Multi-club ownership (MCO) is rapidly transforming the landscape of global sports, particularly in soccer. The concept revolves around investors acquiring stakes in multiple teams simultaneously, paving the way for significant changes in how clubs operate and compete.
A Shift in Ownership Dynamics
One of the key driving forces behind MCO is the influx of private equity groups, which often aim for an eventual exit strategy rather than long-term operational involvement. As one insider put it, "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake." This focus on short-term gains and high returns has reshaped the financial ecosystem of soccer in many ways.
The surge in multi-club ownership, particularly in European soccer, reveals both opportunities and controversies. While the potential for shared resources and global branding efforts can result in a 20-30% increase in commercial revenues for clubs within MCO networks, soccer supporters across Europe remain predominantly opposed to MCOs. The clash between traditional sports values and modern financial strategies fuels a debate integral to the sport's future.
Commercial Success Amid Controversy
For clubs affiliated with MCO structures, the financial benefits are evident. Data suggests that the average market value of MCO-affiliated clubs is estimated to be 15-25% higher than independently owned clubs in comparable leagues. This valuation boost reflects enhanced sponsorship deals and global branding initiatives, indicating the advantages MCO can bring to financially savvy investors.
Technological advancements are also refining the MCO model, with artificial intelligence and data analytics playing a significant role. These tools allow for more strategic decision-making, efficient scouting, and optimized performance across multiple teams. As RedBird Capital notes, "There is a synergy operationally and investment-wise with best practices that you can do across all the IPs that you touch."
Resistance and Legislative Realities
Despite the economic gains, MCO faces considerable opposition from traditional sports communities. Critics argue that such ownership models compromise the competitive integrity of soccer and prioritize profit over the sport's essence. Nonetheless, large-scale legislative intervention to roll back MCOs appears improbable. As one source succinctly stated, "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)."
Financial sustainability remains a pressing concern. Should financial institutions grow unwilling to meet profit targets, clubs could face "fire sales" where players are sold off, potentially leading to relegation. This eventuality underscores the precarious balance MCOs must navigate between immediate financial success and long-term stability.
Growing Influence Across Diverse Arenas
In addition to its pervasive presence in men's soccer, the influence of MCOs extends to women's soccer. Michele Kang, a key figure in the sport, asserts, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." This sentiment is supported by the rising number of soccer teams under MCO structures, which surged from 117 in 2021 to a projected 336 by 2024.
MCO's impact isn't confined to soccer alone. The sports investment giant Red Bull stands as a testament to this model’s efficacy, owning multiple clubs worldwide, including RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. This proliferation demonstrates the scalability and global reach of the MCO model.
Diamond Baseball Holdings (DBH) mirrors this approach in baseball, owning 35 of the 120 affiliated minor league franchises. Through its contracts with MLB, DBH has secured the authority to negotiate national sponsorships for all 120 minor league teams, showcasing the model's versatility across different sports.
A Model for the Future
Profluence Capital is another entity that exemplifies the growth of MCO, looking to create an entire ecosystem of interconnected clubs. This strategy highlights the potential for synergy and shared innovation that MCO can bring across the sporting landscape. Moreover, Westchester SC recently inked the second-largest jersey sponsorship deal in the USL, signed a former Premier League player for his final career stage, and set records for rapid progression from expansion agreement to public announcement within USL history, achieving this feat in just four months.
As multi-club ownership continues to evolve, it challenges traditional notions of sports management and fan engagement. The future promises both remarkable opportunities for expansion and continued debates over the values that underpin the beautiful game.