The phenomenon of multi-club ownership (MCO) is becoming a central force in the world of global sports, especially soccer. As investors and private equity groups increasingly acquire stakes in multiple teams, the landscape of professional sports is undergoing a seismic shift.
The Rise of Multi-Club Ownership
MCO involves an investor or investment group holding ownership stakes in several sports clubs concurrently. While the practice is most prominent in European soccer, it has a burgeoning presence globally. The scale of this trend is highlighted by the numbers; the amount of soccer teams under MCO structures is expected to rise dramatically from 117 in 2021 to a projected 336 by 2024. This surge is not limited to soccer alone, with Diamond Baseball Holdings (DBH) owning 35 of the 120 affiliated minor league baseball franchises, demonstrating a diverse application across sports.
Private equity groups are notably active in this space, often eyeing an exit strategy from the onset. As one insider observes, "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake." These investors prefer to maximize profitability through strategic exits rather than long-term operational involvement.
Economic Advantages and Technological Integration
The economic benefits of MCO are compelling. Clubs within these networks typically see a significant boost in commercial revenue, often ranging from 20-30%, due to shared sponsorship deals and integrated global branding efforts. This synergy is echoed by RedBird Capital, which notes, "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch." Furthermore, the average market value of MCO-affiliated clubs stands at 15-25% higher than independently owned clubs in similar leagues.
Technological advancements are also enhancing the MCO model. Cutting-edge developments in artificial intelligence and data analytics are allowing these networks to optimize performance and streamline operations across their multiple holdings. These innovations are refining how clubs manage player development, scouting, and even day-to-day operational logistics, contributing to the model's growing appeal.
Controversy and Opposition
Despite these economic gains, MCO faces substantial opposition, particularly from traditional soccer communities in Europe. Fans and local supporters often perceive multi-club ownership as a threat to the cultural and historical fabric of their clubs. This resistance is widespread, as evidenced by the general sentiment among European soccer supporters who largely oppose MCOs.
The resistance, however, faces significant hurdles. A major legislative rollback of MCOs is deemed improbable, as indicated by one expert's assertion, "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)." This highlights the entrenched nature of MCOs in the current sports economic framework.
Challenges and Future Outlook
Although MCO presents a lucrative frontier, there are inherent risks. Financial institutions’ reluctance to meet profit targets could lead to "fire sales," where valuable players are sold off, and clubs could potentially face relegation. Despite these risks, entities like Profluence Capital are actively looking to create extensive MCO ecosystems, highlighting a strong belief in the model's long-term viability.
Impact on Women's Soccer
The influence of MCOs is also evident in women’s soccer. Michele Kang, a proponent of the model, states, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." The sentiment underscores the potential of MCOs to provide the financial and structural support needed for the women’s game to flourish, an area often neglected by traditional soccer frameworks.
High-Profile Examples and Success Stories
Several prominent examples illustrate the growing influence of MCOs. Red Bull’s ownership portfolio includes clubs such as RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. This expansive network exemplifies how a coordinated MCO approach can elevate club performance and commercial success across different continents.
In the United States, Westchester SC has made significant strides under the MCO umbrella. The club has inked the second-largest jersey sponsorship deal in the USL and signed a former Premier League player for the twilight of his career. Westchester SC has also set a record as one of the fastest teams to transition from an expansion agreement to a public announcement in USL history, achieving this milestone in just four months. Such rapid progress is indicative of the operational efficiencies that MCO structures can bring.
As multi-club ownership continues to evolve, it will undoubtedly shape the future of global sports. Its economic benefits, technological integration, and expanding scope across various sports highlight its transformative potential. However, the model must navigate significant opposition and operational challenges to sustain its growth and garner widespread acceptance.