Multi-club ownership (MCO) is swiftly revolutionizing the global sports industry, particularly in the realm of soccer. Investors are increasingly purchasing stakes in multiple teams simultaneously, and while this strategy unlocks numerous opportunities, it also fuels significant controversies, especially among European soccer enthusiasts.
"Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake," an insider observes, highlighting the prevalent focus on short-term profits rather than long-term engagement. This mindset brings opportunities for revenue increases but often clashes with the desires and traditions of devoted sports fans.
Commercial Gains and Market Value
The financial benefits for clubs under MCO networks are noteworthy. These clubs often witness a 20-30% boost in commercial revenues, thanks largely to shared sponsorship deals and global branding efforts. Comparing market values, clubs affiliated with MCO structures are estimated to be 15-25% more valuable than independently owned teams in similar leagues. These financial advantages are substantial; however, the traditional sports communities remain largely opposed to such arrangements.
RedBird Capital, a prominent player in this space, elaborates on the operational efficiencies: "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch." Such synergies undoubtedly streamline operations and maximize the potential of affiliated clubs, yet the increase in commercialism is met with skepticism by purists who fear the erosion of the sport’s rich heritage.
Technological Advancements
Technological advancements are fine-tuning the MCO model. Artificial intelligence and data analytics are becoming essential tools for managing and optimizing these multi-club setups. These technologies enable precise decision-making, whether in player acquisitions, match strategies, or fan engagement initiatives. With these advancements, MCOs are increasingly able to operate with the efficiency and precision of modern-day corporations.
Legislative and Financial Dynamics
The notion of a large-scale legislative rollback of MCOs remains improbable. As one observer notes, "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)." Furthermore, financial institutions' reluctance to meet profit targets could lead to "fire sales" where players are offloaded, potentially resulting in club relegations. This highlights the precarious nature of MCOs, where financial missteps can have dire consequences.
Impact on Women’s Soccer
The influence of MCOs extends beyond mainstream leagues, significantly impacting women’s soccer as well. Michele Kang describes multi-club ownership as "a necessity for women’s soccer to continue growing." The infusion of capital and resources into women’s teams not only boosts performance levels but also enhances visibility and commercial viability.
Exponential Growth
The rapid proliferation of MCO structures is evident. The number of soccer teams under such arrangements surged from 117 in 2021 to a projected 336 by 2024. One of the most high-profile examples is Red Bull, which owns multiple clubs worldwide, including RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. This extensive network demonstrates the growing appeal of multi-club ownership among investors looking to capitalize on the global soccer market.
Other sports aren't immune to this trend either. Diamond Baseball Holdings (DBH), for instance, possesses 35 of the 120 affiliated minor league franchises in baseball. DBH has contracts with MLB to negotiate national sponsorships for all 120 minor league teams, aligning with their broader strategy of maximizing commercial revenue across a diverse portfolio of teams.
Future Outlook
Profluence Capital is among the entities eyeing the creation of a multi-club ownership ecosystem, signaling a probable increase in such ventures. Westchester SC, another newcomer, has made significant strides, securing the second-largest jersey sponsorship deal in the USL and signing a former Premier League player for his final career stage. Remarkably, Westchester SC set records for rapid expansion, moving from an agreement to a public announcement in just four months—a testament to the accelerated pace of modern sports operations under the MCO model.
While MCOs are reshaping the sports landscape, particularly in soccer, the balance between commercial success and preserving the sport's authenticity continues to be a contentious issue. As technological advancements and financial incentives drive this model forward, traditionalists and modernists must navigate these changes carefully to ensure the sport’s enduring legacy and growth.