![The Rise of Multi-Club Ownership in Global Sports](/img/breaking.png)
The rapidly evolving landscape of global sports is witnessing a significant shift driven by the rise of multi-club ownership (MCO), a concept where investors simultaneously acquire stakes in multiple teams. This paradigm is notably transforming soccer across the globe, presenting both lucrative opportunities and stirring controversies, especially in Europe.
A Surge in Multi-Club Ownership
The surge in MCO is evident with the number of soccer teams under such structures soaring from 117 in 2021 to a projected 336 by 2024. Investors, often private equity groups, view MCO as a venture with substantial financial benefits. These groups typically target an eventual exit strategy, as one anonymous source noted, "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake."
Red Bull is a prime example of MCO, owning clubs worldwide such as RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. Their strategic approach highlights an operational synergy and shared best practices, or as RedBird Capital eloquently 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."
Financial Upsides
Clubs within MCO networks frequently enjoy a 20-30% increase in commercial revenues, thanks in large part to shared sponsorship deals and global branding efforts. The average market value of MCO-affiliated clubs is estimated to be 15-25% higher than that of independently owned clubs in comparable leagues. These financial upsides have not gone unnoticed, with even institutions like Profluence Capital looking to create their own multi-club ownership ecosystems.
This trend is not confined to soccer alone. Diamond Baseball Holdings (DBH) owns a staggering 35 of the 120 affiliated minor league franchises in baseball, with contracts to negotiate national sponsorships for all 120 teams. The scope of MCO is extensive, highlighting its pervasive influence across different sports domains.
Technological Integration
Technological advancements are further refining the MCO model. Artificial intelligence and data analytics are playing crucial roles in ensuring the success and efficiency of these networks. This technological edge is transforming how clubs operate, making MCOs not just a financial venture but a leap into the future of sports management.
Challenges and Opposition
Despite the apparent benefits, MCO faces considerable opposition from traditional sports communities. Soccer supporters in Europe, in particular, are predominantly against this model, viewing it as a disruption to the traditional club spirit and local fan culture. Michele Kang, a key figure in women's soccer, stated, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing," underscoring the complex dynamics and varying perspectives within the sports community.
There is indeed concern that financial institutions’ unwillingness to meet aggressive profit targets could lead to "fire sales" where players are sold off and clubs potentially relegated. The traditionalists argue that this could undermine the integrity and competitive balance of the leagues. While a large-scale legislative intervention to roll back MCOs is improbable, given the statement, "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)," it remains a contentious issue.
Women's Soccer: A Growing Influence
The influence of MCO extends beyond men's sports, significantly impacting women’s soccer. It is seen as a catalyst for growth, bringing much-needed investment and professional management to the women’s game. The said necessity for women's soccer to grow underlines the broader inclusivity and expansionist aims of MCOs within the sporting world.
Case in Point: Westchester SC
Westchester SC stands as a testament to the rapid achievements possible within MCO structures. The club set records as one of the fastest teams to transition from an expansion agreement to a public announcement in USL history, taking just four months. They've also inked the second-largest jersey sponsorship deal in the USL and signed a former Premier League player for his final career stage. These milestones highlight the operational and financial efficiencies that MCOs can bring to clubs.
As the domain of MCO expands, the blend of opportunities and challenges it brings continues to reshape the sports industry. While it offers new growth avenues, especially through commercial and technological advancements, it also invites scrutiny and pushback from traditionalists who fear the erosion of longstanding sporting values.