Multi-club ownership (MCO) is rapidly transforming the landscape of global sports, particularly soccer. The concept involves investors acquiring stakes in multiple teams simultaneously, creating networks of clubs under common ownership. This practice has been sharply rising, especially in European soccer, presenting both opportunities and controversies.
Private equity groups are major players in this trend, often aiming for an eventual exit strategy rather than long-term operational involvement. As one source noted, "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake." This short-term vision raises questions about the longevity and stability of such investments.
A significant aspect of MCO is the financial uplift it brings to the clubs within its networks. Clubs often experience a 20-30% increase in commercial revenues due to shared sponsorship deals and global branding efforts. Moreover, the average market value of MCO-affiliated clubs is estimated to be 15-25% higher than independently owned clubs in comparable leagues. These financial benefits stem from the collective bargaining and marketing power that MCO structures can harness. As RedBird Capital stated, "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch."
Despite the economic benefits, soccer supporters in Europe are predominantly opposed to MCOs. Traditional sports communities resist the notion of clubs losing their independent identities and being subsumed into broader corporate strategies. The idea of rollback through large-scale legislative intervention appears unlikely. One source underscored this improbability: "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)."
Technological advancements also play a pivotal role in refining the MCO model. Artificial intelligence and data analytics are increasingly employed to enhance decision-making and operational efficiencies across the network of clubs. This adoption of technology aims to streamline processes and maximize the return on investment for stakeholders.
The influence of MCOs extends beyond men’s soccer and into women’s soccer. Michele Kang, a prominent figure in the industry, remarked, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." This sentiment underscores the potential for MCOs to drive development and investment in the women's game, which often operates on smaller budgets compared to its male counterpart.
The rapid expansion of MCO structures is evident in the numbers. The number of soccer teams under MCO frameworks has surged from 117 in 2021 to a projected 336 by 2024. This explosive growth highlights the increasing appeal of these models among investors and the sports community. High-profile examples include Red Bull, which owns multiple clubs worldwide such as RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. Similarly, Diamond Baseball Holdings (DBH) owns 35 of the 120 affiliated minor league franchises in baseball and has contracts with MLB to negotiate national sponsorships for all 120 minor league teams.
One emerging player in this space is Profluence Capital, which is looking to create a multi-club ownership ecosystem. Meanwhile, Westchester SC has made headlines within the United Soccer League (USL). The club inked the second-largest jersey sponsorship deal in the USL and signed a former Premier League player for his final career stage. Remarkably, 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.
However, MCOs are not devoid of risks and challenges. Financial institutions' unwillingness to meet profit targets could lead to "fire sales" where players are sold off and clubs potentially relegated. The strategy to buy low and sell high can sometimes backfire, affecting not just the profitability but also the sporting integrity of the clubs involved. Permanent capital may be deemed more suitable for sports investments compared to public markets, as RedBird Capital notes, "Permanent capital is an appropriate type of capital for sports — and while the public markets aim to serve that, they’re not ready yet."
In conclusion, multi-club ownership is redefining the parameters of sports management and investment. While the model presents substantial financial and operational benefits, it also faces significant opposition from traditional sports communities. The future of MCOs appears set for further growth, driven by technological advances and global market dynamics. Yet, the balance between commercial success and preserving the essence of competitive sports remains a delicate one.