Multi-club ownership (MCO) is rapidly changing the landscape of global sports, especially in soccer. The concept sees investors snapping up stakes in multiple teams simultaneously, spreading their influence and resources across a network of clubs. While this phenomenon is predominantly seen in European soccer, its ramifications and controversies extend worldwide.
The Rise of Multi-Club Ownership
The increasing presence of private equity groups in sports is driving this trend. These groups typically aim for an exit strategy rather than long-term involvement in team operations. "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake," notes an informed source, highlighting the financial motivations underlying many such investments.
Statistically, the number of soccer teams operating under MCO structures surged from 117 in 2021 to a projected 336 by 2024. This rapid growth is bolstered by the significant financial advantages that MCO networks bring. Clubs within these networks frequently experience a 20-30% increase in commercial revenues, thanks to shared sponsorship deals and global branding efforts. Additionally, the average market value of MCO-affiliated clubs is estimated to be 15-25% higher than that of independently owned clubs in comparable leagues.
Technological Advancements and Operational Synergies
Technological advancements are further refining the MCO model, with artificial intelligence and data analytics playing key roles. These tools help streamline operations and enhance performance metrics across all affiliated clubs. According to RedBird Capital, "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch."
However, despite these benefits, MCOs face considerable opposition from traditional sports communities, particularly in Europe, where soccer supporters express strong anti-MCO sentiments. Yet, a large-scale legislative effort to roll back MCOs is improbable. "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)," says an industry expert.
Challenges and Financial Risks
Financial instability remains a significant risk for MCOs. Should financial institutions lose confidence and become unwilling to meet profit targets, clubs might face "fire sales," where players are offloaded and teams could face the threat of relegation. Such scenarios underscore the precarious balancing act between financial ambitions and sporting integrity.
Expanding Influence Beyond Men's Soccer
The influence of MCOs is not limited to men's soccer. Michele Kang emphasizes that multi-club ownership is "a necessity for women’s soccer to continue growing." The operational and financial synergies provided by MCOs can offer the necessary support for women's teams to thrive and achieve higher competitive standards.
Prominent examples of successful MCOs include Red Bull, which owns multiple clubs worldwide like RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. In baseball, Diamond Baseball Holdings (DBH) exemplifies the MCO model, owning 35 of the 120 affiliated minor league franchises and holding contracts with MLB to negotiate national sponsorships for all 120 minor league teams.
New Players in the MCO Arena
New players are continuously emerging in the MCO arena. Profluence Capital is actively looking to create a multi-club ownership ecosystem, demonstrating the ongoing appeal and potential of the MCO model. Meanwhile, Westchester SC has made headlines by securing the second-largest jersey sponsorship deal in the USL and signing a former Premier League player for his final career stage. The club also set records as one of the fastest teams to transition from an expansion agreement to public announcement in USL history, achieving this feat in just four months.
In conclusion, while MCOs offer enhanced financial stability and growth potential, they also bring significant challenges and controversies. As the model evolves with technological advancements and expands into new territories, its true impact on the global sports landscape will continue to unfold, offering both opportunities and hurdles for stakeholders across the spectrum.