Catching up with former Independence owner David Halstead

Former Philadelphia Independence owner David Halstead has kept a low public profile since the team and Women's Professional Soccer as a whole went under in January of 2012.

But he hasn't lost his interest in the sport, and just as importantly, he hasn't forgotten the experiences he had trying to help the sport become sustainable.

In the wake of the United States winning the Women's World Cup this summer, there has been a renewed blossoming of attention paid to women's soccer. That has led to a clamor for the National Women's Soccer League to expand, both from fans and potential owners in interested markets.

What does it take to make the pieces come together in reality? I reached out to Halstead recently to get his perspective. I wasn't sure I'd be able to get a hold of him, because I hadn't talked to him for a while. It turned out to not be too hard, and Halstead had plenty to say.

Here's the nut graf, to borrow from the journalistic patois: Running a women's soccer team is not easy, not straightforward, and not cheap, no matter how hard you try to make it any or all of those things.

That is well-known to many people in the WoSo community, of course. But you don't have to look far to people who see it as an abstract matter and not a concrete matter. Halstead saw it all firsthand. And for as much as he tried to prepare for what he was getting into, there was still only so much he could predict.

"I learned a thousand things," he said. "Any time you have a new undertaking, a new business - it takes probably two or three years to settle in and figure out what kinds of infrastructure you need, and how the business ought to operate in a viable, optimal manner where you make revenue and things like that… For me the WPS was no different. You can only do so much due diligence and pro forma analysis, but at the end of the day, it's boots on the ground and how are you going to connect to the community and things like that."

Halstead repeatedly emphasized the importance of connecting with the community in the course of our conversation. The Independence certainly did that, from marketing to local youth clubs to giving the Sons of Ben a dedicated seating section separated from families with young children.

"All the owners, coaches, players, partners, [they] all have to work together to connect to the community, to the fans, to the sponsors to get ticket sales," Halstead said. "Media is a huge important role in all this, youth programs. So all this stuff has to come together and there has to be a willingness to over time allow this to mature and cultivate."

Unfortunately, even if there was willingness, there wasn't always time. Because WPS didn't have a lucrative television contract - like the WUSA before it and the NWSL now - the Independence's main source of revenue was ticket sales.

You might have expected that last sentence to say corporate sponsorship. It didn't. And by the way, for a long time it was the case for many Major League Soccer teams too.

Halsted also noted that "everybody talks about youth programs, but youth programs and merchandise aren't heard huge income earners."

The biggest expense, of course, is player salaries - especially those of U.S. national team stars. Add that to travel, food, medical and front office staff, and you have an expenses estimate. From there, you project the number of tickets and sponsorships you have to sell.

And if those projections don't come true, well, you can guess what happens next.

"I give these guys a lot of credit that are doing the NWSL now, but for women's soccer, they've got to find that balance between a viable business model and putting great play on the field for the fans," Halstead said. "That's been a tough challenge, meeting both of those needs. But I think the owners and the league need to on the same page about the road ahead in terms of player salaries and player expenses…  There's got to be agreement on what kinds of revenue thresholds and revenue expectations are there and what kinds of expenses you are going to have."

Soon thereafter, and without any prompting from me, Halstead turned to the player whose arrival in WPS might have singlehandedly sunk the league: Brazilian superstar Marta.

The Los Angeles Sol signed her in 2009, and the league - which controlled all contracts, as MLS does - agreed to pay her $500,000 a year for three years guaranteed - some 15 times greater than the average league salary of $27,000. That meant if a club couldn't afford the money, the league office was on the hook.

After the 2009 season, the Sol went under. There was a dispersal draft ahead of the 2010 campagin, but everyone knew Marta was headed to FC Gold Pride, the Bay Area's WPS club. That duly happened - and Gold Pride bit the dust after the season ended.

For 2011, Marta moved to the Western New York Flash. Her salary wasn't made public, nor was just how the Flash afforded it, but no one believed she took a huge pay cut. And when that season ended, WPS went out of business entirely.

Marta's salary wasn't the only factor in all those collapses, to be sure. But no one I know - Halstead included - thinks it was all just a coincidence.

"Does that mean you can't get Marta and you can't get the highest-paid players in the world because you might start out slower? Yeah, that might be just what it means," Halstead said. "But I think the NWSL is doing a better job of balancing that than we did."

The phrase that comes to mind is one of the most famous, or perhaps infamous, in the American women's soccer lexicon: business model.

You may have heard that the WUSA's business model was an epic disaster. Despite major backing from corporate conglomerates such as Comcast and Discovery Communications, the league smashed through its $40 million budget for its first five seasons well before the inaugural campaign was finished. t remains alleged to this day that the first season's budget was toast even before kickoff.

In the end, the league spent over $100 million in three years before going under.

"I think they believed it would take off and be very successful very quickly, and their tolerance was about three seasons," Halstead said. "In our case, we weren't that optimistic and we felt like if we could get through five years and get some stability, where we had the teams on the east coast and the west coast... we saw some stability in the model and we saw some upward increases in the expansion dollars that would eventually go back to the owners. And we just felt like if we could do that for five years, it would take off and we'd be okay."

WPS did a better job of balancing its books, but it too ultimately collapsed for financial reasons too. It didn't help, of course, that its final year was marred by a nasty lawsuit involving the league and the late, notorious magicJack SC owner Dan Borislow. But that wasn't the only factor.

"In my head, I went into it thinking a three-to-five-year business plan expecting losses, and of course I was hoping for closer to three than five," Halstead said. "We had five or six things that I think killed our league - a perfect storm."

He went on to elaborate about what some of those things were:

I think there were just some things that we couldn't keep a lid on. We had a fair amount of instability at the league level. We lost a couple of commissioners within 18 to 24 months of each other, which I think harmed our relationship with the U.S. Soccer Federation - which was already a little bit tricky.

The owners wanted the national team players in our camps to help sell tickets, and the national team players were not in our camps yet we were still paying their salaries. We had contracts with all the national team players where we were paying them - certainly in Philly, our largest salaries were going to national team players, yet they were gone a lot and that was problematic.

The relationship with U.S. Soccer was a little tricky, and then as teams started playing in smaller stadiums and asking for exceptions to some of the classic minimum Division I standards, things got a little more difficult. That was going on with U.S. Soccer. We were losing some leadership at the league level, [and] we kept losing teams.

We lost the L.A. Sol right off the bat, and we lost the Bay Area team [FC Gold Pride], and then St. Louis and Chicago. It was just one team after another, and that was chipping away at the confidence [about] expansion, because we had an active expansion committee.

We were talking to Houston, Dallas, a number of cities around the country and telling them what the model looks like, and it is a viable opportunity, and we're increasing attendance and media presence.

Then you pick up the paper and see that another team had folded. We lost the momentum that we had with the expansion [that brought in Philadelphia and Atlanta in 2010 and Western New York in 2011] and then the whole Borislow thing was a real tough thing to get around. Once that litigation started, all the difficulties that came with magicJack, that was just another thing we had to overcome. Add to all of that owners sitting around the table frustrated that we're all sitting around the table taking losses [and] not knowing when things were going to turn.

We were just on a treadmill that we couldn't get off of, and we had some pretty big animals that were trying to push us off that treadmill.

Halstead has made his career in financial management consulting, so he is fluent in the language of economics. And he knew, as he said, that he was going to lose money for a while in WPS before making any back. But as I wrote earlier, there are some fixed costs that you can predict before figuring out what costs are variable.

So I asked what portion of the costs in his three-to-five-year projection was fixed, and what portion wasn't. You can be sure that many potential NWSL investors are going through the same analysis right now.

"I would say that like any business that is selling entertainment or its people, essentially what we're selling is the players on the field, and we can't really run our business without the players," Halstead answered. "If you can get your arms around what kinds of player salary caps or ranges - you're going to pay every player within this range, times 20 players - then fringe benefits, health insurance and workers comp, if you can get your arms around within a 10 to 15 percent range, everything else is an offshoot of that."

Another big fixed expense is stadium rental. Do you go for the prestige of a Major League Soccer venue, even if it means paying more and having a crowd potentially surrounded by empty seats? Or do you spend less on a smaller venue that's more likely to sell out, but might have less public recognition?

It's no secret that Halstead and the Independence would have loved to play regularly in PPL Park. Indeed, Halstead said the Union "gave us huge cuts on using PPL Park the times that we did." But it wasn't feasible to have every game there.

"You make expectations on revenue from ticket sales and sponsorships - things like stadium, what you're going to pay your coach, insurance, back office staff, there's a lot of discretionary fudge in there," he said. "Back office staff, if you have a few more dollars, you can pay a little more, have more experience and have fewer interns."

With regard to sponsorships, I asked Halstead what kinds of efforts the team and the league made to sign deals that could help defray expenses. He said that happened, noting that Premier Health and Orthopedics was the team's jersey sponsor and official medical provider.

But it wasn't always easy to strike deals for a team that was starting from scratch. Some negotiations succeeded, and some didn't.

Notably, there was no big sponsor at the club or league to help with another really big cost: travel. Major League Soccer and many of its clubs have deals with airlines, and the U.S. Soccer Federation counts Marriott as one of its marquee backers.

That's the case with the NWSL too. Would Alex Morgan's Twitter broadside about bedbugs at the hotel for visiting teams in Kansas City have happened if the NWSL had a sponsorship deal with Marriott?

Halstead wanted to give the players the money and benefits that they wanted - not just better salaries, but insurance, transportation, housing help and other things. But he didn't have the resources to do it.

"In Philadelphia, I grew to care about those players a great deal," he said. "I felt like they tried to connect us to Philly, and they did everything they could, and I wanted to give them what they wanted and what they deserved. But it would have all been right out of my pocket, because it was a situation where we were still losing money and not making enough to anywhere near cover our expenses."

That is the cold, hard reality of life in the women's soccer realm. Halsted knew he was going to lose money. It was, as it remains to this day, a question of how much and for how long.

"Will the owners see trends of positive business moves and economics that make them want to continue to sit around the table and suffer those losses because they see upward swings, and more attendance, and sponsors opening their pockets, and they see players with reasonable expectations for salaries?" Halstead said. "Then they stick around say, 'Okay, this is going to be a viable business.' "

Toward the end of the conversation, we turned to the what-if questions. First up: What if WPS had the same arrangement to pay U.S., Canadian and Mexican national team player salaries that the NWSL has?

Halstead didn't go so far as to say that would have saved his team or league, but it obviously would have helped.

"When you figure out how much money you're going to spend on your player budget, I would say probably three or four or five of those slots are big numbers for your [U.S.] national team players, and then everybody else is significantly less," Halstead said. "Certainly, there is a wide gap between your senior national team players and your other roster players. And the internationals are somewhere in between."

He added, though, that in hindsight he could have helped himself in ways he didn't realize when he brought big names such as Heather Mitts and Amy Rodriguez to his team.

"I should have been a little bit smarter in how I negotiated my player contracts," Halstead said. "Amy Rodriguez, her agent said she demands this much salary to play in WPS, I said okay.... I should have done a better job of in the contract stating specifically that if the national team player leaves for national team commitments, the U.S. Soccer Federation makes that money up to me or I'm not responsible for paying the player when I'm not there."

He added that other NWSL teams had such clauses in their player contracts, specifically naming Western New York, Chicago and Boston.

My next question was whether it would have made a difference if MLS teams were as directly involved in running WPS clubs as Portland and Houston are in the NWSL. Halstead left no doubt about that.

"If you can partner with a mature MLS organization, that's going to save you so much stress and energy," he said. "You can focus on selling tickets for the women's game and not doing all this other stuff you have to do as a new enterprise... They need to do anything they can to connect to the community, and in the markets where there's MLS they ought to try to do it."

Halstead said he could and should have done more to partner with the Union, though he acknowledged that it wasn't so easy early on because both teams were so new.

"I should have spent more time with the Union rather than thinking of the Union the way I thought about other independent business sponsors in Philadelphia," he said. "I felt like we were starting at scratch so much that any help we could get - recognition, ticket sales, any sort of a partnership, appearing with the logo of the Independence in the Union's media guide, anything at all, I felt like helped us. It gave us legitimacy, because MLS was pretty well established and the women's game was not, and I just felt like getting in bed with MLS was something that did absolutely no harm to us, and in most areas I could think of did good for us."

He added that Union CEO Nick Sakiewicz and his staff were "very receptive and helped any way they could, but they had their own challenges too - they weren't going to write any checks or do things that disrupted their business model, but anything they could do to help, they did, and I think that was crucial."

As for the present day, Halstead said he believes Philadelphia would be a fine market for a NWSL expansion team.

"Philadelphia has a great female soccer interest and following, and they've got literally hundreds of clubs within a 100 mile radius there and they have a lot of great soccer players come out of that and then they've got some good universities in the area," he said. "There are a whole lot of folks that are soccer savvy and appreciate the game and follow the game, and then you've got the success of the MLS team there, and some longstanding businesses that are willing to back your sports teams."

The ideal ownership group, he said, "comes in and does it in a methodical way, and says we're not going to hit any home runs the first two or three years - we want to get some base hits and some doubles."

So I asked the final question, and perhaps the most important one of all: have you considered getting back in?

Halstead knew it was coming, and as with every other question I posed, he answered it straight up.

"Yeah, but only casually," he said. "I don't know that much about their business model... I'm still in contact with [former Atlanta Beat owner] T. Fitz Johnson, and here in D.C., [Washington Spirit owner] Bill Lynch, and we talk  from time to time. I've never had substantive conversations about getting back involved."

Halstead added that he's happy to consult any current or potential owners if they ask, but otherwise, he's staying on the sidelines.

"I've had some discussion with some folks involved in NWSL, and [they ask], 'What would you do differently, because we really want to make this third time around work?' " he said. "My discussion tends to circle back around to the model and connection to the community and ticket sales and sponsors... If I were to get back involved or to talk somebody else to get back involved, I'd just peel away the onion skin a lot more."

Whether he's consulted or not, Halstead wishes success for the NWSL's current owners and investors.

"I hope that things at NWSL continue to go well and they chip away and things work," he concluded. "It would be fantastic."

For him, the players, and for all of us, in Philadelphia and beyond.