The Rise of Multi-Club Ownership: Transforming Global Soccer
Multi-club ownership (MCO) is rapidly reshaping the global sports landscape, particularly in the realm of soccer. This burgeoning trend revolves around investors acquiring stakes in multiple teams simultaneously, with an eye toward boosting revenues and introducing new operational synergies. While the approach offers lucrative opportunities, it has also sparked significant controversies.
A Growing Phenomenon
Private equity groups are major players in this evolving landscape. Many of these investors are not seeking long-term operational involvement but instead have clear exit strategies in mind when they buy their stakes. According to a source, "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake."
One striking aspect of this surge in multi-club ownership is its profound impact on European soccer. For many traditional supporters, this shift is unwelcome. Opposition is strong, largely due to a sentiment that MCO undermines the authenticity of the sport. Despite this resistance, the model is proving financially advantageous for the clubs involved.
Financial Implications and Technological Advancements
Clubs within MCO networks often see a 20-30% increase in commercial revenues, thanks to shared sponsorship deals and global branding initiatives. The average market value of these clubs is estimated to be 15-25% higher than that of independently owned counterparts in comparable leagues. Investors like RedBird Capital emphasize the benefits, stating, "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch."
Technological advancements, including artificial intelligence and data analytics, are refining the MCO model further. These tools offer deeper insights into player performance, fan engagement, and market trends, making the model more effective and sustainable in the long run.
An Unlikely Legislative Rollback
Despite the debates, a large-scale legislative intervention to dismantle MCO structures appears improbable. Rollbacks would require governments to enact legislation forcing owners to divest their interests, a scenario described by sources as "highly unlikely."
Yet, the financial undercurrents remain complex. Should financial institutions fall short of meeting profit targets, a wave of "fire sales" could ensue, leading to player sales and potential relegation of clubs. This adds an element of instability to an otherwise promising model.
Extending to Women’s Soccer
The influence of MCOs is also palpable in women’s soccer. Speaking on the matter, Michele Kang noted, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." The model provides vital financial and operational support, facilitating the growth and stability of women's teams.
A Staggering Increase
The number of soccer teams under MCO structures has surged from 117 in 2021 to a projected 336 by 2024. High-profile examples include Red Bull, who owns several clubs worldwide such as RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino.
Beyond Soccer
Beyond the soccer sphere, multi-club ownership models are making waves in other sports. Diamond Baseball Holdings (DBH) exemplifies this trend by owning 35 of the 120 affiliated minor league franchises in baseball. DBH’s unique approach involves contracts with MLB to negotiate national sponsorships for all 120 minor league teams, showcasing the model's adaptability across different sports.
New Entrants
New entrants like Profluence Capital are actively seeking to create their own multi-club ownership ecosystems. Individual clubs are also breaking records, such as Westchester SC, which inked the second-largest jersey sponsorship deal in the USL and signed a former Premier League player for his final career stage. Westchester SC has been one of the fastest teams to transition from an expansion agreement to public announcement in USL history, achieving this feat in just four months.
As multi-club ownership continues to grow and evolve, its impact on global sports is undeniable. Whether appreciated for its financial benefits or criticized for its potential to undermine the authenticity of traditional sports, MCO is poised to remain a significant factor in the future of sports management.