Transforming the Global Sports Landscape: The Rise of Multi-Club Ownership
The world of global sports is undergoing rapid transformation, and soccer is at the forefront of this seismic shift. One of the key drivers behind these changes is Multi-club Ownership (MCO), a concept where investors acquire stakes in multiple teams simultaneously. This burgeoning trend is reshaping the sports industry, revealing both vast opportunities and significant controversies.
Private equity groups are heavily involved in this space, frequently targeting what they consider 'low-hanging fruit.' As one unverified source notes, "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake." These investors are often more focused on exit strategies than long-term operational involvement, raising questions and concerns among traditional sports communities.
The European Soccer Landscape
The surge in MCO is especially pronounced in European soccer. Clubs within MCO networks typically see a 20-30% increase in commercial revenues due to shared sponsorship deals and global branding efforts. Additionally, the average market value of MCO-affiliated clubs is estimated to be 15-25% higher than independently owned clubs in comparable leagues. These financial benefits underscore the attractiveness of MCO to investors.
Technological advancements are refining the MCO model further. Artificial intelligence and data analytics now play significant roles in optimizing both the operational and investment aspects of MCOs. RedBird Capital highlights the synergy possible within 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."
Despite these advancements, MCO faces substantial opposition from traditional sports communities, particularly soccer supporters in Europe. The sentiment is largely negative, reflecting widespread concerns about the integrity and authenticity of the sport under corporate ownership. However, a major legislative push to roll back these ownership structures remains unlikely. As another unverified source puts it, "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)." The financial momentum behind MCOs makes large-scale legislative intervention improbable.
Challenges and Risks
While MCO offers financial and operational efficiencies, it also introduces considerable risks. If financial institutions fail to meet their profit targets, the result could be "fire sales" where clubs sell off players and potentially face relegation. These scenarios could severely disrupt team cohesion and fan loyalty, posing long-term challenges for the clubs involved.
Impact on Women's Soccer
MCO's influence extends beyond men's soccer, impacting women's soccer as well. Michele Kang, a prominent figure in the field, states, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." This suggests that the structures and financial backing provided by MCOs could be crucial for the continued development and professionalization of women's sports.
Case Studies: Red Bull and Diamond Baseball Holdings
Two notable examples of successful multi-club ownership are Red Bull and Diamond Baseball Holdings (DBH). Red Bull owns several clubs worldwide, including RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. This widespread ownership allows Red Bull to foster talent across different markets while leveraging the global brand for sponsorship and marketing deals.
Similarly, DBH owns 35 of the 120 affiliated minor league franchises in baseball. They also have contracts with Major League Baseball (MLB) to negotiate national sponsorships for all 120 minor league teams, providing a unified approach to commercial partnerships.
Future Projections and Developments
The number of soccer teams under MCO structures surged from 117 in 2021 to a projected 336 by 2024. This rapid expansion highlights the increasing appeal and adoption of the MCO model. Profluence Capital is another entity actively looking to create a multi-club ownership ecosystem, further solidifying the trend's foothold in the sports industry.
Westchester SC, a club that recently made headlines, exemplifies the rapid operational advancements possible under MCO. The club set records in the United Soccer League (USL) for one of the fastest expansions from agreement to public announcement, achieving this milestone in just four months. Moreover, Westchester SC secured the second-largest jersey sponsorship deal in the USL and signed a former Premier League player for his final career stage, showcasing the commercial and sporting benefits that MCOs can bring.
Conclusion
As multi-club ownership continues to evolve, its impact on global sports, particularly soccer, will be profound. While it offers significant financial and operational advantages, it also faces considerable opposition and risks. The ultimate success of this model will likely depend on balancing these benefits with the concerns of traditional sports communities, ensuring that the sport's integrity and fan loyalty are not compromised.