The dynamics of global sports are undergoing a seismic shift, particularly in soccer, with the rise of multi-club ownership (MCO). This corporate strategy, where investors acquire stakes in multiple teams simultaneously, is reshaping the industry's landscape both commercially and operationally.
A Transformative Concept
Multi-club ownership is not a novel concept, but its recent acceleration has sparked significant discussions. Investors, particularly private equity groups, enter the arena with precise objectives. "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake," an insider remarked. These investors often seek to maximize returns quickly, steering away from long-term operational involvement.
The explosion of MCO, especially in European soccer, reveals a complex tapestry of opportunities and controversies. Clubs within these networks frequently enjoy commercial revenue boosts of 20-30% thanks to shared sponsorship deals and global branding initiatives. Consequently, MCO-affiliated clubs typically boast market values 15-25% higher than their independently owned counterparts in similar leagues.
Technological Advancements and Integration
Advancements in technology are refining the MCO model, with artificial intelligence and data analytics playing crucial roles. These technologies enhance operational efficiency and enable better strategic decisions across multiple club portfolios. "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch," stated RedBird Capital, highlighting the benefits of a well-integrated MCO system.
Opposition and Legislative Realities
Despite the apparent financial advantages, the traditional sports community has shown considerable resistance to MCOs. European soccer supporters, in particular, predominantly oppose this model, seeing it as detrimental to the sport’s integrity and competitive balance. However, the odds of large-scale legislative intervention to curb MCOs are slim. As one expert put it, "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)." This reality underscores the entrenched presence of MCOs in the sports industry.
Financial Risks and Fire Sales
Yet, the financial landscape for MCOs is not without peril. Should financial institutions fail to meet profit targets, forced "fire sales" could become a harsh reality, leading to player sell-offs and potential club relegations. This risk highlights the volatile nature of sports investments, where high rewards come with significant risks.
Impact on Women's Soccer
The influence of MCOs extends beyond men's soccer. The model is increasingly seen as pivotal for the growth of women's soccer. Michele Kang, a notable voice in the industry, emphasized, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." This perspective reflects the broader applicability of MCOs in enhancing commercial viability and competitive standards across all levels of the sport.
Rapid Growth and Notable Examples
The number of soccer teams under MCO structures has surged dramatically, growing from 117 in 2021 to a projected 336 by 2024. This rapid expansion underscores the model's attractiveness to investors worldwide. Prominent examples include Red Bull, which owns multiple clubs globally, such as RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. Similarly, Diamond Baseball Holdings (DBH) owns 35 of the 120 affiliated minor league franchises in baseball and holds contracts with MLB to negotiate national sponsorships for all these teams.
Emerging Players and Noteworthy Deals
New entrants like Profluence Capital are also looking to create expansive multi-club ownership ecosystems, further diversifying the landscape. In the USL, Westchester SC has made headlines with significant achievements. The club secured the second-largest jersey sponsorship deal in the league and signed a former Premier League player, marking his final career stage. Furthermore, Westchester SC set a record by moving from an expansion agreement to a public announcement in just four months, showcasing the rapid operational capabilities within MCO structures.
The interplay between commercial acumen and sporting traditions will continue to shape the narrative of multi-club ownership. While financial benefits are evident, the balance between profit and the essence of sport remains a topic of debate. As MCOs become more prevalent, their long-term impact on global sports will undoubtedly invite further scrutiny and analysis.