Yahoo Finance’s Joe Pompliano is joined by founding partner of San Diego FC Tom Penn to discuss the expansion process, developing young talent, the future of MLS and what to expect from the league’s newest club ahead of their first season.
Video Transcript
I’m joined by San Diego FC CEO and founding partner Tom Penn.
Tom, thanks so much for joining the show today.
I think the most logical place to start is why San Diego, right?
San Diego is about to make their debut as MLS’s 30th club, but more specifically, why San Diego as a market was so interesting to you.
San Diego, perfect place for soccer, always has been, scores off the charts in terms of participation and excellence.
I mean, everybody plays soccer here, the weather’s perfect, and then we’ve produced a disproportionate number of national team players and stars coming out of this market.
So the talent base is here.
San Diego, as many people know, is jammed right up against the border with Tijuana.
It’s really a blended community.
So you’ve got this Mexican culture influence, unlike anywhere else in the country.
And then it scores off the charts, uh, demographically, right?
There’s 3.3 million people, and there’s only one major men’s team, the Padres.
Since the Chargers left, nothing has filled that void, and we’re here to do that.
You put all that together, Joe, and that’s why MLS has always been interested in this market for 30 years.
Just couldn’t get the capital together and the stadium plan together, and it all came together for us in this uh period of time.
So I would love to talk about that process right there that you mentioned, right?
Just the entirety of an expansion process.
You go through, obviously the numbers need to work for the league to make sure that Uh, the expansion fee is appropriate for the other owners, but there’s a million other things that go into it, right, from establishing the ownership group to the stadium development, the team branding, to roster construction, everything else like that.
Can you maybe just give us a little bit of an insight into how that all that process all played out for you guys?
Yeah, it starts with 3 big things.
In order for expansion to work, you need 3 things.
First, the market, and we just talked about that.
San Diego, great market, always has been for soccer, no doubt about that.
Next is the stadium.
You need to have a tangible plan, either a real building to go into, or a believable plan for MLS to say you’re gonna have your own stadium within a really short period of time.
And then the third thing is the money.
You need to have the capital, you need to have the principal investors.
So in this case, we had the market for sure.
Then we had the stadium, because San Diego State University has redeveloped where Jack Murphy Stadium, Qualcomm Stadium used to be, where the Chargers used to play.
They won this big battle, this big bid to redo that land.
And they built a 32,500 seat venue that’s perfect for soccer.
So, we had the stadium, we had the market, it just came down to finding the investors.
And that was the key thing that took a little while.
We had from the beginning, the Native American tribes, Swan, the Native American.
Folks who have been here for 12,000 years, MLS always wants local owners.
You can’t get more local than that.
They’re not moving anywhere, they’re not going anywhere, they’re totally vested and invested in this market.
But they needed a partner and wanted a partner, and it took a while to find our way to Sir Mohammad Mansoor, a multi-billionaire from Egypt, who had invested recently in the right to dream academies across the world.
So all of a sudden you had this amazing partnership where you had a joint venture, 50/50, the Native American tribe, and a multi-billionaire from Egypt.
Crazy story.
We’ve got to take a quick break, but we’ll be back with more of my conversation with Tom Penn right after this.
Welcome back to Yahoo Finance Sports Report.
I’m your host Joe Pompeiano.
I’m here with San Diego FC CEO and founding partner Tom Penn.
So I want to talk more about right to Dream.
You just mentioned it there specifically, but I think it’s a really unique part of your guys’ bid and potentially even the team moving forward, because No other MLS team really is structured as a setup.
So for those that don’t know, right to Dream is essentially an academy structure.
They have other teams abroad, but you guys are going to be bringing players up and developing them, maybe more than other people have seen in MLS in the past.
Can you just explain why you think that offers your team a competitive advantage?
Yeah, first, in global football, those that know, you’re incentivized to homegrow your own talent for a couple of reasons.
First, you homegrow that talent from teenage years, and they’re able to sign with you as teenagers, they can’t sign with anybody else.
Second, In the global transfer market, the best players don’t get traded, they get transferred in financial deals.
So if you have their contractual rights, you sell those rights in the global marketplace, and you see a lot of those big transfers happening in Europe.
So the conceit here is that San Diego has so much talent.
If we were to invest in developing that talent, sign that talent to professional contracts early, you then get a flywheel going of major international transfers.
And what right to Dream does for 25 years, they’ve been developing the best young talent, starting first in Ghana.
So they’ve been in sub-Saharan Africa developing young Ghanaians and Ivory Coast, that whole region.
And then they went and they acquired a team up in Denmark, FC Nordland, and they’ve created this pipeline of Ghanaian and Scandinavian, African and Scandinavian kids, the best ones blended together and then being transferred on into the Premier League and all the major leagues in Europe.
They’re seeing annual 1020 $30 million transfers every year out of their system.
And Mr. Mansoor invested in right to Dream and added it in Egypt.
So there’s a right to Dream Academy in Egypt as well.
Then he said, bring it to America, cause America gets this.
So we’re doing a right to dream in San Diego that will service both San Diego and across the border in Tijuana.
In FIFA, you’re not allowed to transfer players across border until they’re 18 years old.
The exception is if you’re within 50 kilometers of an international border, you can recruit 50 kilometers over the border.
Our training facility is 48.5 kilometers from the border.
We invest now in kids 1011, and 12.
We offer them a full scholarship.
It’s a residential facility, and we offer a school.
So we’re a residents of school and the best football training all in one.
Interwoven with those other places, Africa, Scandinavia, and Egypt.
And will some of these, uh, some of these players end up playing in Scandinavia as well, or they’ll be specifically earmarked for the MLS club?
We have multiple pathways, right?
So a lot of the young best talent has left America early because they aspire to play as soon as they can in Europe.
So think of Christian Pulisic, best player in America gets over into Germany early as a team.
Uh, in this particular case, we will engage with some families, some young phenoms, and we can offer them a quicker pathway into Europe, for example.
So maybe we have one of the best American kids in our academy, and he aspires to go right to Europe as soon as possible.
So we accelerate his development through his teen years.
The other half of the story is, if the kids aren’t on a professional pathway, we support them on an educational pathway.
So, right to Dream has been sending Some of these amazingly talented Ghanaians, Egyptians, and so on, to the best prep schools in America and on to college, all on scholarship, boys and girls, it’s really a remarkable, remarkable initiative.
So the expansion process specifically in year one for a team can kind of be hit or miss on the field, core pitch, whatever you want to call it.
But off of that, are there specific benchmarks or metrics that you’re gonna be tracking to determine how year one goes from a success point of view?
Yeah, look, first is on pitch performance, right?
How’s the team gonna do?
And, you know, there’s a chance you can be good right out of the chute.
Saint Louis was, others have been.
At LAFC when I was there, we were pretty darn good, set a record at that point.
So, the team can be competitive.
That’s the first thing you’re looking for.
My other key metrics and measures certainly is revenue.
You know, everything in pro sports, the valuations are based on revenue.
People pay multiples of revenue, and you need to build the business first.
So what we look for is a robust, substantial sponsorship base, and then that ticket base.
And is the ticket base sustainable year over year so you can ride out the tough times.
That’s where contractually obligated income comes in, multi-year premium seat deals, so we’ve really focused on that in launching our club.
Is getting 357 year club seat deals, 57, 10 year ultra premium seat deals.
And then how big can we build our season ticket base.
And then the other nuance in MLS is the supporters, those rabid, fun, crazy fans in the end zone that never sit, that wave the flags, that sing the entire match.
They are the atmosphere setters, so what I have my eye on is How can we establish a supporter culture in a way that it’s impactful?
Because it gives you competitive advantage locally, but it also becomes part of your brand, part of your product.
It’s nearly as important because so many American fans come for the first time, and when you get that experience of just feeling those fans, and that emotion and that passion, it’s not in any other professional sport in America.
With the singing and the pageantry, it’s almost like college football feeling, but at the pro level without a student section.
What is your expectation for what could happen to MLS or how the product could change after the World Cup in 2026?
Yeah, I always say it’s this double booster that’s happening right now.
So we’ve got the Messi booster, now you throw the World Cup booster, and where does that rocket ship go?
So in this case, Messi is here and he feels like here to stay, and here to be here for the long haul, which is interesting as he sunsets.
What other superstars are coming behind him that are gonna be really interesting to the macro-American audience?
And then how does that World Cup capture the entire nation’s attention?
Cause there’s nothing like when it’s here, and it’s on our turf, in our time zones, in our cities to see the entire world converge and just infect us.
And then the idea is, there’s a version of that in all of our communities because MLS is rolling.
So for, it’s difficult to know, Joe, but I feel like there will be a significant boost and an uptick in overall interest and an overall relevance in America and in North America, because this is happening in Mexico.
So we’re getting more of this blend of the best of America playing against Mexico, that League’s Cup format where top 18 teams in MLS play all the 18 teams in League of Max.
And that’s kind of interesting, and the way the world gets smaller and our continent gets smaller, it’ll be very interesting to see how things develop coming out of the World Cup.
Amazing.
Well, Tom, thanks so much for joining us.
I’m excited to see how you guys do this first year in San Diego.
Welcome down here anytime.
We got a box seat ready for you.
