Multi-club ownership (MCO) is rapidly reshaping global sports, particularly in the realm of soccer. This model, where investors hold stakes in multiple teams simultaneously, has sparked both enthusiasm and controversy, primarily driven by its financial and operational implications.
The Investor's Playground
Predominantly, private equity groups and investors target multi-club ownership with a clear exit strategy in mind. Their involvement is often transient, focused on quick profits rather than long-term operational control. As one source noted, "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake."
Despite this perspective, the attractiveness of MCOs lies in their synergistic benefits. Implementing best practices across different clubs, shared resources, and consolidated commercial strategies can lead to a significant increase in revenues. The operational efficiency resulting from interconnected management structures offers tantalizing opportunities for investors.
European Soccer: A Hotbed of MCO Activity
Soccer supporters in Europe, however, remain largely skeptical of MCOs. The surge in multi-club ownership in European soccer highlights the delicate balance between financial interests and the sentiments of traditional sports communities. Soccer clubs within MCO networks typically witness a 20-30% boost in commercial revenues through shared sponsorship deals and global branding initiatives. Additionally, the market value of MCO-affiliated clubs is estimated to be 15-25% higher than independently owned clubs in comparable leagues.
Technological advancements further augment the MCO model, with artificial intelligence and data analytics playing pivotal roles in refining strategies and operations. Yet, this modern approach faces continuous resistance from purists who cherish the traditional club ownership model.
Legislative and Financial Challenges
While opposition is vocal, a large-scale legislative intervention to roll back MCOs appears improbable. "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)," suggests one source. Financial institutions also pose a distinct challenge. If they become unwilling to meet profit targets, "fire sales" could occur, where players are offloaded quickly, potentially leading to the relegation of clubs.
Beyond Men's Soccer: The Growing Influence on Women's Soccer
Interestingly, MCO’s impact is not confined to men's soccer alone. The influence extends to women's soccer, where it is seen as essential for growth. Michele Kang, a prominent figure in the sports finance sector, stated, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing."
A Worldwide Trend
The trend of multi-club ownership is not limited to Europe. The number of teams under MCO structures has surged dramatically, from 117 in 2021 to a projected 336 by 2024. Major examples include Red Bull’s expansive portfolio, which spans clubs such as RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. Another significant player is Diamond Baseball Holdings (DBH), which owns 35 of the 120 affiliated minor league franchises in baseball and holds contracts with MLB to negotiate national sponsorships for all 120 minor league teams.
The Future of MCOs
RedBird Capital, another key entity in the MCO landscape, encapsulates the benefits of this model concisely: "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch." They also emphasize the appropriateness of permanent capital in sports, although they acknowledge that public markets may not yet be ready to serve this function.
New entities like Profluence Capital are also looking to carve out their niche by developing a multi-club ownership ecosystem. Meanwhile, clubs like Westchester SC are setting records and making headlines, exemplified by their rapid rise to public announcement within the USL and securing substantial jersey sponsorship deals, alongside signing high-profile former Premier League players.
Amid these evolving dynamics, the global sports industry continues to navigate the myriad opportunities and challenges that MCOs present. As the landscape undergoes fundamental changes, the enduring debate between financial innovation and preserving traditional sporting values remains at the forefront.