Multi-club ownership (MCO) is rapidly transforming the landscape of global sports, particularly soccer. This phenomenon involves investors acquiring stakes in multiple teams simultaneously, creating a network of clubs under a single ownership umbrella. The trend has shown significant growth, especially in European soccer, where the number of soccer teams under MCO structures surged from 117 in 2021 to a projected 336 by 2024.
Investment Strategies and Operational Synergies
Private equity groups often see MCOs as an attractive investment opportunity, aiming for an eventual exit rather than long-term operational involvement. One anonymous source noted, "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake." This approach allows investors to capitalize on synergies, shared resources, and streamlined operations across their portfolio. RedBird Capital highlighted this efficiency, stating, "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch."
The financial benefits of MCOs are evident, with clubs within these networks frequently experiencing a 20-30% increase in commercial revenues due to shared sponsorship deals and global branding efforts. Moreover, the average market value of MCO-affiliated clubs is estimated to be 15-25% higher than independently owned clubs in comparable leagues. These financial incentives are fueling the rapid expansion and acceptance of MCOs amongst investors and club owners.
Technological Advancements and Commercial Impact
Technological advancements are also playing a pivotal role in refining the MCO model. Tools such as artificial intelligence and data analytics are being utilized to optimize player performance, scout for new talent, and enhance overall operational efficiency. This digital transformation is contributing to the increased market value and commercial success of MCO-affiliated clubs.
Red Bull is a prime example of a successful MCO, owning multiple clubs worldwide, including RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. Another significant player in the MCO landscape is Diamond Baseball Holdings (DBH), which owns 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, illustrating the commercial power and influence these entities can wield.
Fan Opposition and Legislative Perspectives
Despite the financial and operational benefits, the rise of MCOs is met with considerable opposition from traditional sports communities, particularly among soccer supporters in Europe. Fans argue that MCOs undermine the integrity and heritage of their beloved clubs, turning them into mere assets in a larger investment portfolio.
The prospect of large-scale legislative intervention to roll back MCOs seems unlikely. As one unnamed source pointed out, "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)." Financial institutions' unwillingness to meet profit targets could lead to "fire sales" where players are sold off, and clubs potentially face relegation, further exacerbating fan concerns.
Impact on Women's Soccer
Interestingly, the influence of MCOs extends to women's soccer. Michele Kang highlighted the importance of MCOs in this sector, stating, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." The investment and resources provided by MCOs are essential for the continued development and professionalization of women's soccer leagues globally.
Notable Developments in the USL and Profluence Capital
The United Soccer League (USL) has also seen notable developments attributed to MCOs. Westchester SC, for instance, inked the second-largest jersey sponsorship deal in the league. Additionally, the club made headlines by signing a former Premier League player for his final career stage and set a record for being one of the fastest teams to go from an expansion agreement to public announcement in USL history, achieving this feat in just four months.
Profluence Capital is another entity looking to create a multi-club ownership ecosystem, further demonstrating the growing interest and investment in the MCO model within the sports industry.
In essence, multi-club ownership is reshaping the competitive and commercial landscape of global sports. While the model offers immense financial and operational advantages, it also faces significant opposition from traditional sports communities and brings with it a set of challenges and controversies that are yet to be fully resolved.