Multi-club ownership (MCO) is rapidly redefining the terrain of global sports, particularly the world of soccer. This burgeoning trend involves investors acquiring stakes in multiple teams simultaneously, reshaping the economic and operational landscape of the sport.
Leading this change are private equity groups, who often eye an eventual exit strategy instead of long-term engagement. One industry insider candidly remarked, “Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake.” This mindset has sparked a surge in multi-club ownership, unveiling both lucrative opportunities and significant controversies, especially in European soccer.
Economic Boost and Market Value
MCO networks have shown to considerably amplify commercial revenues and market values for clubs. Teams within these networks commonly see a 20-30% increase in commercial revenues, thanks to shared sponsorship deals and global branding initiatives. Moreover, the average market value of clubs linked to MCO structures tends to be 15-25% higher than that of independently owned clubs in comparable leagues.
This model’s efficacy is underscored by operations like those of Red Bull, which owns multiple clubs globally, including RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. The synergy operationally and investment-wise is palpable, as articulated by RedBird Capital, “There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch.”
Fan Opposition and Legislative Challenges
Despite the financial allure, MCOs face considerable opposition from traditional sports communities, particularly from European soccer supporters who are predominantly against such structures. However, large-scale legislative intervention to dismantle MCOs seems improbable. As one source succinctly put it, “Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely).”
Impact on Women's Soccer
Interestingly, the influence of MCOs extends to women’s soccer. Michele Kang, a prominent figure in the sport, asserts, “Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing.” This necessity is driven by the need for sustained investment and the adoption of best practices across multiple teams to foster growth and stability.
The MCO model’s impact on women’s soccer emphasizes the broader effect of this ownership structure on global sports. As the number of soccer teams within MCO frameworks surged from 117 in 2021 to a projected 336 by 2024, it is clear that multi-club ownership is not a fleeting trend but a fundamental shift in sports ownership.
Technological Innovation
Technological advancements, including artificial intelligence and data analytics, are refining the MCO model further. These tools enhance scouting, performance analysis, and overall team management, making it more attractive to investors who prioritize data-driven decision-making. As RedBird Capital notes, “Permanent capital is an appropriate type of capital for sports — and while the public markets aim to serve that, they’re not ready yet.”
A Broader Horizon
Beyond soccer, the concept is making strides in other sports as well. Diamond Baseball Holdings (DBH) has emerged as a significant player, owning 35 of the 120 affiliated minor league franchises in baseball. DBH's agreements with MLB to negotiate national sponsorships for all 120 minor league teams illustrate the potential these structures hold across different sports.
In the realm of U.S. soccer, Westchester SC's achievements highlight the dynamism and rapid development that MCOs can bring. From securing the second-largest jersey sponsorship deal in the USL to signing a former Premier League player for his final career stage, Westchester SC exemplifies the ambitious strides facilitated by multi-club ownership.
These developments collectively paint a picture of a sports world in flux, where traditional single-club ownership models increasingly give way to interconnected networks of teams, spurred by investor ambition and technological innovation. As this trend continues to reshape the landscape, the sports community watches closely, balancing economic benefits against cultural and operational discontents.