The Value of the San Jose Earthquakes (Kind of)

This week, Forbes came out with their annual list of Major League Soccer’s most valuable teams. Like weekly team rankings, this list is useless other than it gives fans another opportunity to throw shade on their chosen rival. The league or its individual teams don’t release any official financial information so this list was compiled using various other methods. Methods I’m sure the league and the teams will say are flawed. Either way, it is an impressive amount of work and a good way to spend an afternoon when your team is not involved in the MLS playoffs.

So to answer the question on everybody’s mind, the San Jose Earthquakes came in 14th out of 23 teams with an estimated value of $235 million. Tucked neatly between 13th place Chicago and 15th place New England, $10 million separating the Earthquakes from each team. The Earthquakes are one of 10 teams in the league that own their own stadium and that value was not included in that estimate. This bothers me but more on that in a couple of paragraphs.

Photo by Justin Sullivan/Getty Images

For a bottom-feeding team like the Earthquakes that valuation is somewhat of a surprise, it is higher than teams like Real Salt Lake and Columbus Crew SC both playoffs teams in 2018. The notoriously frugal front office somehow has cobbled together a team that is worth as much as a Silicon Valley start-up after its B round of funding. That number does not include the recent hirings of manager Matias Almeyda and his crew which will increase the team’s expenses but hopefully, those losses are recovered by success on the pitch putting more butts in seats. We will have to wait for next years list to find out.

The Forbes list is neat but it is speculation and without real estate values it fails to tell a complete story. The Earthquakes built their new stadium in one of the hottest real estate markets in the world. The story of Avaya’s construction goes back to at least 2006 and it is an amazing story in itself, stay tuned for a story on that later. On top of that, the development being built adjacent to the stadium, Coleman-Highline, only has two buildings complete but it is already an award-winning development and has leased half of the planned 1.5 million square feet of office space. This news in itself isn’t really major if you take a look at the plans for the land around Allianz Field in Saint Paul and Buzzard Point in Washington D.C. both have similar developments going up around the new stadiums. No disrespect to those parts of the country but that is where the similarities end.

The definition of “downtown stadium” is a fluid one, some call LAFC’s new Banc of California Stadium a downtown stadium although it is over five miles from the downtown core of Los Angeles. At 2.5 miles away from downtown San Jose I rarely hear of Avaya Stadium being described as a downtown stadium but as a regular fixture there I can tell you it is. Avaya sits one 5-minute stop away from San Jose’s Diridon train station, or 15 minutes by scooter if you want a more scenic view of downtown. Diridon itself is at the center of a massive office and residential project which will one day have up to 20,000 of Googles’ employees working within walking distance of the station. This is on top of the $1.43 billion dollars spent in the last year on downtown properties by various other developers.

Cool story but what does that have to do with the Earthquakes and Avaya Stadium?

Well, the land that Avaya sits on and the Earthquakes own will continue to increase in value for the coming future, by a lot. This means an increase in value for the team, but will the Earthquakes front office use this value to increase their investment on the pitch or will they be content watching their investment increase in value until they are ready to cash out? The first transfer window of 2019 should be a good indicator of the front office intentions. As an optimistic supporter wearing rose colored glasses I am hopeful that this is the catalyst that brings the Earthquakes back to greatness in MLS. As a longtime supporter of Bay Area sports franchises I am more skeptical.