Will Merritt Paulson Prune the Thorns?

Merritt Paulson has spent the past two months bargaining to keep his Portland soccer dynasty.

Paulson, arguably the most ambitious team owner in Major League Soccer, has tried to appease players, fans and city officials who nevertheless want him to pay for a sexual abuse scandal that he covered up and downplayed for years. They want him to sell the Timbers and the Thorns, the soccer clubs he built from almost nothing into championship squads that are the envy of their leagues.

The big question remains: Can Paulson hold on as owner?

On Oct. 3, U.S. soccer’s top regulator reported that, among other things, Paulson had hidden the record of a former coach who sexually harassed two Thorns players in 2015. In addition, investigators said Paulson’s executives stonewalled their 2022 inquiry after pledging total transparency.

Two days after the report dropped, Paulson fired his top two deputies, general manager Gavin Wilkinson and president Mike Golub. Six days after that, Paulson himself resigned as CEO of both teams—while retaining control. He stayed home Oct. 29, when the Thorns traveled to Washington, D.C., to win a record third championship.

None of those moves may be enough—especially for the Timbers Army and the Rose City Riveters, the hardest-core Thorns supporters, many of whom have endured sexual violence and harassment themselves as members of queer communities.

“Portland was the ideal,” says Gabby Rosas, president of the 107 Independent Supporters Trust, or 107IST, a nonprofit that represents the Army and the Riveters. “Fans support a club not because it’s winning, but because it reflects our values. That’s what’s heartbreaking about this. That idea has been shattered.”

Now, Paulson, 49, has a different plan to keep ownership of the Timbers: WW has learned he is in talks to sell only the Thorns, according to people with knowledge of the negotiations, while keeping the Timbers.

One prospective buyer is a group of women led by Melanie Strong, a former Nike executive who left the sportswear giant to start an investment company called Next Ventures VC with disgraced cyclist Lance Armstrong. (The Oregonian named Strong and, separately, a group of fans called Onward Rose City as two possible buyers for both teams last month.)

Strong acknowledged the negotiations but declined to say if they only concerned the Thorns. “Nothing we can talk about yet, but I will share everything I can soon,” she said in a text message.

The Thorns and Timbers are owned by Peregrine Sports LLC, controlled by Paulson and his father, former U.S. Treasury Secretary Hank Paulson, 76.

Peregrine is seeking $30 million to $50 million for the Thorns alone, two people familiar with the talks say. Merritt Paulson is betting that a sale of the Thorns to a group of women would take the heat off him as owner and allow him to keep the Timbers, the stadium deal, and media rights.

Sexual harassment on a women’s soccer team would be a story in any city, but nowhere more so than in Portland, a city that celebrates diversity and has embraced the Thorns with a fervor seen nowhere else. American soccer leagues have also benefited from Portland’s passionate support for Paulson’s teams. That success, as well as the involvement of Hank Paulson, who is closely wedded to big league soccer officials, could mean Portlanders are not so easily rid of him.

And as we enter the holiday shopping season, some observers say the sale Paulson is discussing is a lesson in being careful what you ask for.

“The worst thing that could happen is selling the Thorns out from under the Timbers,” says Chris Henderson, a professor at the University of Rhode Island who lives in Portland at times and has been studying the Timbers Army and the Riveters for the past few years. “If that happens, the Thorns would be in trouble. They are more vulnerable than they are as a package with the Timbers.”

Henry Merritt Paulson III, who, unlike his father, goes by his middle name, grew up in a wealthy suburb of Chicago, spent winters at a chalet in Keystone, Colo., and studied English at Hamilton College in Clinton, N.Y., then got his MBA at Harvard.

After graduation, he managed HBO’s on-demand service, then did marketing at the National Basketball Association. He started hunting for a sports franchise to buy in 2004. His father agreed to help.

Paulson zeroed in on Portland and three years later bought the Timbers, then a minor league soccer team, and the Beavers, a AAA baseball team, for a reported $16 million. He tussled with skeptical members of the Portland City Council for months before winning $12 million in public money for a $36 million stadium renovation. At the time, Portland Monthly ran a profile of him called “The Player.”

“He’s ridiculously good looking,” it began. “He’s got a Harvard M.B.A. His father is the U.S. Secretary of the Treasury. Last May, Henry Merritt Paulson III bought the Portland Timbers and the Portland Beavers.”

Two years after his 2007 purchase, Paulson decided to focus on soccer instead of baseball and take the minor league Timbers into Major League Soccer. MLS required owners to have deep pockets and access to a soccer-specific stadium. Paulson had both, thanks to his dad. He paid MLS’s $35 million expansion fee and joined the league in 2009.

Paulson’s company leases Providence Park from the city and also guarantees a minimum share of ticket revenue. In 2022, the city is contracted to receive at least $1.94 million from Peregrine, according to the 2010 operating agreement.

When Paulson and his wife, Heather, moved to Portland in 2007, they settled in Lake Oswego. Three years later, they moved upmarket to Dunthorpe and got a $1.4 million loan from Paulson’s father and mother, Wendy, to buy a six-bedroom, 7,000-square-foot house on Southwest Iron Mountain Boulevard, county records show. They moved again in 2017, paying $3.4 million for a slightly larger house a mile north.

Heather Paulson, 46, was first in the class of 1999 at Cornell University, where she studied industrial and labor relations. She went immediately to Harvard Law School and graduated cum laude, according to her LinkedIn profile.

In 2002, Paulson and her law school roommate became contestants on The Amazing Race 3, the reality TV show in which 12 teams of two raced around the world. They placed ninth. She became an antitrust lawyer in 2003 and married Paulson two years later.

In a 2016 interview with The Winged M, the in-house magazine of the Multnomah Athletic Club, where the Paulsons are members, Merritt said Heather was a “big part” of the decision to invest in the new National Women’s Soccer League in 2012 and form one of the first eight teams.

“We felt it was the right thing to do, and if we were going to do it, we were going to do it right and not market it as a niche product,” Paulson told the publication.

People who know Paulson (he declined several requests by WW for an interview) say he’s fidgety when he’s not at work. In conversation, he doesn’t seem to be listening but, rather, waiting to talk, said two people who have dealt with him.

He’s prickly, too, once tweeting to Timbers fans upset by a loss to “stfu.” Soon after, he deleted the tweet and apologized.

The vibe at Timbers headquarters was odd, says a person who worked there. The offices are in old skyboxes at Providence Park. They’re freezing in the winter and sweltering in summer, with no space for large groups to meet on that level. Golub, the former president, really ran the business, several people say.

“Merritt would get bored and start popping into people’s offices,” one person says. “I think he has a good heart. He’s just got this weird tic. He makes bad decisions and says stupid things.”

Even so, Timbers and Thorns fans could do much worse than Merritt Paulson. By all accounts, he kept his cool in 2008 when the city of Portland demanded all sorts of provisions to protect its stadium investment.

“He was annoyed that we wanted so many guarantees,” says former City Commissioner Randy Leonard, a working-class former firefighter who led the negotiations with Paulson. “But I found him to be earnest and above board. He’s an unlikely person for me to grow to like so much.”

Behind the scenes, Paulson has worked hard to keep the NWSL together. When the Boston Breakers and FC Kansas City folded in 2017, Paulson convinced other owners to stand firm, keeping the eight teams the NWSL needs to qualify as the nation’s top women’s league, a team owner familiar with the negotiations says.

“He made his staff available like a strike force to go sit with leaders at other clubs,” the owner says. “If Merritt hadn’t pulled those people back from the brink, the NWSL would’ve folded.”

And, importantly, his teams are winners, especially the Thorns. This year, they became the first NWSL team to win three championships. The Timbers have been in three finals, winning one.

“The devil you know might be better than the devil you don’t,” says Henderson, the Rhode Island professor. “What if Elon Musk were to buy the teams?”

In the year after a journalist at The Athletic revealed sexual abuse and harassment by former Portland Thorns soccer coach Paul Riley, no one was fired at Peregrine.

Riley, while at another club, coerced one player, Sinead Farrelly, to have sex with him after plying her with alcohol, Farrelly told The Athletic. Riley became head coach at the Thorns in 2013 and brought Farrelly over the following year. There, he harassed another player, Mana Shim, and once offered Shim and Farrelly lighter drills at practice if they would kiss each other in front of him. (Thorns management knew about the incident, The Athletic said.)

“Our world was turned upside down on Sept. 30, 2021, when The Athletic article came out,” says Rosas, president of the 107IST, the nonprofit that oversees the Riveters.

One year later, the U.S. Soccer Federation released a report prepared by former U.S. Attorney and deputy attorney general Sally Yates that confirmed the allegations in The Athletic. It showed Paulson had fired Riley in 2015 but didn’t raise alarms about his behavior. To the contrary, after the Western New York Flash hired Riley in 2016, Paulson emailed Flash president Alex Sahlen and said, “Best of luck this season and congrats on the Riley hire. I have a lot of affection for him.”

In 2022, Yates said, her team of investigators were thwarted by Thorns managers who “interfered with our access to relevant witnesses and raised specious legal arguments in an attempt to impede our use of relevant documents.” They did so after Paulson himself pledged to “fully cooperate” with any investigation and to be “transparent” going forward.

While Pauslon would not talk to WW, a Peregrine spokesman says the Thorns produced more than 300 documents for the investigation, and executives sat for multiple interviews.

The reaction has been intense: “Paulson is a disgraced owner. And he will be until the day he becomes a disgraced former owner,” Oregonian columnist Bill Oram wrote Oct. 5.

But nowhere has the blowback been stronger than among the Riveters, the supporters club for the Thorns that occupies three to six sections of the stadium, including 107, every game. It is perhaps the largest such group in women’s soccer and does more than just cheer. URI’s Henderson says the Riveters create an environment where sports can be enjoyed outside the “hypermasculinity and heteronormative femininity that shape professional soccer in the United States.”

The Yates report “was a real crisis for Thorns fans,” Henderson says. “It’s particularly hard for people who are survivors. It’s uncomfortable to be in Providence Park because it brings up stuff from their past.”

For some fans, it was the last straw.

“The reason the teams have been successful is fan support,” says Chris Bright, co-founder of Onward Rose City, a group that’s raising money from fans to buy the teams, a similar structure to the Green Bay Packers. “The soccer culture here is wide and deep and goes beyond one person.”

So far, Onward Rose City says it has commitments for $9.2 million.

Adding pressure on Paulson to sell: Several sponsors have stepped back from Peregrine.

Union Wine Co. said it would “no longer participate as an official sponsor of either team.” Directors Mortgage said it was “deeply disheartened” by the behavior described in the Yates report and was also ending its sponsorship.

Alaska Airlines, the Timbers’ biggest sponsor, has been hedging a bit by comparison. Last month, Alaska said it was redirecting ad funds for this quarter to an emergency fund set up in December by the NWSL Players Association to help women players—who are notoriously underpaid—with living expenses and mental health care costs in the wake of the scandals.

Meanwhile, politicians are piling on. All three candidates for governor, including now-Gov.-elect Tina Kotek, called for a sale. Mayor Ted Wheeler and all four members of the Portland City Council have said Paulson should sell the teams.

None of the city officials WW contacted, however, were aware of the negotiations to sell just the Thorns.

Told about this, Commissioner Carmen Rubio was supportive: “I would love to see a women-led group come forward and successfully purchase the Thorns.That would be a moment to celebrate.”

Commissioner Mingus Mapps, however, said selling the Thorns was not enough: “I think both teams should be sold.”

Even though the city owns Providence Park, politicians probably couldn’t force a sale. The 25-year lease, signed in 2010, contains no provisions that would permit the city to evict Peregrine over the sex abuse scandals.

A half-dozen people tell WW that little is likely to happen until a joint investigation by the women’s league and NWSL Players Association concludes its work. They began their investigation in October 2021, the same month Yates and U.S. Soccer did, and their report is expected before year’s end.

Technically, U.S. Soccer trumps the NWSL because it regulates all men, women and children playing the game in leagues across the country. But the NWSL report carries special weight because the players association is a partner in the investigation.

“It’s incredibly important that the joint investigative team, with the full participation of the players association, has the opportunity to finish their work, unimpeded,” NWSL spokesman Mark Jones said in a statement. “That is the league’s focus, and any corrective actions will follow that joint report.”

Further complicating matters is that any decision is certain to involve Paulson’s multimillionaire father. A former head of both Goldman Sachs and the U.S. Treasury Department, Hank Paulson ponied up $40 million in 2009 to help his son buy the Timbers, then a minor league team, and get them into Major League Soccer.

He and Wendy are the majority owners of Peregrine Sports LLC, not Merritt, and he sits on the board of Major League Soccer, along with his son.

“Hank is way more involved in the club than people think,” says a person who’s dealt with the club.

It’s easy to imagine Hank Paulson blanching at sexual abuse scandals at a team he owns. He’s an Eagle Scout and a Christian Scientist who relies on prayer over medication for his ailments. He’s an avid birdwatcher who gives away millions every year through his conservation-oriented Bobolink Foundation (named for a migratory songbird). Unlike many Wall Street titans, he’s remained married to Wendy, whom he met during his senior year at Dartmouth College.

Hank Paulson is also close with Major League Soccer commissioner Don Garber. The two are fly-fishing buddies. They discussed their mutual passion on the podcast Straight Talk with Hank Paulson in January 2021.

“I’m getting my captain’s license,” Garber said on the show. “The next time we go out, you might have to call me Captain Don!”

Then, in February 2022: “I have great faith in the Paulson family,” Garber said on a video call with reporters, according to The Oregonian.

At an event Nov. 3, Garber said he saw nothing in the Yates report that would require the Paulsons to sell the Timbers. He said nothing about the Thorns.

If selling the Thorns alone appeases fans, sponsors, politicians—and, perhaps, his father—Merritt Paulson could hold on to the team he cherishes.

The Thorns are not bound by the 2010 operating agreement to play at the city-owned Providence Park if they are sold. They could play anywhere. The city would have to approve a transfer of the team to another owner, the agreement indicates.

But selling the Thorns is a risky move for Paulson, and for the club.

Of the 12 teams in the National Women’s Soccer League, six are affiliated with men’s teams of some kind. The Thorns are accustomed to benefiting from economies of scale with the Timbers, including a shared stadium that is the envy of the league.

Cutting away the Thorns may not appease fans, especially the Riveters.

“If he’s unfit to own one team, why should he be fit to own the other?” asks Rosas at 107IST. “You can’t tell me that one half of the club is broken and the other is fine.”

Sophie Peel contributed reporting to this story.