Multi-club ownership (MCO) is reshaping the sports industry, particularly in the realm of global soccer. This evolving trend involves investors acquiring stakes in multiple teams concurrently, transforming traditional club ownership dynamics. While some view this as a financial boon, it has also sparked a wave of controversy, especially among European soccer supporters who largely oppose the concept.
Economic Upsurge and Technological Integration
MCO networks prove lucrative for the clubs involved. Data indicates that these clubs often see a 20-30% increase in commercial revenues due to shared sponsorship deals and global branding efforts. Additionally, the market value of MCO-affiliated clubs tends to be 15-25% higher than that of independently owned teams in similar leagues. This spike in value and revenue can be attributed to the synergies that are operationally and investment-wise spread across all the intellectual properties (IPs) involved. As one insider from RedBird Capital put it, “There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch.”
Advancements in technology are further refining the MCO model. Artificial intelligence and data analytics now play significant roles, offering sophisticated methods for managing multiple teams. This technological integration fortifies the business model, appealing to data-driven private equity groups that view these clubs as ripe for investment with the potential for substantial returns.
Private Equity and Exit Strategies
Private equity groups are at the forefront of this MCO surge. Their strategy often involves buying up the ‘low-hanging fruit’ with an exit strategy in mind from the outset. As per one undisclosed source, "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake.” This approach indicates a preference for short-term ownership to maximize profitability rather than committing to long-term team management.
Controversy and Legislative Realities
Despite its financial benefits, MCO faces considerable opposition from traditional sports communities. In Europe, soccer fans are predominantly against these multi-team ownership structures, viewing them as a disruption to the sport’s heritage and competitive balance. However, legislative moves to mitigate or roll back MCOs appear improbable. As another source articulated, "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely).”
Women's Soccer and MCO Influence
The influence of MCO extends to women’s soccer, where it is deemed essential for the sport’s progression. Michele Kang, a prominent figure in women's soccer, attests, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." This viewpoint underscores the positive impacts on financial sustainability and resource allocation within women's sports.
Expansion Across Multiple Sports
MCO is not confined to soccer alone. For instance, Red Bull owns multiple clubs worldwide, including RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. Similarly, Diamond Baseball Holdings (DBH) has emerged as a significant player in the baseball industry, owning 35 of the 120 affiliated minor league franchises. DBH has secured contracts with Major League Baseball (MLB) to negotiate national sponsorships for all 120 minor league teams, reflecting the broadening scope of MCO beyond just soccer.
Emerging entities like Profluence Capital are also looking to capitalize on this trend by creating their own multi-club ownership ecosystems. The MCO framework thus continues to appeal to investors seeking diversified sports portfolios across various leagues and countries.
Case Study: Westchester SC
The impact of MCO can also be observed in individual success stories such as Westchester SC. The club recently inked the second-largest jersey sponsorship deal in the United Soccer League (USL). Moreover, they made headlines by signing a former Premier League player for his final career stage. In a record-setting achievement, Westchester SC went from an expansion agreement to public announcement in just four months, marking one of the fastest such transitions in USL history.
As the number of soccer teams under MCO structures continues to skyrocket—from 117 in 2021 to a projected 336 by 2024—the model’s influence on global sports becomes increasingly incontestable. The financial institutions’ continued interest, combined with technological advancements and strategic partnerships, suggest that MCO is not merely a passing trend but a seismic shift in how sports teams are owned and managed.
Nevertheless, the possibility of "fire sales" looms, where financial institutions' unwillingness to meet profit targets could lead to the liquidation of assets, including player sell-offs and potential club relegations. This undercurrent of risk adds a layer of complexity to the otherwise lucrative prospects of MCOs.
In conclusion, multi-club ownership is redefining the framework of sports management and ownership. Despite its economic advantages and innovative potential, its widespread acceptance remains challenged by traditionalists and regulatory hurdles. As the landscape continues to evolve, the ongoing debate surrounding MCO will undoubtedly shape the future of global sports.