Niyo: Detroit City FC offers piece of ownership to its supporters
Detroit City FC isn’t for sale.
But the local soccer club’s diehard supporters officially can claim ownership of the club now for a small fee.
One of the great success stories in American soccer is borrowing a page from the Green Bay Packers’ playbook — and following the lead of Chattanooga FC, a fellow member of the fledgling National Independent Soccer Association — by offering up a limited equity stake of the club to fans.
With Detroit City FC’s inaugural season of professional soccer derailed by the coronavirus pandemic almost as soon as it started this spring, team owners were faced with a seemingly impossible juggling act, balancing a nearly $2 million operating budget with what club co-founder and CEO Sean Mann says could be revenue shortfalls of up to 80-90 percent in 2020.
But in the midst of what Mann described as a “perfect storm” back in late March, the grassroots club may have found the perfect solution.
A year ago, Chattanooga FC — looking for an infusion of cash to make the transition to pro soccer — raised more than $850,000 through sales of public stock, becoming the first U.S. sports team to do so since securities reform laws were passed in 2016 to allow it. (The NFL’s Packers, with more than 350,000 shareholders, haven’t held a stock offering since 2012.)
Now Detroit City FC, a limited liability company with a half-dozen local owners, including a recent addition this summer, is offering up 10% of the equity of the club to fans in a similar sale, using the crowdfunding investment site WeFunder to allow fans and the wider soccer community a chance to buy a piece of Le Rouge.
Detroit City FC “units” — an LLC can’t issue stock — go for as little as $125, and the club also is offering its 2020 season-ticket holders the opportunity to convert those already-paid fees into a unit, in lieu of a refund or a credit toward 2021 season tickets. (No crowds are expected for the club’s abbreviated match schedule at Hamtramck’s Keyworth Stadium the rest of this summer, but Mann says fewer than two dozen of their 1,700-plus season-ticket holders had requested refunds to date.)
This crowdfunding campaign is scheduled to run through the end of the year but is capped at $1.2 million. There are perks, ranging from Detroit City FC art prints and scarves for a $250 investment to access to an owners’ suite on the field at Keyworth for the $50,000 maximum.
The club, which has a season-ticket base of about 2,000 and averaged more than 6,000 fans per match in 2019, will kick off a creative advertising campaign this weekend. It’ll begin with an old-school telethon using improv artists from Detroit’s Planet Ant Theatre during the team’s livestream broadcasts of its preseason games at Keyworth. A Lafayette American marketing campaign also will be featured on billboards around Metro Detroit. And since WeFunder requires a “lead investor,” DCFC has enlisted a rather famous one in Detroit rock icon Iggy Pop, who also is doing voiceovers for the club’s commercials.
“He will be kind of the spiritual embodiment of our community owners,” Mann said.
Strength in supporters
But the true spirit of Detroit City FC always has been found in its supporters, beginning with the Northern Guard, a raucous bunch that marches to games and fills Keyworth with tifos and smoke and song. They also have deep roots in the community, much like the club itself, which has enjoyed steady growth since its 2012 debut.
In 2018, Detroit City FC opened a 75,000-square-foot indoor facility that serves as the club’s headquarters, features a bar and restaurant and hosts adult and youth sports leagues. And with the club joining the professional ranks, ownership was projecting 25-35% revenue growth again this year, thanks largely to an extended season with spring and fall schedules.
Each home game brings in roughly $100,000 for the club, but with the NISA season suspended less than two weeks before the home opener back in March, the club was forced to get even more creative as it looked to solidify its short-term financial future.
“Obviously, for any business, that’s a huge blow,” Mann said of the lost revenue. “We’ve done our best to navigate, cut costs where we can, and we’ve been as strategic as we can. …
“But the community campaign is the way that we’re gonna be able to make sure we have the financial footing to get through this. It’s an opportunity to leverage our biggest asset — the fans — and ensure we have the resources to not just survive for the foreseeable future with limited crowds or no crowds, but also to build and hopefully grow coming out of it.”
It starts at home
Some of the money raised may be used to bolster the revenue-generating staff on the sales and marketing side. But most of it will be earmarked for capital improvements, including new concession areas and permanent bathrooms at historic Keyworth Stadium, the club’s renovated 85-year-old home that is owned by the city of Hamtramck. Those are things fans have been asking for, and now in the age of social distancing they’re even more of a necessity moving forward.
Even in its current state, though, the stadium is a testament to strength of Detroit City FC’s support. Four years ago, the club raised $725,000 through a community-investment campaign to renovate Keyworth. And earlier this spring the club announced it had finished paying off those nearly 500 investors — two years ahead of schedule with a 13 percent annual rate of return
This campaign is different in a couple key respects. Thanks to changes in federal laws, it’ll be open to investors across the U.S. and internationally, allowing Detroit City FC to tap into relationships built through the years with European soccer clubs and their fans. But beyond that, “this is permanent,” Mann said. “This is having an ownership stake in the club.”
And while it won’t give investors a vote in the club’s finances or day-to-day governance, the current owners say de-facto shareholders will have a voice, whether it’s deciding charity partners, setting stadium policies and so on. As Mann describes it, “It’s having a more direct line into how the club is operating and where people want to see it going.”
Still, as they brace for this uncertain future with live sporting events, it’s hard not to look back at where they were in 2011, when Mann — a former community activist and legislative policy advisor who lives in southwest Detroit — approached a handful of rec-league soccer acquaintances with a crazy idea to start their own club from scratch.
They each chipped in $2,200 to buy their way into the fourth-tier National Premier Soccer League, used grant money from Midtown Detroit to pay for goals, slapped the team logo on Nike training shirts and drawing a crowd of just over 1,000 fans to their first home match at Cass Tech. Now that same club is carrying a valuation of $10.8 million into this community investment campaign.
“It’s all a bit surreal,” Mann admits. “But we’re at the point where we have 6,000 fans at a game, a professional roster, a pretty deep full-time staff. So as a small business, that’s kind of a realistic view of where we’re at.”
And it’s time to find out how many others agree with them.
“I think we’ve always been protective of equity because of the significance of it,” Mann said. “It was always about finding a partner that we trust. But we wouldn’t be where we are if it wasn’t for the supporters who put in the time and the passion for the club. So if we were gonna sell of a portion of the club to anybody, they’d be the most worthy recipient by far.”