Multi-club ownership (MCO) is rapidly transforming the landscape of global sports, particularly soccer. At its core, the concept involves investors acquiring stakes in multiple teams simultaneously, a strategy that has both proponents and detractors. While some see it as a necessary evolution in the commercialization of sports, others worry about the long-term ramifications for competition and fan culture.
The trend of multi-club ownership is not new, but its acceleration, especially in European soccer, has been staggering. Investors, including private equity groups, are becoming increasingly interested in acquiring stakes across different clubs to build a robust portfolio. These investments are not always about long-term operational involvement. As one insider revealed, "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake.” This exit-focused approach contrasts sharply with the traditional model of dedicated, long-term club ownership.
Clubs within MCO networks frequently experience a 20-30% increase in commercial revenues. This uptick is primarily due to shared sponsorship deals and global branding efforts, creating a synergy that benefits all involved clubs. As RedBird Capital noted, "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch.” Additionally, the average market value of MCO-affiliated clubs is estimated to be 15-25% higher than independently owned clubs in comparable leagues.
One striking example of MCO's influence is the Red Bull conglomerate, which owns multiple clubs worldwide, including RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. This portfolio allows Red Bull to leverage its brand on a global scale, enhancing commercial revenues and maintaining a consistent competitive edge across different leagues.
However, this trend is not without its controversies. Soccer supporters in Europe are predominantly opposed to MCOs, fearing it erodes the traditional values and local loyalty that define the sport. Substantial opposition from traditional sports communities is a significant hurdle, yet a large-scale legislative intervention to roll back MCOs is improbable. As one source put it, "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely).”
Technological Advancements and Financial Pressures
Technological advancements are also refining the MCO model. The integration of artificial intelligence and data analytics enables these owners to optimize team performance, scout talent efficiently, and manage resources strategically. Despite these technological advancements, financial pressures loom large. The reluctance of financial institutions to meet profit targets could lead to "fire sales," where players are sold off and clubs potentially face relegation.
The Impact on Women's Soccer
Interestingly, the influence of MCOs extends to women's soccer. Michele Kang aptly summarized this sentiment by stating, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." This approach could provide the necessary financial and developmental support to elevate the women's game on a global scale.
Expansion and Notable Moves
Remarkably, the number of soccer teams under MCO structures surged from 117 in 2021 to a projected 336 by 2024. This rapid expansion underscores the growing appeal and potential profitability of MCOs. Some of the most significant moves include Diamond Baseball Holdings (DBH) acquiring 35 of the 120 affiliated minor league franchises in baseball. DBH has even secured contracts with MLB to negotiate national sponsorships for all 120 minor league teams, enhancing their commercial outreach.
On a more localized level, examples such as Westchester SC, which inked the second-largest jersey sponsorship deal in the USL and signed a former Premier League player for his last career stage, demonstrate how MCOs can facilitate high-profile moves and bolster a club's marketability and success.
In conclusion, multi-club ownership is undeniably reshaping the world of sports, bringing both opportunities and challenges. While technological advancements and new revenue streams offer exciting possibilities, the resistance from traditionalists and the inherent financial risks cannot be overlooked. As the landscape continues to evolve, it will be crucial to balance the commercial ambitions of investors with the enduring values and traditions that make sports so universally beloved.