North Carolina FC announced on Tuesday that it will not compete in the men’s USL Championship next season, and will instead file an application to join the USL’s proposed Division One league that will likely not begin play until 2028.

In a statement, NCFC said that “the application begins a formal process that could bring top-level professional soccer to Raleigh, supported by a long-term stadium plan and strong market infrastructure.”

The USL said in a statement that North Carolina’s franchise agreement ended after 2025, and that “The USL believes Raleigh has strong potential as a future Division One market if it meets the league’s professional standards, including a minimum 15,000-seat, purpose-built soccer stadium that will serve as an anchor for real estate development.”

The decision by NCFC to essentially go dormant for two seasons comes at an awkward time for the USL, which in addition to starting the Division One league that will sit atop the USL Championship, League One and League Two, is also attempting to implement a system of promotion/relegation.

The USL is also in the middle of negotiations with the USL Players Association on a new Collective Bargaining Agreement (CBA) for players in the USL Championship. The current CBA expires at the end of this year.

A source with knowledge of the situation said that all player contracts will be voided following the end of the season, allowing them to become free agents.

This creates a fraught situation for players who had multi-year contracts with North Carolina, as well as injured players who will no longer be covered by health insurance once the contracts are terminated, and will likely have to file workman’s compensation claims. The source estimated that there are around 10 players who will have the contracts terminated prematurely.

The source added that per the current CBA, NCFC players with multi-year contracts will get two months severance.

A club spokesperson told ESPN that NCFC “will follow the CBA and we’ll do everything we can to go above and beyond” in terms of aiding players.

NCFC’s chairman, Steve Malik, who has owned the club since 2015, also owns the NWSL’s North Carolina Courage, and has been attempting to build a soccer-specific stadium in the Raleigh area that should be shared by both teams since 2019. But despite some getting regulatory approvals, as well as acquiring the needed land, so far Malik hasn’t been able to secure the needed public financing for the stadium project to move forward.

The men’s team has also been plagued by poor attendance, averaging just 2,550 fans per game during the regular season. This ranked 21st out of 24 teams in the USL Championship. NCFC drew just 2,005 fans to last weekend’s playoff game against Loudon United.

NCFC has been in existence since 2006, having started life in the USL as the Carolina RailHawks, then moving to the North American Soccer League in 2009, and then returning to the USL in 2017. Malik moved the club down to USL League One in 2021, but then returned to the USL Championship in 2023.

NCFC is scheduled to play Rhode Island FC in the conference semifinals this Saturday.