FILED: NEW YORK COUNTY CLERK 05/11/ :18 PM INDEX NO /2018 NYSCEF DOC. NO. 31 RECEIVED NYSCEF: 05/11/2018

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2 SOCCER PLANET FUTBOL Last-Gasp Meeting to Shape Future of NASL-and U.S. Soccer's Club Landscape Q UICKLY U.S. Soccer denied NASL Division 2 sanctioning for Now the league is scrambling to stay afloat, keep high-profile members from leaving and present a path to a sustainable future. By BRIANSTRAUSSeptember 14, 2017 The U.S. Soccer board wasn't convinced two weeks ago that the NASL had a viable plan to meet the standards established for second-division professional leagues. So this Friday in New York City, where the federation denied the NASL's request for 2018 sanctioning in a September 1 vote, owners will gather and attempt to come up with one. They'll They' need to find a path they can go down together-and â one that entices others to join them-before â convincing the USSF to consider reversing its decision. The fate of the seven-year-old league hangs in the balance. Multiple sources confirmed Friday's meeting to SI.com and through conversations with executives connected to the NASL, USL and U.S. Soccer, a picture of the complex, sometimes controversial sanctioning process took shape. Most declined to speak on the record. An NASL spokesperson referred to a statement released last week, which read in part, "The NASL is disappointed with the [USSF] decision and does not believe that the federation acted in the best interest of the sport... the NASL remains committed to growing the game and is exploring multiple options as it continues planning for the future." Launched in 2011 following a split in the league that became the USL, the NASL has been about ideology as well as soccer. It's an eight-team circuit that advocates for selfdetermination and independent clubs and bristles at the stricter, more centralized structure of MLS and the USL (which are partners) ~There are those who feel the federation's current standards, which were established in 2014 and dictate minimums league members must meet in order to achieve a specific sanctioning level, are part of the problem. Perhaps at this point in American soccer's they' evolution, re arbitrary or even unnecessary, they argue. Those arguments, however-the â ideological ones-will have to wait for another day. In order to have them, the NASL must survive. And without second-tier sanctioning, it's in serious trouble. Sponsors, TV partners and segments of the media and fan base do care about division designation, and owners believe it impacts their asset's value and appeal. â Falling to D3-U.S. Soccer likely would be amenable to such an application-isn't â going to be a well-received option in the NASL board room. So, they have to find another way. The USSF handled the sanctioning issue last winter by offering provisional D2 status for 2017 to both the NASL, which didn't have enough teams (12), and the USL, which moved up from D3 but still has members that didn't meet every piece of criteria (stadium/field size, coaching licenses). By August 15, each league had to submit its D2 plan for 2018-the â federation didn't want to leave teams scrambling again by waiting until the last minute. 1/4

3 The USL has 30 members currently and will comprise at least 33 next season. And there are instances (around 20 or 21 according to a source) where several clubs don't don' meet every D2 standard. For example, the Charlotte Independence must expand their new facility in suburban Matthews, N.C., to hit the 5,000-seat minimum. But the issues appear to be manageable, and on September 1, U.S. Soccer gave the USL 30 days to provide a plan to resolve each waiver requested. At worst, a non-compliant club can drop to the third-division league USL plans to launch in The NASL's issues are more significant. Second-tier leagues must field at least 12 teams (in three time zones) ~The NASL had eight this season, and even though it has commitments from expansion outfits in San Diego and Orange County, California, for 2018, there are questions about the viability of several current members and the longterm commitment of others. U.S. Soccer did not believe the NASL offered a clear plan for 12, and the timeline discussed-three â years, according to a source-was unacceptable. Last winter, the federation's pro task force didn't see a way forward for the NASL, which lost teams to both MLS and the USL, and recommended that the board vote against D2 sanctioning. Instead, the USSF granted provisional seconddivision status with the understanding that a defined, actionable plan to resolve issues must be in place this summer. In the USSF's eyes, there was no such plan at the end of August. Necessity is the mother of invention. Owners felt the need to retain greater control over their own teams back when the NASL was formed, and now they must be bold in order to save it. Although U.S. Soccer didn't offer an official lifeline or a path back to D2 sanctioning in 2018, the NASL is going to try to hack one out anyway. Getting the USSF to reconsider will require fielding 12 teams, and on Friday in New York, owners and NASL officials will lay the groundwork. With D2 status previously in limbo and now, for the time being, revoked, it's tough to entice new teams. Minor league soccer isn't exactly a guaranteed money maker to begin with. So the NASL has to find a way to remain intact in the interim while reducing the risk for new investors who might be on the fence. The former isn't a given, especially since exit fees exist only if the league maintains D2 sanctioning (it's (it' unclear when that officially expires). The New York Cosmos and Miami FC are true believers. They have no interest in joining the USL and were excluded from merger conversations last winter. Owners Rocco Commisso and Riccardo Silva are independent and ambitious and have done reasonably well within the limits imposed by American soccer's pro structure. They' re not interested in dealing with any more. Commisso, a cable TV entrepreneur, saved the Cosmos from folding in January and engineered a move from far-flung Hofstra to MCU Park on Coney Island, which offers a more intimate and engaging atmosphere. Under the guidance of coach Giovanni Savarese and COO Erik Stover-both â MLS veterans â the roster and front office were rebuilt quickly. The Cosmos have been competitive on the pitch while enjoying a 28% leap in year-over-year attendance. Miami FC is a second-tier juggernaut. Playing at Florida International in a stadium now named for Silva and coached by Italian legend Alessandro Nesta, the club has a payroll in the millions and holds an 18-point lead over second-place San Francisco in the overall NASL standings. It upset Orlando City and Atlanta United in the U.S.~Open Cup before falling, ironically, to a fellow second-tier team in FC Cincinnati in the quarterfinals. 2/4

4 Both owners want full control over their clubs and their futures. But they need others to join them, and that's where it gets tricky. Counterparts in Indianapolis, Jacksonville or Raleigh may not have similar resources or the same die-hard belief in the cause. There's concern that the first-year San Francisco Deltas may not remain afloat, while the long-term intentions of NASL members in Edmonton and Puerto Rico are unclear. A roadmap to 12 must be drawn quickly, so that the likes of Jacksonville or Indy don't don' give up and bolt before new investors commit. It's understood that the NASL, whose brand is grounded in an embrace of the free market, is considering a couple compromises if it helps teams enter and/or survive. Spending cuts, a salary cap/budget, tighter roster regulations, reduced entry fees and additional financial support for new or existing clubs are all on the table. Multiple sources have told SI.com that they expect North Carolina FC, which is among the dozen bidders for an MLS expansion team, to move to USL. And so the NASL's path to 12 envisions a 2018 schedule without the Raleigh club but with the Deltas and the two Californian newcomers, along with at least three expansion teams. It's been reported that investors in Chicago, Atlanta and Detroit, among others, have been in advanced conversations with the NASL. The Chicago bid is fronted by former Chicago Fire and Indy Eleven chief Peter Wilt. An Atlanta team would be based out of a stadium complex in suburban DeKalb County, while the Motown effort is focused on the wildly successful NPSL club, Detroit City. NCFC owner Steve Malik was instrumental in saving the NASL last winter and finds himself in an interesting position now as a member of the USSF board (he recused himself during the sanctioning vote) and an aspiring MLS entrant. NCFC already has a downtown site picked out for a potential MLS stadium. When reached by SI.com, Malik was willing to speak on the record. He said no decision has been made about next season. "We've "We' community," been pursuing the highest level of soccer for our he said. "We' re looking at all of our options. Some of those are with the current teams in the NASL and we've we' looked at we' others, because we do want to play [next year] and we've made a lot of progress in our MLS bid. And we want to continue to build on that." If he stays, that's one fewer expansion team needed. If he goes, the degree of difficulty rises. Either way, there's no guarantee the USSF will even consider the NASL's appeal. The federation doesn't want to see leagues, teams or jobs go away. But it also believes enforceable standards must exist to ensure clubs deliver a professional, consistent product while leagues avoid the insane attrition and fly-by-night investment that characterized the 1990s and early 2000s. The NASL intends to test U.S. Soccer's resolve. If the path to D2 is blocked, the NASL-at â least technically-has â a couple other options short of breaking up. U.S.~Soccer almost surely would allow the league to operate as a D3 circuit next year. It's hard to imagine the likes of Silva and Commisso entertaining that possibility, but it is a possibility. There was no D3 pro soccer in the USA this season for the first time since 1994-two â years before MLS kicked off. And unless the NASL drops, there will be none in Wilt's nascent league, the National Independent Soccer Association, didn't apply, and the USL remains a year away. The NASL also could go off the grid entirely and play as an unsanctioned competition. There would be no labels, no politics and no oversight. There'd also be no Open Cup, no federation referees, no representation at U.S. Soccer meetings and a whole lot of 3/4

5 questions about player eligibility, transfers and status that have no obvious answers. It would be uncharted territory. Either way, there very well could be a lot of litigation. Silva, for one, already has filed a claim with the Court of Arbitration for Sport in Switzerland arguing that the lack of automatic promotion from the second tier to MLS violates FIFA regulations. But first comes Friday's meeting and the NASL's Hail Mary. Whether it's caught or not, the pro soccer landscape is going to change in It could include a 12 (or more)- team, revitalized NASL. Or simply a larger, empowered USL that stands alone below MLS. 4/4