Multi-club ownership (MCO) is rapidly transforming the landscape of global sports, particularly soccer. The concept, which involves investors acquiring stakes in multiple teams simultaneously, is seeing a surge, especially within European soccer. This rising trend is sparking both significant opportunities and controversies among stakeholders.
Private equity groups are major players in the MCO arena, typically eying an eventual exit strategy rather than long-term operational involvement. "Most private equity groups buying up the 'low-hanging fruit' will have an exit in mind before they buy their stake," reveals an industry insider. This focus on financial gains is a double-edged sword, often clashing with the sentiments of soccer supporters in Europe who are predominantly opposed to MCOs.
From a financial perspective, clubs within MCO networks frequently experience a 20-30% increase in commercial revenues, thanks to shared sponsorship deals and global branding efforts. The average market value of MCO-affiliated clubs is estimated to be 15-25% higher than that of independently owned clubs in comparable leagues. Such statistics illustrate the economic allure of multi-club ownership, drawing more investors into the fold.
Technological advancements are further refining the MCO model. Artificial intelligence and data analytics are playing significant roles, optimizing various aspects of club management and performance. "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch," says RedBird Capital, highlighting the integrated approach facilitated by these technologies.
However, multi-club ownership also faces substantial opposition from traditional sports communities. Concerns over the authenticity and integrity of the sport are prevalent, with many fearing that the primary focus on profitability undermines the core values of the game. Despite the backlash, a large-scale legislative intervention to roll back MCOs appears improbable. "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)," asserts an informed source.
The financial landscape of MCOs is delicate, with potential pitfalls. Financial institutions' unwillingness to meet profit targets could lead to "fire sales," where players are sold off, and clubs potentially face relegation. This financial instability poses a significant risk to the long-term viability of MCO networks.
Interestingly, the influence of MCOs extends beyond men's soccer. Michele Kang, a notable figure in women's sports, stresses the importance of this model: "Multi-club ownership is 'a necessity' for women’s soccer to continue growing." This perspective underscores the growing recognition of women's sports as a lucrative and vital segment of the industry.
The prevalence of MCO structures is undeniably on the rise. The number of soccer teams under MCO frameworks surged from 117 in 2021 to a projected 336 by 2024. High-profile examples include Red Bull's ownership of multiple clubs worldwide, such as RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. In baseball, Diamond Baseball Holdings (DBH) owns 35 of the 120 affiliated minor league franchises, securing contracts with MLB to negotiate national sponsorships for all 120 teams, reflecting the wide-reaching impact of MCOs across different sports.
Profluence Capital is another entity looking to create a multi-club ownership ecosystem, signifying the ongoing interest and investment in this model. The appeal is clear: enhanced commercial opportunities, higher market valuations, and strategic technological integration.
Westchester SC serves as a testament to the tangible benefits of MCOs. It inked the second-largest jersey sponsorship deal in the USL and secured the signing of 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, multi-club ownership is reshaping the sports landscape with its mix of economic potential and inherent controversies. While the future of MCOs promises further growth and technological advancements, balancing financial ambitions with the preservation of the sport's integrity remains a paramount challenge.