Multi-Club Ownership: Shaping the Future of Global Soccer
In the ever-evolving landscape of global sports, the rise of multi-club ownership (MCO) is making waves, particularly in the world of soccer. This phenomenon, where investors acquire stakes in multiple teams simultaneously, is not only transforming the business but also stirring controversy among traditional fans.
Private equity groups have been at the forefront of this trend, often eyeing an exit strategy rather than long-term operational involvement. As one insider noted, "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake." This short-term approach raises questions about the sustainability and health of the clubs involved.
Despite the controversies, MCOs present lucrative opportunities. Clubs within these networks often witness a 20-30% surge 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 their independently owned counterparts in comparable leagues. "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch," notes a representative from RedBird Capital.
The influence of MCOs isn't limited to men's soccer. Michele Kang highlights their importance in women's soccer, stating, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." This expansion into women's soccer underscores the comprehensive impact MCOs are having on the sport at all levels.
Technological Advancements Fueling Growth
The role of technology in refining the MCO model cannot be underestimated. Advances in artificial intelligence and data analytics are revolutionizing how these conglomerates operate, offering deeper insights and optimizing performance across teams. These tools allow MCOs to function more cohesively and maximize their investments, creating a more efficient and effective operation.
However, this rapid growth and technological integration haven't silenced the critics. Soccer supporters, particularly in Europe, remain predominantly opposed to the concept of MCOs. The idea of clubs being run as part of larger corporate ventures undermines the traditional, community-rooted spirit of the game for many fans. While a large-scale legislative rollback seems improbable, opposition from the grassroots level continues to be a significant challenge.
Economic Implications and Market Dynamics
The financial implications of MCOs are profound. Financial institutions' reluctance to meet profit targets could lead to "fire sales," where players are sold off, and clubs could face relegation. This scenario underscores the precarious balance MCOs must maintain between financial performance and sporting success.
Despite these risks, the number of soccer teams under MCO structures has surged, from 117 in 2021 to a projected 336 by 2024. Major corporations like Red Bull exemplify this trend, with ownership of clubs worldwide, including RB Leipzig, NY Red Bulls, and Red Bull Salzburg. Their global presence demonstrates the extent to which MCOs have become embedded in modern soccer.
A Broader Sporting Impact
The influence of MCOs isn't confined to soccer. In baseball, Diamond Baseball Holdings (DBH) owns 35 of the 120 affiliated minor league franchises. They have contracts with Major League Baseball (MLB) to negotiate national sponsorships for all 120 minor league teams, highlighting their significant impact on the sport.
Companies like Profluence Capital are also looking to establish multi-club ownership ecosystems, indicating that this model could become a prominent feature across various sports. The impact of these networks extends beyond mere financials; they shape the competitive landscape and the way teams operate both on and off the field.
Case Studies: Success Stories and Rapid Achievements
Westchester SC serves as an intriguing case study of the benefits MCOs can bring. The club inked the second-largest jersey sponsorship deal in the USL and signed a former Premier League player for his final career stage. Impressively, Westchester SC set records as one of the fastest teams to go from an expansion agreement to public announcement in USL history, achieving this feat in just four months.
"Permanent capital is an appropriate type of capital for sports — and while the public markets aim to serve that, they’re not ready yet," adds a representative from RedBird Capital. This perspective underlines the complex, evolving nature of financing in professional sports, with MCOs playing a crucial role in shaping its future.
As multi-club ownership continues to gain traction, its impact on global sports, particularly soccer, will be closely watched by stakeholders and fans alike. With no clear end in sight and significant economic and technological forces at play, the rise of MCOs represents one of the most significant shifts in the sports industry today.