The landscape of global sports, particularly soccer, is undergoing a seismic transformation, driven by the rapid rise of multi-club ownership (MCO). This phenomenon, which entails investors acquiring stakes in multiple teams simultaneously, is reshaping the sport's economic and competitive dynamics.
A Surge in Multi-Club Ownership
The MCO model has been gaining traction, especially in European soccer, where it presents both opportunities and controversies. Over the past few years, the number of soccer teams under MCO structures has ballooned from 117 in 2021 to a projected 336 by 2024. The increase in multi-club ownership offers a potential boost for commercial revenues, with clubs in these networks often experiencing a 20-30% rise due to shared sponsorship deals and global branding efforts.
Private equity groups are at the forefront of this surge, typically eyeing an eventual exit strategy rather than long-term operational involvement. As one private equity insider noted, "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake." This short-term focus brings its own set of challenges and opportunities.
Giving Rise to New Synergies
RedBird Capital, prominent in the MCO sphere, emphasizes the operational and investment advantages that come with their approach. "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch," a RedBird Capital spokesperson explains. This synergy translates into improved market value, with MCO-affiliated clubs boasting an average market value 15-25% higher than their independently owned counterparts in similar leagues.
Technological advancements are also playing a critical role, with artificial intelligence and data analytics refining the MCO model. These tools enhance decision-making processes, from player acquisitions to performance tracking, thereby amplifying the potential gains of multi-club ownership networks.
Fan Opposition and Legislative Implications
Despite these potential benefits, MCOs face significant opposition, particularly from traditional sports communities and soccer supporters in Europe. There's a prevailing sentiment among fans that multi-club ownership dilutes the essence of the sport and prioritizes profit over passion. Yet, the likelihood of a large-scale legislative rollback appears slim. As one analyst puts it, "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests — highly unlikely."
Furthermore, financial pressures could lead to dire consequences for some clubs within these networks. Financial institutions’ unwillingness to meet aggressive profit targets might result in "fire sales," where players are sold off and clubs face potential relegation. This scenario underscores the volatility and risks inherent in the MCO model.
Extending Influence to Women's Soccer
The MCO model is not just reshaping men's soccer; its influence extends to women's soccer as well. According to Michele Kang, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." The infusion of investment and shared resources is vital for the continued development and competitive advancement of the women's game, providing a much-needed financial and structural boost.
Global Footprints Across Sports
Beyond soccer, multi-club ownership structures are making their mark in other sports. Diamond Baseball Holdings (DBH), for instance, owns 35 of the 120 affiliated minor league franchises in baseball. Through its agreements with MLB, DBH is in a unique position to negotiate national sponsorships for all 120 minor league teams, illustrating the broad applicability and potential of the MCO model across various sports domains.
Notable Examples and Emerging Players
Some of the most notable examples of successful MCOs include Red Bull's portfolio, featuring teams like RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. Meanwhile, Profluence Capital aims to create an extensive multi-club ownership ecosystem, further attesting to the growing attractiveness of this model to investors.
On a local level, Westchester SC has set notable records, becoming one of the fastest teams to make the transition from expansion agreement to public announcement in USL history, achieving this milestone in just four months. The club has also inked the second-largest jersey sponsorship deal in the USL and signed a former Premier League player, marking its ambitious entry into the scene.
Looking Toward the Future
As multi-club ownership continues to evolve, it remains a contentious yet transformative force within global sports. While it unlocks new commercial opportunities and technological advancements, it also stirs debate among traditional fans and stakeholders. The delicate balance between financial interests and the sport's intrinsic values will ultimately dictate the long-term viability and acceptance of this burgeoning model.