Iggy Pop is leading a small Detroit pro soccer club’s ownership sale campaign

NEW YORK, NEW YORK - FEBRUARY 26: Rubin Kodheli and Iggy Pop perform on stage during the 33nd Annual Tibet House US Benefit Concert & Gala on February 26, 2020 in New York City. (Photo by Noam Galai/Getty Images for Tibet House)
By Bill Shea
Jul 30, 2020

Iggy Pop, the iconic bare-chested godfather of punk rock, wants you to buy a piece of Detroit City FC.

He did.

The 73-year-old rocker, who grew up in Michigan, has lent his voice to a marketing campaign for an online crowdfunding equity campaign that the popular Detroit soccer team launched Thursday to raise cash to improve its Depression-era stadium, hire more staff, and act as a reserve fund amid the COVID-19 pandemic that halted its season and roiled its finances.

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Detroit City’s intent is to sell up to 10 percent of the team in $125 shares or units, with a goal of $1.2 million, team co-owner and CEO Sean Mann said.

“It’s an opportunity to generate some capital, to make sure we have the funds to get through an extended botched COVID response that could last into 2021,” Mann said. “The community fundraising filing allows us to sell equity in the business to the general public.”

Pop (born James Newell Osterberg Jr.), who rose to fame in the 1970s with his band The Stooges and with collaborations with David Bowie, invested $1,000 in the team via the online campaign, records show.

He did a voice-over for a 47-second campaign spot that will be used on social media as part of a wider campaign that will include local billboards.

How did the small soccer club land a global music and cultural icon?

Toby Barlow, chief creative officer and co-founder of the Detroit advertising agency Lafayette American that’s leading the creation of the DCFC marketing campaign, said it came out of brainstorming and staff knowing people linked to the singer.

“We approached Iggy — through his manager — about being an investor and the voice of the campaign,” Barlow said via email. “Initially, his manager was wary, unsure that Iggy would have any interest, but once we showed them the story of the team, its history, the Northern Guard (fan supporter group), the everything that is DCFC is all about, sure enough, Iggy dug it.

“It’s the perfect marriage. The fierce independent spirit of the team, its DIY culture, its positive, inclusive, incredibly loud spirit, all that aligns with everything Iggy has stood for ever since he first exploded out of that trailer park in Ypsilanti.”

Who thought of using Pop?

“Our art director, Sarah Bills, said ‘What about Iggy?’ and then the rest of the team said ‘Ohhhh yeah.’ He’s just such a perfect fit. And, it’s Detroit, so someone knew one of his old guitarists, who put us in touch with his manager in Poland.”

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Barlow, whose firm has done promotional work for DCFC for several years, said they used Pop’s voice in the campaign video rather than his distinctive face because the singer lives in Florida and travel is limited by the pandemic.

Detroit City ownership believes Pop’s participation will goose the campaign’s effectiveness. The club, which turned professional this year in the third-division National Independent Soccer Association, averages about 6,000 fans per game – about half of what MLS’ Chicago Fire averaged in 2019. DCFC has developed a global reputation for the quality of its soccer, its business, its progressive political outlook, and its rowdy loyal fan base known as the Northern Guard.

Detroit City’s equity sale is the latest step in its evolution from an amateur soccer project launched by a group of friends.

DCFC began play at Detroit’s Cass Tech High School in 2012 and immediately gained a following of about 1,000 fans per game. The team moved into Keyworth Stadium in 2015 and began to formalize plans to become a professional team.

Detroit City FC


Detroit City FC fans at Keyworth Stadium in 2018. (Allison Farrand / For The Athletic)

The club played its first eight seasons in the National Premier Soccer League, which is mostly amateur and semi-pro teams around the country. Last fall, DCFC announced a plan to create a new pro league outside of the U.S. Soccer system that governs the sport in the United States. However, insurers required for such an endeavor refused to cover the new league, so it was scrapped.

Detroit City instead opted to join the eight-team National Independent Soccer Association, which is a third-tier league in the U.S. Soccer organizational pyramid that’s topped by Major League Soccer.

The club has played a number of friendlies with European and Mexican teams from higher divisions of soccer, and ownership says it’s hopeful that its international recognition will inspire overseas fans to buy into the team.

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The need for money has become acute because the pandemic has devastated its finances. DCFC got a single road game in this season before its league halted play on March 12 as the pandemic spread, and the season was then canceled on April 27.

The team generates most of its money from match-day and season ticket sales and fans buying merchandise, apparel, and concessions. It also has a robust corporate advertising base.

Every home game generates about $100,000, Mann said, and the loss of what he said was an expected 18 home league and exhibition games this season sapped $1.8 million from the team’s budget of $2.5 million to $3 million. Additionally, when the pandemic struck, most of the club’s corporate sponsors had not yet fully paid for their 2020 advertising deals, he added.

This year also brought an unexpected expense: The team expects to spend about $3,000 weekly on COVID-19 testing, Mann said.

Detroit City is scheduled to participate in the NISA’s 15-team “Independent Cup” regional competition that also includes amateur clubs. DCFC opens play at Keyworth on Friday against Cleveland SC and finishes Aug. 2. There are no plans to allow fans into the Keyworth matches because of the state’s limit on crowd size.

Detroit City FC streams its matches at detcityfc.com/watchcity and intends to deploy what it calls a “retro-style telethon” to pitch the ownership stake sale.

By turning professional this year, the club added player payroll as an expense for the first time. The average salary is nearly $20,000, Mann said. Players are under contract, although many opted to take unpaid furloughs to help the club while there is no money coming in.

Detroit City has 10 full-time staffers and coaches, and if the 2021 season can be played with at least some fans in the stands, the team will use some of the crowd-funded ownership share revenue to hire seven or eight more.

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There are also a handful of part-timers and volunteers, who helped DCFC’s new women’s team play a handful of fanless games recently.

DCFC also lost the revenue it enjoyed from a 75,000 square-foot former ice rink elsewhere in Detroit that it converted in 2018 to a field house and team headquarters. The building was used for practice and leased out for events and youth and adult sports, but the pandemic halted that. The building’s basic operating expenses have not halted.

“(The pandemic lockdown has) hit every asset really hard. It’s hard to say when it will reopen again,” Mann said.

The team, which had conversations with unnamed wealthy financiers in the past about buying a majority stake, talked this spring to investment bankers about a possible infusion of cash, Mann said, but that scene was inundated with minor league baseball teams seeking money.

“It was a buyer’s market at that point, so we didn’t get much traction there,” Mann said.

Ownership then decided to sell stakes in the team.

“Our greatest asset is our supporters, so we figured now is the time,” Mann said. “We kept hearing from fans that said they want to be part-owner of the team.”

The team is utilizing a 2015 federal law that allows non-accredited individuals to buy ownership shares in a business, which is known as regulation crowdfunding. The rules require that businesses use an accredited third-party fundraising site, and DCFC is using Wefunder Portal LLC.

The securities law that governs crowdfunding requires a significant financial disclosure by the team on the crowdfunding site. It currently shows the team with about $1 million on hand and nearly $241,000 in short-term debt.

DCFC also tapped into the federal Small Business Administration’s Economic Injury Disaster Loans program and Paycheck Protection Program, getting $250,000, to help cover payroll, Mann said. Also, the team relied on the state’s WorkForce program that permits people to get some unemployment benefits while working part-time.

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“We were down to our last couple of payrolls, so this gave us the cushion to get through this year,” Mann said.

He also disclosed that the team, which originally was founded by five friends, took on a sixth owner in 2018, Joe Richert, who bought a 10 percent stake. He is not part of the day-to-day operations of the team but has been a longtime supporter and past investor.

“We’ve worked out an arrangement that works well,” Mann said.

The expectation now is to finish the year with a break-even bottom line, he added.

The equity sale isn’t the first time DCFC has turned to fans for financial support: Detroit City in 2016 raised more than $725,000 for stadium improvements using a non-equity crowdfunding campaign made possible by a special Michigan law. The team paid back the 499 investors last year — a significant milestone and a timely one because the debt service accounted for about 22 percent of the team’s budget.

The team also added suites to its city-owned stadium last season, made from refurbished shipping containers and leased for $10,000 each. It also spent $400,000 to replace the stadium turf thanks to a grant from the foundation set up by late Buffalo Bills owner (and longtime Detroit businessman) Ralph Wilson.

The team’s venue is in Hamtramck, a tiny city entirely within Detroit. Its fans traditionally march to the stadium through town, and matches are filled with colored smoke, rowdiness, and a bit of loud angry vulgarities – not unlike European soccer.

DCFC is offering equity buyers five tiers of perks based on their investment amount. The basic $125 share includes a “fine art certificate” and some other rewards. Higher tiers include apparel, ticket discounts, merchandise, tickets for life, and jerseys.

Season ticket holders will have the option in 2020 of a refund, a credit toward 2021, or converting their payment into an ownership share.

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DCFC lays out the perks of buying into the club in a press release: “By buying into the campaign, fans will have an equity stake in the club as well as the bragging rights of being able to say they own a professional soccer team. Community investors will also be given the opportunity to shape the culture of the club by proposing and voting on issues such as annual charity partners, honoring players, and certain club and stadium policies, as well as regular calls and meetings with the team’s front office.”

Making equity stakes available to the public is common overseas, Mann said, but hasn’t been done often in the United States. He pointed to Chattanooga FC as a team that has done so – it raised $850,000 in a public sale during 2019.

Tim Kelly, principal owner of Chattanooga FC, said his team sold ownership shares starting at $125 and more than 3,200 people bought in. The effort, combined with a smaller private equity sale, generated $1.5 million for Chattanooga.

“We were just totally blown away. We had investment from every state in the union and 30 countries around the world. It’s such a perfect dovetail with the philosophical position of independent local soccer teams,” Kelly said.

Chattanooga FC is believed to be the first sports team to have used the regulation crowdfunding option.

“It’s a significant way for sports teams to raise money,” Kelly said. “They’re not just vanity shares. They may not be publicly traded on NASDAQ, but they are honest to god equity in the company.”

Kelly said his club had considered a European model of a supporter’s trust in which fans buy into a separate trust that invests in the team but opted for the regulation crowdfunding option once a financial adviser recommended it.

Detroit City and Chattanooga both play in the NISA and Kelly and Mann are longtime friends. They chatted at length about the equity sale experience.

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“I’m encouraged that Detroit will do well with it. I’m quite sure they’ll be successful,” Kelly said.

The federal law governing the crowdfunding program allows businesses to raise money once every 12 months.

“That’s a lifeline if we need it,” Kelly said.

In American sports, perhaps the best-known publicly owned team is the Green Bay Packers. It became a nonprofit with public ownership in 1923 and today has more than 361,000 shareholders. The most recent of five Packers stock sales was in 2011-12 and priced shares at $250 each. The team said 269,000 were sold and the money was used to finance the $146 million Lambeau Field expansion. The 1923 share sale was priced at $5 each.

The Packers shares don’t pay dividends, don’t increase in value, are not tradeable and don’t have securities-law protections, according to the Wall Street Journal. The shares serve functionally as a point of pride.

DCFC and Chattanooga’s equity shares are more like traditional public securities.

“We are still a Michigan LLC, so people are buying an actual unit of the company. As the value of the business entity goes up or down, so will the value of their unit,” Mann said. “There is the potential for dividends but in our documents, we are upfront that profits are typically reinvested into the organization. In the future, owners could have the ability to transfer their units, but that system would be set up in the future if there is demand from the owners.”

As part of its business strategy of growing its international profile, Detroit City has played home matches against several foreign teams from loftier levels of soccer including Glentoran FC from Northern Ireland’s top division, Venezia FC and Frosinone Calcio from Italy’s second division, Germany’s FC St. Pauli from the Bundesliga’s second tier, and three teams from Mexico’s first division Liga MX. DCFC is 3-4-1 in those friendlies. The Frosinone Calci match in 2018 drew a DCFC-record 7,887 fans (although they saw their club lose 0-10).

The crowdfunding campaign is open to overseas investors.

(Photo: Noam Galai / Getty Images for Tibet House)

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