Multi-Club Ownership: A Double-Edged Sword for Global Soccer
In recent years, multi-club ownership (MCO) has dramatically reshaped the global sports landscape, particularly in the realm of soccer. The practice involves investors acquiring stakes in multiple teams simultaneously, creating networks that span continents and leagues. This strategy, while financially lucrative, has sparked both opportunities and controversies.
Financial Gains and Commercial Boosts
One of the significant advantages of MCO is the financial uplift experienced by clubs within these networks. These teams often see a 20-30% increase in commercial revenues, fueled by shared sponsorship deals and global branding efforts. On average, MCO-affiliated clubs boast market values estimated to be 15-25% higher than independently owned counterparts in comparable leagues. This commercial synergy is not limited to the men's game; the influence of MCOs extends to women’s soccer as well, which many view as essential for the continued growth of the sport.
Technological advancements also bolster the MCO model, with artificial intelligence and data analytics playing crucial roles in refining operational efficiencies. As Michele Kang put it, “Multi-club ownership is 'a necessity' for women’s soccer to continue growing."
Controversies and Opposition
Despite the financial benefits, MCO has faced considerable backlash, particularly in Europe where traditional soccer supporters are predominantly opposed to the concept. Fans argue that MCOs dilute the unique identities of clubs, making them mere pawns in a broader investment strategy. "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)," as some critics have noted, indicating the improbability of large-scale legislative intervention to curb MCO practices.
One significant risk associated with MCO involves "fire sales," where financial institutions' unwillingness to meet profit targets could lead to mass player sell-offs and potential relegation of clubs. This scenario underscores the volatile nature of MCO investments, particularly when private equity groups are involved. Most private equity firms aim for eventual exits rather than long-term operational involvement, focusing on short-term gains rather than sustainable growth.
High-Profile Cases and Future Prospects
Several high-profile MCO examples illustrate the far-reaching implications and potential benefits of this trend. Red Bull, for instance, owns multiple clubs worldwide, including RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. This global footprint allows for shared resources, streamlined operations, and enhanced market presence.
In baseball, Diamond Baseball Holdings (DBH) has made significant strides, owning 35 of the 120 affiliated minor league franchises. DBH's contracts with MLB enable it to negotiate national sponsorships for all 120 minor league teams, showcasing the potential for MCO structures to revolutionize other sports.
Profluence Capital is another entity eyeing the creation of a multi-club ownership ecosystem, signaling that the MCO trend is far from over. As RedBird Capital succinctly put it, "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch."
Fast-Rising Stars and Unique Deals
Westchester SC exemplifies the rapid ascent possible within an MCO framework. The club set records as one of the fastest teams to go from an expansion agreement to a public announcement in USL history, achieving this feat in just four months. Westchester also inked the second-largest jersey sponsorship deal in the USL and signed a former Premier League player for his final career stage, highlighting the immediate benefits that strategic investments can bring.
The Path Ahead
With the number of soccer teams under MCO structures expected to surge from 117 in 2021 to a projected 336 by 2024, it is clear that multi-club ownership is a force to be reckoned with. The rapid growth showcases the model’s attractiveness to investors, while the increasing controversies and opposition highlight the challenges that lie ahead.
Permanent capital appears to be an appropriate type of funding for sports ventures. However, as RedBird Capital points out, "the public markets aim to serve that, [but] they’re not ready yet." This reveals a gap between the potential benefits of MCO and the existing financial infrastructures that need adaptation to fully realize these advantages.
In conclusion, while multi-club ownership is transforming the landscape of global sports, particularly soccer, it remains a complex, multifaceted phenomenon. As it continues to evolve, the balance between financial gain and the preservation of club identities will be a critical consideration for all stakeholders involved.