Multi-club ownership (MCO) is rapidly transforming the landscape of global sports, particularly soccer. This evolving trend involves investors acquiring stakes in multiple teams simultaneously, fundamentally altering the dynamics of the sport. The surge in MCO, especially in European soccer, brings to light significant opportunities and controversies.
One of the primary drivers behind the MCO phenomenon is private equity groups, which often aim for an eventual exit strategy rather than long-term operational involvement. As one insider keenly observed, "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake." This strategic approach underscores the financial motivations fueling the MCO model.
Commercial Gains and Market Value
Clubs within MCO networks frequently experience a 20-30% increase in commercial revenues. This growth is largely attributed to shared sponsorship deals and global branding efforts, which amplify their commercial appeal. Moreover, the average market value of MCO-affiliated clubs is estimated to be 15-25% higher than independently owned clubs in comparable leagues. Such financial boosts highlight the profitable aspect of MCO structures.
Technological advancements are further refining the MCO model, with artificial intelligence and data analytics playing significant roles. These technologies aid in optimizing operational efficiencies and investment strategies across multiple clubs. As RedBird Capital aptly noted, "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch."
Supporter Opposition
Despite the financial benefits, soccer supporters in Europe remain predominantly opposed to MCOs. Traditional sports communities view the influx of multi-team ownership with skepticism and concern. The resistance is so substantial that any large-scale legislative intervention to roll back MCOs seems improbable. As one source asserted, "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)."
Additionally, financial institutions' unwillingness to meet profit targets could lead to "fire sales" where players are sold off and clubs potentially face relegation. This prospect adds a layer of uncertainty and risk to the MCO model.
Impact on Women's Soccer
The influence of MCOs extends beyond men's soccer, significantly impacting women's soccer as well. Michele Kang emphasized that "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." This assertion underscores the critical role of MCOs in expanding and sustaining the women's game.
Proliferation of MCO Structures
The number of soccer teams under MCO structures has surged dramatically, from 117 in 2021 to a projected 336 by 2024. This rapid increase demonstrates the growing appeal of the MCO model among investors. High-profile examples of multi-club ownership include Red Bull, which owns several clubs worldwide, including RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino.
The trend is not limited to soccer. Diamond Baseball Holdings (DBH) owns 35 of the 120 affiliated minor league franchises in baseball and has contracts with MLB to negotiate national sponsorships for all 120 minor league teams. This multi-club approach enables DBH to leverage economies of scale and maximize their investment returns.
The Role of Permanent Capital
RedBird Capital offers a perspective on the financial underpinnings of MCOs, pointing out that "Permanent capital is an appropriate type of capital for sports — and while the public markets aim to serve that, they’re not ready yet." This sentiment reflects the evolving financial strategies behind multi-club ownership and hints at future developments in funding mechanisms.
Emerging Innovations and Ambitions
Profluence Capital is another key player looking to create a multi-club ownership ecosystem, further testifying to the growing interest and potential of the model. Moreover, the rapid rise of Westchester SC in the USL highlights the dynamic changes within the sports landscape. The club has not only inked the second-largest jersey sponsorship deal in the USL but also signed a former Premier League player for his final career stage. Remarkably, Westchester SC set records as one of the fastest teams to go from an expansion agreement to public announcement in USL history, achieving this feat in just four months.
In conclusion, the phenomenon of multi-club ownership is reshaping the global sports scene, blending financial acumen with sporting ambitions. While it brings significant commercial benefits, it also faces notable opposition from traditional sports communities. The trajectory of MCOs will undoubtedly continue to be a focal point of discussion and analysis in the evolving world of sports.