![The Rise of Multi-Club Ownership in Global Sports](/img/breaking.png)
Multi-club ownership (MCO) is rapidly transforming the landscape of global sports, particularly soccer. The concept involves investors acquiring stakes in multiple teams simultaneously. This strategy, increasingly popular in Europe, is drastically altering the traditional dynamics of the sport.
A New Era in Soccer
Private equity groups are at the forefront of this seismic shift. Their approach is characterized by a focus on 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," an anonymous source noted. This revelation highlights a key motive behind these investments: the aim is financial gain rather than deep-rooted involvement.
Despite opposition from traditionalists, technological advancements are refining the MCO model. Artificial intelligence and data analytics are playing significant roles in optimizing operations across multiple teams. This innovation is proving beneficial, as clubs within MCO networks 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.
Opportunities and Controversies
The surge in MCO, particularly in European soccer, reveals both opportunities and controversies. Soccer supporters in Europe are predominantly opposed to MCOs. There is a belief that this model prioritizes financial interests over the sport's integrity. However, according to RedBird Capital, "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch." This perspective underscores the potential benefits of shared resources and best practices within MCO networks.
Meanwhile, a large-scale legislative intervention to roll back MCOs seems improbable. "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)," another source stated. This sentiment reflects the entrenched position MCOs have carved out within the sports industry.
Financial institutions’ unwillingness to meet profit targets could precipitate "fire sales" where players are sold off, and clubs potentially relegated. This eventuality highlights the financial risks associated with MCOs, despite their apparent commercial advantages.
Expanding Influence
The influence of MCOs is not confined to men's soccer. Michele Kang emphasized, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." This assertion underscores MCOs' critical role in promoting and supporting women's soccer, which often struggles for resources and visibility compared to its male counterpart.
Real-world examples illustrate the expansive reach of MCOs. Red Bull owns multiple clubs worldwide, including RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. This global network demonstrates the extensive influence and reach these ownership models can achieve.
Baseball and Beyond
Multi-club ownership is not exclusive to soccer. For instance, Diamond Baseball Holdings (DBH) owns 35 of the 120 affiliated minor league franchises in baseball. DBH also has contracts with MLB to negotiate national sponsorships for all 120 minor league teams. This arrangement enhances commercial opportunities across the board, reflecting the benefits of centralized operations and oversight.
Emerging Contenders
Profluence Capital is another notable player in the MCO arena, looking to create a multi-club ownership ecosystem. Their strategic vision aims to replicate the successes seen in other MCO ventures, indicating a growing trend towards this model across various sports.
In the USL, Westchester SC has made significant strides under the MCO umbrella. The club inked the second-largest jersey sponsorship deal in the league and signed a former Premier League player for his final career stage. Impressively, 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.
A Transformative Force
As multi-club ownership continues to shape the global sports landscape, its future remains a subject of intense debate. While opportunities for growth and synergy abound, the controversies and opposition from traditional sports communities cannot be overlooked. The impact of MCOs—whether ultimately beneficial or detrimental—will undoubtedly be profound and far-reaching in the evolving world of sports.