Multi-Club Ownership: The Evolving Landscape of Global Soccer
In recent years, the world of global sports, especially soccer, has witnessed a significant shift due to the rapid rise of multi-club ownership (MCO). This transformative trend involves investors and private equity groups acquiring stakes in multiple teams simultaneously, fundamentally altering how clubs operate and thrive in competitive leagues.
The Rise of MCOs: Opportunities and Controversies
The surge in multi-club ownership, particularly within European soccer, presents a blend of opportunities and controversies. While MCOs enable clubs to leverage shared resources, sponsorship deals, and global branding efforts, they also face considerable opposition from traditional sports communities. Soccer supporters in Europe are predominantly against MCOs, raising concerns about the potential dilution of club identities and priorities.
Despite the opposition, the financial benefits of MCOs are evident. Clubs within MCO networks often experience a significant boost in commercial revenues, with estimations pointing to a 20-30% increase due to shared sponsorships. Furthermore, the average market value of MCO-affiliated clubs is reportedly 15-25% higher than that of independently owned clubs in comparable leagues.
The Role of Private Equity
Private equity groups are deeply embedded in the mechanics of MCOs, primarily eyeing an eventual exit strategy rather than long-term operational involvement. A source conveyed, "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake." The strategy often revolves around enhancing the value of their investments and seeking profitable exits when market conditions are favorable.
Technological advancements are also refining the MCO model. Innovations in artificial intelligence and data analytics have become crucial in optimizing team performance and management, further aligning operational efficiencies across multiple clubs. As RedBird Capital notes, "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch."
Legislative Interventions Unlikely
Despite widespread opposition, large-scale legislative interventions to dismantle MCOs appear improbable. A source emphasized, "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)." This uncertainty leaves traditionalists and purists in a state of confrontation with evolving business models that emphasize profitability over legacy.
The Domino Effect of Financial Uncertainty
The financial stability of MCOs is not without its challenges. There is a looming risk of "fire sales" where financial institutions, unwilling to meet profit targets, may push for the sale of players and potential club relegations. This precarious balance underscores the intricate tug-of-war between financial imperatives and maintaining competitive integrity within leagues.
Expansion into Women’s Soccer
The influence of MCOs extends beyond men's soccer, highlighting their growing presence in women's soccer as well. According to Michele Kang, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." This strategic move not only fosters the growth of women's leagues but also integrates them into broader commercial and branding ecosystems.
The Spectacular Growth Trajectory
The rapid expansion of MCO structures is noteworthy. The number of soccer teams under MCO frameworks surged from 117 in 2021 to a projected 336 by 2024. This remarkable growth showcases the increasing appetite for multi-club ownership as investors seek to capitalize on the synergies and financial benefits afforded by this model.
Illustrative examples of successful MCOs include Red Bull's extensive network, encompassing clubs such as RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. Similarly, in baseball, Diamond Baseball Holdings (DBH) boasts ownership of 35 out of 120 affiliated minor league franchises. DBH's contracts with MLB to negotiate national sponsorships for all minor league teams highlight the vast potential and influence of MCOs across sports.
Proliferating Club Ecosystems
Profluence Capital's initiative to create a comprehensive multi-club ownership ecosystem further underscores the growing momentum. In parallel, notable developments in the United Soccer League (USL) illustrate the dynamism of this trend. Westchester SC recently inked the second-largest jersey sponsorship deal in USL history and signed a former Premier League star for his career's final stage. Notably, Westchester SC set a record as one of the fastest teams to go from an expansion agreement to public announcement in USL history, achieving this milestone in just four months.
Conclusion
As multi-club ownership continues to shape the global sports landscape, its implications for soccer and beyond remain profound and multifaceted. While traditional supporters may resist, the financial gains and operational efficiencies championed by MCOs are compelling forces driving their persistence and expansion in the world of sports.