Multi-club ownership (MCO) is rapidly transforming the landscape of global sports, particularly soccer. This investment model, where investors acquire stakes in multiple teams simultaneously, is becoming increasingly prevalent, presenting both opportunities and challenges to the traditional world of sports.
Surging Trends in European Soccer
The concept of MCOs is not new, but its proliferation in European soccer is notable. The number of soccer teams under MCO structures surged from 117 in 2021 to a projected 336 by 2024, indicating a significant shift in ownership patterns. This surge reveals a blend of opportunities and controversies. Soccer supporters in Europe are predominantly opposed to MCOs, reflecting a broader resistance from traditional sports communities.
Despite this opposition, clubs within MCO networks frequently experience a 20-30% increase in commercial revenues. This is largely due to shared sponsorship deals and global branding efforts. Furthermore, the average market value of MCO-affiliated clubs is estimated to be 15-25% higher than independently owned clubs in comparable leagues. Such financial benefits make MCOs an attractive proposition for investors.
Private Equity and Technological Advancements
Private equity groups are at the forefront of this MCO boom. "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake," an unnamed source noted. This indicates a focus on short-term gains rather than long-term operational involvement. RedBird Capital, a significant player in the space, highlighted the operational synergies and investment best practices that come from owning multiple clubs: "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch."
Technological advancements, particularly in artificial intelligence and data analytics, are also refining the MCO model. These technologies enable better decision-making processes and enhanced coordination across different clubs within a network, further improving the financial and operational metrics of MCO-affiliated teams.
Challenges and Opposition
However, the rise of MCOs is not without significant challenges. Traditional sports communities have shown considerable opposition to this model. There is a deep-rooted belief that MCOs undermine the authenticity and local identity of sports clubs. Despite these sentiments, a large-scale legislative intervention to roll back MCOs is deemed improbable. "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)," another source commented.
The financial volatility inherent in this approach poses another risk. Financial institutions' unwillingness to meet profit targets could result in "fire sales," where players are sold off and clubs potentially relegated. This scenario underscores the precarious balance MCOs must maintain to ensure financial stability and competitive performance.
Red Bull's Global Footprint
One of the most prominent examples of successful MCO implementation is Red Bull. The energy drink giant owns multiple soccer clubs worldwide, including RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. This extensive network exemplifies the potential reach and influence MCOs can achieve when executed effectively.
Impact on Women's Soccer
The influence of MCOs also extends to women’s soccer. Michele Kang remarked that MCO is "a necessity for women’s soccer to continue growing." This statement underscores the importance of financial and operational support in elevating the women's game to new heights. The same principles that drive revenue growth and market value in men's soccer are being applied to foster the development of women's teams.
Expanding Beyond Soccer
Interestingly, MCOs are not limited to soccer alone. Diamond Baseball Holdings (DBH) owns 35 of the 120 affiliated minor league franchises in baseball. DBH's role extends to negotiating national sponsorships for all 120 minor league teams, demonstrating that the MCO model can thrive in other sports as well.
Profluence Capital is another entity looking to create a multi-club ownership ecosystem. This speaks to the broader applicability of MCO structures across various sports and the ongoing interest from diverse investment groups.
Case Study: Westchester SC
Westchester SC is a notable case within the MCO framework. The club inked the second-largest jersey sponsorship deal in the United Soccer League (USL) and signed a former Premier League player for his final career stage. Additionally, Westchester SC set records as one of the fastest teams to go from an expansion agreement to public announcement in USL history, achieving this feat in just four months. These accomplishments highlight how strategic planning and investment within an MCO can accelerate a team's growth and market presence.
In conclusion, the rise of multi-club ownership is reshaping the financial and competitive landscape of global sports. While it brings substantial opportunities for commercial growth and market expansion, the model also faces significant opposition and inherent risks. As MCOs continue to evolve, their impact on both male and female sports will be closely watched by supporters, traditionalists, and investors alike.