SUM’s $5 Million Offer to Purchase New York Cosmos IP Comes to Light, Raises Questions
In the NASL’s most recent filing for injunctive relief against the United States Soccer Federation, current New York Cosmos owner Rocco Commisso claimed that Soccer United Marketing – a partnership between Major League Soccer and its regulatory body, USSF – attempted to buy the club to “with the intent to terminate the franchise and eliminate the organization as a competitor.” Commisso’s allegation was first reported on by Brian Straus of Sports Illustrated. The full offer from SUM was later made public on Twitter by Miki Turner.
NASL filing: Commisso testifies SUM made $5M Dec offer for Cosmos "w/ intent to terminate franchise and eliminate the org as a competitor" pic.twitter.com/v7uFiUXlpg
— Brian Straus (@BrianStraus) October 24, 2017
#NASL v. #USSF: SUM tried to acquire Cosmos for $5 million. Long night of reading ahead. pic.twitter.com/CJeTLhZXDM
— Miki Turner ⭐️ (@turneresq) October 24, 2017
For the average fan, it’s a lot to digest, but there are a few big points worth noting. First, Soccer United Marketing would be acquiring all of the assets listed, not sending them to the U.S. Soccer Hall of Fame. This is an essential distinction as negotiations during the 2016 off-season stated that the USL’s term sheet to essentially absorb the NASL last offseason insisted that all NASL-related IP would be transferred to the Soccer Hall of Fame, and not kept by said clubs. Second, the agreement requires that New York Cosmos, LLC not operate a soccer team in the MSA for a period of 10 years following the agreement to “avoid consumer confusion in the marketplace”. Third, the agreement forbids New York Cosmos, LLC from publicly disclosing the sale of the intellectual property to SUM.
Additionally, it’s worth noting how wild the timing of the offer from SUM is. The morning of the e-mail sent from Jon Patricof, December 15th, Seamus O’Brien, then owner of the Cosmos, was set to accept an offer from GF Capital Management, a private equity firm, for $3.5 million. The offer would have shut down the brand and the team. The night before O’Brien, then owner of the Cosmos, was contacted by Commisso about possibly buying the team. The two men would meet for 12 hours on the 15th, eventually reaching a deal for the club.
Commisso has alleged that SUM intended to eliminate the Cosmos as a competitor and called this a move to kill the club. While the agreement certainly would have killed New York Cosmos, LLC and the club’s participation in the North American Soccer League, the intentions become more muddied upon further inspection. What would Soccer United Marketing do with the Cosmos intellectual property and no team behind it? Further, why was the intellectual property worth $5 million?
It may be helpful to first look at what Soccer United Marketing actually does, outside of broadcasting deals. SUM currently offers partnerships, but the “authentication” arm of SUM seems to be a bit more interesting. Soccer United Marketing offers “to authenticate your products with the Official Marks of Major League Soccer, The United States Soccer Federation, The Mexican National Team and other top clubs in the world”, as well as “allow fans to show the depths of their passion and loyalty through the products they purchase every day.” Further, the email was sent by NYCFC President Jon Patricof and copied to MLS Deputy Commissioner Mark Abbott. Abbott, who also is MLS’s President, “leads a new business development group to address new areas of opportunity for the League and Soccer United Marketing” according to MLSSoccer.com.
This raises the question of whether Soccer United Marketing and Mark Abbott are primarily focused upon the business of fostering and growing intellectual properties rather than the sport itself. This creates the possibility that SUM would purchase the Cosmos IP and use it for a rebrand of NYCFC, merchandise, or other marketing opportunities instead of fielding a unique team. With the head of MLS and SUM, Don Garber, stating numerous times (either genuinely or out of respect) that the Cosmos were a great brand, it would make financial sense to bring the Cosmos brand into the marketing umbrellas. This again raises the questions of why MLS and the SUM partnership seemed to find more value ($5 million, to be exact) having the brand and IP under their umbrella, than on the shelf of a private equity firm.
While there is nothing illegal or conspiratorial about approaching a brand on life support about a possible purchase, the SUM offer may prove to be one of the most controversial filings to come out of the NASL’s case against USSF.
The NASL’s motion for a preliminary injunction will be heard in civil court on October 31st in Brooklyn.