The North American Soccer League has further escalated its legal battle with the U.S. Soccer Federation, filing a lawsuit alleging the directors on the USSF board are acting to protect personal interests.
The suit alleges that the board members, motivated by conflicts of interest and economic considerations, breached their fiduciary duties to the NASL by “arbitrarily refusing to sanction the NASL as a Division II league for the 2018 season.”
It says that decision was made to protect the board members’ self-interested positions in Major League Soccer and the league’s marketing arm, Soccer United Marketing.
The named defendants are USSF president Sunil Gulati, vice president Carlos Cordeiro, CEO Daniel Flynn, and board members Valerie Ackerman, Chris Ahrens, Carlos Bocanegra, Lisa Carnoy, John Collins, Don Garber, Jesse Harrell, Angela Hucles, Stephen Malik, Richard Moeller, Donna Shalala and Timothy Turney.
Of those named, Garber is the MLS commissioner, Bocanegra is a vice president of MLS club Atlanta United, and Malik owns North Carolina FC, which left the NASL to move to the USL while pursuing an MLS expansion bid.
U.S. Soccer has a contract with SUM to manage its media rights under a deal that runs through 2022. The topic has been a hot-button issue during the election for a new USSF president, with nearly every candidate expressing a desire for the next to deal to either be opened up to competitive bidding, have more transparency, or both.
The NASL seems intent on using comments from Cordeiro, one of the candidates for USSF president, against him.
The complaint alleges that through SUM, “defendants have enriched MLS while wasting USSF assets and freezing out MLS competitors, like the NASL. In particular, Defendants Gulati and Garber have dominated Board operations to advance MLS interests while enhancing their own clout and influence.
“As Defendant Cordeiro recently admitted, ‘[t]he unique ownership of SUM creates conflicts that need to be addressed.'”
SUM is controlled by the owners of MLS teams, but not the league itself.
The suit is the latest legal development between U.S. Soccer and the NASL. On Sept. 19, the NASL filed an antitrust lawsuit in federal court against the USSF, alleging the federation used the division standards it set as a way of driving the NASL out of business, while allowing MLS to maintain its monopoly status.
The NASL sought an injunction in U.S. District Court to reinstate its Division II status, but that request was denied. That decision is currently under appeal.
On Feb. 1, a demand letter was sent to the USSF by the NASL, which asked for materials related to board meeting minutes, committee meeting minutes, and past financials. The materials requested were related to the USSF’s contract with SUM, the decision to deny the NASL Division II status for 2018, and the granting of Division II status to the USL for 2018.
The USSF responded by stating that the minutes and latest financials could be found on their website, but that the additional materials was an “at attempt to circumvent the limits on discovery in the pending litigation that your firm commenced on behalf of the NASL against U.S. Soccer.”