Women's Soccer News: Uncertainty is a killer when you are running a business

Only a few weeks ago the Women's Professional Soccer (WPS) was in Kansas City holding their annual draft at the NSCAA.  The women’s professional game seemed to be moving forward. Then yesterday there was this bombshell announcement that WPS would suspend the 2012 season. What happened?  Women's soccer is not just a sport, it is also a business, and the WPS experienced growth issues as well as litigation and has asked for a timeout.

One of the unspoken questions that has circulated has been how could this happen? Was this provoked by the litigation with magicJack’s owner Dan Borislow? How could the disruption of professional women’s soccer in America have been avoided? 

Most people quietly thought there was fighting and dissent on the WPS Board, but Philadelphia Independence Owner, David Halstead set the record straight when he clearly stated that there was no fighting among the owners.  magicJack simply violated enough rules and that the WPS terminated the team. Halstead probably said it best when he told media this morning, “I admire Dan Borislow, owner of magicJack’s passion for women’s soccer, we just do not see eye-to-eye on how to pursue women’s soccer in this country.”

While it is apparent that financial issues did plague the three-year-old league, Halstead said, “Business issues, over time, would have been resolved while we were playing."

On the litigation with Dan Borislow, Halstead said,” Lawyers can make a mountain of a molehill. Enough lawyers can drag the whole thing into court.” 

Were these problems with magicJack avoidable or foreseeable?  There will probably be more due diligence on prospective buyers, but how can you be certain if your partners are going to play by the rules? 

“Uncertainty is a killer when you are running a business,” said Halstead in response to the ongoing litigation and uncertainty of what the court is going to decide, but it was clear that the issues with magicJack were only one of several confronting the WPS.  With the litigation hanging over the league’s head like a black cloud, it was impossible (or perhaps impractical) to bring in expansion teams, which would have infused the WPS with new cash and offset losses as the young business struggled to survive.

Everyone should be cautious to not chalk up the suspension of the 2012 season to the financial troubles that plague soccer and in particular women’s soccer.  Every three-year-old business struggles to review financial gains and losses and restructure according to its experiences.

Halstead confirmed that it was not one specific reason but a series of cumulative issues that forced the suspension of the upcoming season.

One of the issues cited?  The three-week-long WPS sanctioning issue with U.S. Soccer.  This issue questioning whether or not the WPS could move forward clearly did not help the strength of the organization nor the ability to move forward with sponsors.

Halstead said, “It was another log on the fire. Lessons were learned.”

Clearly a smart businessman, Halstead wants to look to the model of the MLS’s Philadelphia Union and said, “I believe the Philadelphia Union is one of the best pro sports models.  I look forward to sitting down with them and asking how they have been so successful.  The MLS has been around for 18 years, and is a far more mature organization, but obviously they are making some good business decisions.”

It is clear that Halstead is most concerned at this time with his players, coaches and staff, telling the media “this is all still being processed…There are a lot of questions about next steps for the WPS but the vote to suspend was made final less than 24 hours ago. I do not think any of us thought that this would happen.”

First and foremost, the WPS position is that they have to get rid of the litigation, evidently a ball and chain that has prevented the owners from being able to move forward with the business of running a pro league.

Halstead said, “Beyond the litigation, the WPS would have made some refinements to the business model as we progressed. Retooling based on realistic data acquired from the past three seasons.” Halstead referred to an analysis of realistic paid attendance dollars, income from local sponsors, how much time is required to promote games and better aligning the budget with expenses.  For example, aligning player salaries with tickets sales.

Halstead said, “When you build a business, you figure out what your vertical costs are going to be, and along the line you make the refinements.  We are a very young and immature organization.  All three-year-old businesses are young and immature.

Halstead said, “Over the past several months, we (the WPS owners) wanted so badly for 2012 to be a success, I believe we all felt we were growing our local sponsor base and our coaches were forming the kind of rosters that would be competitive on the field.  This lingering litigation was a black cloud over our head and we did not want to throw in the towel.  We felt confident that a settlement was going to come to fruition.  Sometimes your passion and desire rationalizes your pragmatic behavior.  But we couldn’t wish it away.  The talks in Florida were not moving in the direction we needed. It is no secret that we needed expansion teams to come into the WPS.  There were things that started to hit us, and in the end we came to terms with the realization that we needed to retool.

The WPS will be suspended for ten months and Halstead reminded us that this time is going to go by really really fast..

While some WPS teams are actively seeking to play this season, if possible, and are exploring options to play in the W-League or the WPSL, the Philadelphia Independence looks to retooling.  Halstead has not been back in Philadelphia since this news was announced and said “I am not making any decisions until I speak with Paul Riley. I trust Paul.”

“I want to sit down with a spread sheet and see how we can make this work. I am really focused on the business side.  It sounds easy to bring all the players to the minor league.  But there are a lot of expenses to review.”

What should fans and sponsors do?  Not give up. Show their support for women’s soccer and these pro teams and provide them with the time they have requested to make women’s soccer stronger and better than ever.

Most important are the dreams of all young girl soccer players. Today, they are waking up asking why isn’t there a professional league for me to play in?  I want to grow up to play pro soccer. America owes them more than this.  And it is not just up to the owners, it is up to all of us to support soccer – for instance, attend games and sponsor teams. We all need to do our parts to give our young players the future they deserve.