Revolutionizing Global Soccer: The Surge of Multi-Club Ownership
Multi-club ownership (MCO) is rapidly transforming the landscape of global sports, especially soccer. Investors and private equity groups are increasingly acquiring stakes in multiple teams simultaneously, reshaping the economic and operational dynamics of the sport. This trend presents both significant opportunities and notable controversies.
The concept of MCO involves investors acquiring stakes in more than one team, enabling them to create networks of clubs. While private equity groups often aim for an eventual exit strategy rather than long-term operational involvement, the immediate impact on the clubs involved is profound. Notably, clubs within MCO networks often see a 20-30% increase in commercial revenues, thanks to shared sponsorship deals and global branding efforts.
In Europe, the surge in MCO, particularly in soccer, has sparked substantial debate. Soccer supporters on the continent are predominantly opposed to this model, expressing concerns about the integrity of the sport and the preservation of traditional club identities. Despite this opposition, MCO-affiliated clubs generally enjoy higher market values, estimated to be 15-25% greater than those of independently owned clubs in comparable leagues.
"Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake," an unspecified source noted, highlighting the financial motivations behind these acquisitions.
Technological advancements have further refined the MCO model. Artificial intelligence and data analytics play significant roles in optimizing operations across these networks. "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch," stated RedBird Capital, emphasizing the strategic advantages of MCO structures.
Nonetheless, traditional sports communities remain resistant to these transformations. Despite wide opposition, a large-scale legislative intervention to roll back MCOs is deemed improbable. "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)," an unnamed source emphasized.
Moreover, financial instability within these structures could lead to precarious scenarios. Should financial institutions fail to meet profit targets, "fire sales" of players and potential relegations of clubs could become a reality. This underscores the volatility and risks associated with the MCO model, despite its commercial profitability.
The influence of MCOs extends beyond men’s soccer, impacting women's soccer as well. Michele Kang expressed that "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing," underlining the critical role that these investments play in developing the sport.
The growth of MCOs is evident in the increasing number of teams under such structures. The number has surged from 117 in 2021 to a projected 336 by 2024, indicating the rapidly expanding scope of this ownership model.
Notable examples of MCO entities include Red Bull, which owns multiple clubs worldwide such as RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. Similarly, Diamond Baseball Holdings (DBH) has made significant inroads in baseball, owning 35 of the 120 affiliated minor league franchises. DBH has also secured contracts with MLB to negotiate national sponsorships for all 120 minor league teams.
Profluence Capital is among the investors looking to create a multi-club ownership ecosystem, further diversifying the landscape of sports ownership.
Westchester SC, a club in the United Soccer League (USL), exemplifies the rapid growth and commercial success that MCOs can facilitate. The club inked the second-largest jersey sponsorship deal in the USL and set records by moving from an expansion agreement to a public announcement in just four months. Additionally, Westchester SC signed a former Premier League player for his final career stage, underscoring the club's ambitions and the appeal of MCO-backed teams.
"Permanent capital is an appropriate type of capital for sports — and while the public markets aim to serve that, they’re not ready yet," RedBird Capital added, reflecting on the unique financial structures supporting the MCO model.
As MCOs continue to proliferate across various sports and regions, their influence on global sports is undeniable. While controversy and opposition remain, the significant financial and operational synergies they offer will likely see this trend persist and evolve.