Multi-club ownership (MCO) is becoming an increasingly dominant force in the world's major sports leagues, particularly soccer. This transformative model sees investors acquiring stakes in numerous teams simultaneously, reshaping the traditional landscape of the sport. The rise of MCOs has been meteoric, especially in European soccer, where the number of teams under such structures soared from 117 in 2021 to a projected 336 by 2024.
Private equity groups are at the forefront of this revolution, often eyeing an eventual exit strategy rather than long-term operational involvement. "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake," notes an unnamed source. This short-term investment approach contrasts sharply with the conventional model of club ownership, which typically sees proprietors deeply embedded in the running and cultural identity of their teams.
Commercial Gains and Market Value
One of the primary drivers behind MCOs is the potential for significant financial gain. Clubs within MCO networks frequently experience a 20-30% boost in commercial revenues due to shared sponsorship deals and global branding efforts. This synergy is further highlighted by a representative from RedBird Capital, who said, "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch."
These financial benefits extend to the market value of clubs as well. On average, MCO-affiliated clubs boast market values 15-25% higher than their independently owned counterparts in comparable leagues. These advantages are amplified by technological advancements, with artificial intelligence and data analytics refining the MCO model and optimizing everything from player performance to fan engagement.
Challenges and Controversies
Despite the financial upsides, MCOs are not universally welcomed. Soccer supporters in Europe have shown a predominant opposition to this model, fearing the erosion of local club identity and tradition. Multi-club ownership faces considerable resistance from traditional sports communities, who argue that these conglomerates prioritize profit over passion and heritage.
However, a large-scale legislative rollback of MCOs seems unlikely. "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)," asserts an unnamed source. Additionally, financial institutions' unwillingness to meet profit targets could lead to "fire sales," where players are sold off, and clubs face potential relegation.
Influence Extending Beyond Men’s Soccer
The influence of MCOs is not confined to men's soccer alone. Women's soccer is also seeing a surge in multi-club ownership. As Michele Kang remarks, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." This sentiment echoes across the sports world, emphasizing the importance of shared resources and strategic investment to elevate the women's game.
Outside of soccer, the MCO model is making waves in other sports as well. For example, Diamond Baseball Holdings (DBH) owns 35 of the 120 affiliated minor league franchises in baseball. DBH's extensive network extends its impact beyond mere ownership, with contracts in place to negotiate national sponsorships for all 120 minor league teams under its wing.
Case Study: Red Bull and Profluence Capital
Red Bull stands as a prime example of successful multi-club ownership. The energy drink giant owns multiple teams worldwide, including RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. This expansive network allows Red Bull to create a global brand with far-reaching influence in various leagues.
Meanwhile, Profluence Capital is actively looking to create a multi-club ownership ecosystem. Their approach underscores the growing recognition of the strategic advantages offered by owning multiple teams across different leagues and regions.
A Fast-Tracked Success Story
One notable story in the realm of multi-club ownership is that of Westchester SC. The team set records as one of the fastest to transition from an expansion agreement to public announcement in USL history, accomplishing this in just four months. Westchester SC also made headlines by inking the second-largest jersey sponsorship deal in the USL and signing a former Premier League player for his final career stage.
As MCOs continue to reshape the sports world, their impact is undeniable. The model offers significant financial benefits and the potential for global brand elevation. Nonetheless, it also faces considerable opposition from traditionalists and enthusiasts who fear it may compromise the rich cultural and historical fabric of sports.