Multi-club ownership (MCO) is rapidly transforming the landscape of global sports, particularly soccer. By acquiring stakes in multiple teams simultaneously, investors are reshaping the financial and operational frameworks of the sport. This trend, fueled by private equity groups and large-scale investment firms, suggests a pressing shift in how soccer clubs, and increasingly other sports franchises, are managed and financially sustained.
The Strategy and Financial Impact of MCO
The primary allure of MCO lies in the synergies created through shared resources and collective marketing strategies. "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch," asserts RedBird Capital, summarizing the strategic benefits. These synergies often lead to a 20-30% increase in commercial revenues for clubs within such networks, underpinned by shared sponsorship deals and expansive global branding efforts.
Notably, the average market value of MCO-affiliated clubs is estimated to be 15-25% higher than that of independently owned clubs in comparable leagues. This financial boon stems not only from more robust commercial operations but also from leveraging technological advancements. Artificial intelligence and data analytics are playing pivotal roles in refining the MCO model, enabling more precise scouting, player development, and tactical decision-making.
The Growth and Controversies
The expansion of MCO is especially pronounced in European soccer, where the number of teams under MCO structures surged from 117 in 2021 to a projected 336 by 2024. Notable examples include Red Bull's diverse portfolio, which includes RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. However, this rapid expansion is not without its detractors. Soccer supporters in Europe predominantly oppose MCOs, arguing that it undermines the traditional essence of football club sovereignty and local identity.
Furthermore, MCO faces considerable opposition from traditional sports communities, which view this model as a threat to the integrity of the sport. Despite this resistance, large-scale legislative intervention to roll back MCOs remains improbable. As one source notes, "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)."
A Closer Look at MCO's Long-term Viability
The strategy of many private equity investors often involves purchasing clubs with a clear exit strategy in mind. "Most private equity groups buying up the 'low-hanging fruit' will have an exit in mind before they buy their stake." This approach highlights the transactional nature of MCO investments, where profit objectives might override long-term commitments to club development.
Financial institutions also play a critical role in the dynamics of MCO. Should these institutions fail to meet their profit targets, scenarios where players are sold off en masse, and clubs face potential relegation, become plausible risks.
Extending Influence to Women's Soccer
The influence of MCO is not confined to men's soccer alone. The model is seen as crucial for the growth of women's soccer as well. Michele Kang notes, "Multi-club ownership is 'a necessity' for women’s soccer to continue growing," underscoring the potential benefits of shared resources and investments to uplift the women's game.
Global Expansion Beyond Soccer
Apart from soccer, other sports are witnessing the effects of MCO. Diamond Baseball Holdings (DBH), for instance, owns 35 of the 120 affiliated minor league franchises in baseball and is actively involved in negotiating national sponsorships for all 120 minor league teams through its contracts with MLB. This adoption signifies that MCO's principles are versatile and potentially beneficial across various sports.
Emerging Players and Notable Deals
Profluence Capital is another entity seeking to create a multi-club ownership ecosystem, aiming to tap into the burgeoning market. Additionally, Westchester SC has made headlines, inking the second-largest jersey sponsorship deal in the USL and signing a former Premier League player for his final career stage. Impressively, Westchester SC set records by becoming one of the fastest teams to go from an expansion agreement to a public announcement in USL history, achieving this in just four months.
As MCO continues to shape the future of global sports, both its proponents and critics will undoubtedly watch closely. The intricate balance between financial gain, operational synergy, and the preservation of traditional sports values will define the narrative of multi-club ownership in the coming years.