may, by a vote of at least 75% of the ownership percentages of MLS, terminate the Operating Agreement or an Owner’s Ownership Interest in the Team Operator, including, for example, upon a determination by the Board of Governors that the Team Operator or any Owner has failed to act in the best interest of the League. Generally, in the case of any such termination vote, the Team Operator or Owner will first be given six (6) months to consummate a sale of the Team Operator’s assets or the Owner’s Ownership Interest (as applicable), after which MLS will be entitled to consummate such a sale to a purchaser approved by the Board of Governors at such price and on such terms as the Commissioner deems reasonable and appropriate. Further details on the circumstances permitting termination and the related procedures and remedies are set forth in each Operating Agreement.

That three-quarters vote by the Board of Governors was increased from a two-thirds vote at some point between 2002 and 2019, but it does provide the league with a relatively simple mechanism for terminating someone’s ownership interests. MLS, as most know, is a single—entity league where the members “own” a percentage of MLS LLC, and operate specific teams.

But simple doesn’t mean easy.

Hansen has been an owner in MLS since 2009, when he purchased a 49% interest in RSL, before buying the rights fully in 2013. He undoubtedly has fostered many relationships with his fellow MLS owners, and — more specifically to Salt Lake City — is a powerful figure, having developed a massive training facility, and moving a NWSL team into town as well. Don Garber’s initial statement lavished praise on what he believed were Hansen’s good works.

That statement seems ill-advised in the wake of The Athletic story, especially given the space dedicated by the league to matters of racial and social justice. The league was seemingly happy to take credit for postponing the games (though the players took issue with the size of the slice the league took). And it should be noted that MLS ownership has gotten a fair bit more diverse in recent years, with the likes of Russell Wilson, Kevin Durant and James Harden investing into the league.

Given the allegations in the Athletic piece, and Hansen’s apparent self-immolation on the radio — twice — the league would likely do itself some favors to expeditiously and transparently complete its investigation, with all due process afforded. And if the allegations are confirmed, well, Hansen will likely have to make do with all of his other business interests in the Salt Lake area.