The landscape of global sports is undergoing a significant transformation, particularly within soccer, as multi-club ownership (MCO) takes hold. Investors, often private equity groups, are acquiring stakes in multiple teams simultaneously, altering the dynamics of the sport and bringing both opportunities and controversies to the forefront.
Rising Investments and Operational Synergies
MCOs are on the rise, especially in European soccer. Investors see multi-club ownership as a lucrative venture, aiming for an eventual profitable exit rather than long-term operational involvement. This approach is clearly articulated by a private equity group which stated, "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake."
The financial allure is evident, as clubs within MCO networks frequently experience a 20-30% increase in commercial revenues. This is primarily due to shared sponsorship deals and global branding efforts, which enhance their market presence. Moreover, the average market value of MCO-affiliated clubs is estimated to be 15-25% higher than that of independently owned clubs in comparable leagues. RedBird Capital emphasizes the operational advantages, noting, "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch."
Technology's Role and Financial Stability
Technological advancements are significantly refining the MCO model. Artificial intelligence and data analytics are becoming pivotal tools for these networks, improving operational efficiencies and strategic decision-making.
However, the financial aspect is nuanced. Certain financial institutions' reluctance to meet profit targets may lead to "fire sales," where players are sold off, and clubs potentially face relegation. Yet, despite these financial intricacies, a large-scale legislative intervention to roll back MCOs seems highly unlikely. As stated plainly, "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)."
Fan Opposition and Cultural Impact
Despite the financial and operational benefits, MCOs face considerable opposition from traditional sports communities, particularly among soccer supporters in Europe. Fans argue that multi-club ownership dilutes the authenticity and competitive spirit of the sport, seeing it as a move driven purely by commercial interests. Unfortunately for these supporters, the surge in multi-club structures reveals that this trend is set to continue its course unabated.
Influence Beyond Men’s Soccer
The influence of MCOs extends beyond men's soccer. Women's soccer is also seeing a growing number of multi-club ownership structures, which many believe is essential for its continued growth. Michele Kang, a key figure in the industry, explicitly states, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." This sentiment underscores the crucial role that MCOs could play in elevating the visibility and commercial viability of women’s soccer globally.
Significant Rise in MCO Teams
The number of soccer teams operating under MCO structures has surged dramatically. From 117 teams in 2021, projections estimate that this number will reach 336 by 2024. Established entities such as Red Bull are clear examples of the multi-club ownership model in action, with investments in clubs worldwide, including RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino.
Baseball is not left behind in this trend. Diamond Baseball Holdings (DBH) exemplifies the model by owning 35 out of the 120 affiliated minor league franchises. DBH holds contracts with MLB to negotiate national sponsorships for all 120 minor league teams, showcasing the expansive influence and operational scale that MCOs bring to the sports industry.
New Players in the MCO Arena
Profluence Capital is among those looking to create an extensive multi-club ownership ecosystem, signifying a growing interest among investors to leverage the MCO model’s economic potential. Meanwhile, individual clubs like Westchester SC in the USL are making headlines. Westchester SC has rapidly established itself, inking the second-largest jersey sponsorship deal in the league and signing a former Premier League player for his final career stage. The club's astonishing journey from an expansion agreement to public announcement in just four months sets a record in USL history.
In summation, the trend of multi-club ownership within global sports, particularly soccer, is poised for continued growth. While promising increased revenues and market values, it faces significant resistance from traditional fan bases wary of commercial exploitation. Nonetheless, as technological advancements and strategic financial planning bolster its viability, MCOs are likely here to stay, influencing various facets of the sports world, from men's and women's soccer to baseball.