Multi-club ownership (MCO) is rapidly transforming the world of global sports, particularly soccer, where it has become a game-changer with profound implications across the sport. This burgeoning trend involves investors acquiring stakes in multiple teams simultaneously, fundamentally altering the dynamics of club ownership.
One of the primary actors in this new landscape is private equity. These groups often target a swift exit strategy rather than committing to 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," confirms a source. This strategy underscores a business-oriented approach that contrasts sharply with the traditional, passion-driven ownership model revered by many soccer aficionados.
European Soccer: A Hotbed of MCO Activity
Europe, with its rich soccer heritage, has become the epicenter of this multi-club movement. Despite the opportunities it offers, it has also sparked significant controversy. Soccer supporters across Europe predominantly oppose the concept of multi-club ownership. They are skeptical of the motivations behind these investments, fearing that financial gains are prioritized over the club's integrity and community values.
However, the commercial benefits for clubs within these MCO networks are undeniable. Data indicates that teams often experience a 20-30% surge in commercial revenues due to shared sponsorship deals and concerted global branding efforts. These synergies are crucial for clubs looking to enhance their financial stability and market presence.
The average market value of MCO-affiliated clubs is estimated to be 15-25% higher than independently owned clubs in comparable leagues. This increase highlights the perceived market confidence in clubs under the multi-club umbrella, driven by the potential for more substantial commercial partnerships and streamlined operations.
Technology: A Catalyst for MCO Growth
Technological advancements have played a pivotal role in refining the MCO model. Innovations in artificial intelligence and data analytics are instrumental in managing multi-club portfolios more efficiently. These tools aid in scouting talent, optimizing player performance, and making informed investment decisions, ensuring that MCOs stay competitive on and off the field.
Resistance and Regulation
The rise of MCOs has not been without significant resistance from traditional sports communities. There is a pervasive sentiment that MCOs dilute the essence of competition and local identity. Despite this, a large-scale legislative intervention to reverse MCO trends appears improbable. "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests," noted an insider, adding that such legislative action is highly unlikely.
Moreover, financial institutions' reluctance to meet profit targets could lead to perilous situations where clubs are forced into "fire sales," hastily selling players and risking relegation.
Women's Soccer: A Growing Influence
The influence of multi-club ownership is also extending to women's soccer. Michele Kang asserts, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." The systemic financial backing and structural support provided by MCOs are seen as vital for the expansion and professionalization of the women's game.
Expansion and Notable Examples
The surge in MCO activity is evident in the growth of soccer teams under this structure, from 117 in 2021 to a projected 336 by 2024. Prominent examples 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. This diversified portfolio allows Red Bull to leverage its brand across different markets, enhancing both commercial and competitive advantages.
In baseball, Diamond Baseball Holdings (DBH) has taken a similar approach, owning 35 of the 120 affiliated minor league franchises. With contracts to negotiate national sponsorships for all minor league teams, DBH illustrates the benefits of a consolidated approach to ownership within the sports industry.
Further, Profluence Capital is eyeing the creation of a sophisticated multi-club ownership ecosystem, indicating that the trend is far from reaching its zenith. Their ambition reflects a broader strategic intent to harness the synergies and commercial opportunities afforded by multi-club models.
On a more localized scale, Westchester SC has set records and achieved significant milestones, including securing the second-largest jersey sponsorship deal in USL history and signing a former Premier League player in the final stage of his career. Remarkably, Westchester SC transitioned from an expansion agreement to a public announcement in just four months, underscoring the operational efficiencies that MCO structures can bring.
As multi-club ownership continues to evolve, it remains a contentious yet pivotal force within global sports, redefining the parameters of investment, competition, and community engagement in ways that were previously unimaginable.