Multi-club ownership (MCO) is rapidly transforming the landscape of global sports, particularly soccer. The concept, which involves investors acquiring stakes in multiple teams simultaneously, is not without its share of opportunities and controversies.
The Surge of Multi-Club Ownership
In recent years, there has been a surge in multi-club ownership, especially in European soccer. This model has seen a significant increase in the number of teams under MCO structures, rising from 117 in 2021 to an anticipated 336 by 2024. Among the notable examples is Red Bull, which owns a portfolio of clubs worldwide, including RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino.
The Commercial Impact
Clubs within these MCO networks frequently experience a 20-30% increase in commercial revenues. This growth is largely attributed 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, representing a significant financial advantage.
RedBird Capital highlights the operational and investment synergies of this model, noting, "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
Technological advancements are also playing a crucial role in refining the MCO model. Artificial intelligence and data analytics are becoming increasingly integral to the operational strategies of these multi-club networks. These technologies are enabling more efficient management practices and providing valuable data insights that help maximize the potential of each club within the network.
Investor Strategies and Fan Reactions
While private equity groups often aim for an eventual exit strategy, they appear to be less inclined toward long-term operational involvement. A source notes, "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake." This short-term investment approach, however, does not sit well with many soccer supporters in Europe, who are predominantly opposed to MCOs.
Despite their disapproval, large-scale legislative intervention to roll back MCOs seems improbable. Another source mentioned, "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)."
Challenges and Risks
One of the major risks associated with MCOs is financial instability. If financial institutions are unwilling to meet profit targets, it could lead to "fire sales," where players are sold off and clubs are potentially relegated. This potential downfall remains a critical concern for both investors and fans.
The Influence on Women's Soccer
The influence of MCOs extends beyond men's soccer, also making a significant impact on women's soccer. Michele Kang states, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." This sentiment reflects the growing recognition of the importance of integrated structures in promoting the development and visibility of women’s sports.
Expansion Beyond Soccer
Multi-club ownership is not confined to soccer alone. In baseball, Diamond Baseball Holdings (DBH) owns 35 of the 120 affiliated minor league franchises. The organization also has contracts with MLB to negotiate national sponsorships for all 120 minor league teams, demonstrating the broader applicability of the MCO model in other sports.
Case Study: Westchester SC
Westchester SC provides a compelling case study in the rapid expansion and commercial success achievable under the MCO model. The club inked the second-largest jersey sponsorship deal in the USL and signed a former Premier League player for his final career stage. Furthermore, 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.
The Future of MCO
As MCO continues to gain traction across different sports, firms like Profluence Capital are looking to create broader multi-club ownership ecosystems. This trend highlights the growing appeal and perceived benefits of interconnected sports franchises under unified management. As noted by RedBird Capital, "Permanent capital is an appropriate type of capital for sports — and while the public markets aim to serve that, they’re not ready yet."
The landscape of sports ownership is evolving, and multi-club models are at the forefront of this transformation. With their commercial advantages, technological integrations, and expansive reach, MCOs are poised to remain a significant force in global sports.