Multi-club ownership (MCO) is swiftly reshaping the landscape of global sports, with soccer at the heart of this transformation. The practice, which involves investors acquiring stakes in multiple teams simultaneously, is propelling both opportunities and controversies, particularly within European soccer.
A surge in the acquisition of soccer teams by private equity groups often results in clubs experiencing a 20-30% increase in commercial revenues. Such growth can be attributed to shared sponsorship deals and extensive global branding efforts. Despite the financial upside, soccer supporters across Europe predominantly oppose the rise of MCOs, fearing the dilution of club identity and commercialization of their cherished institutions.
Operational Synergies and Enhanced Values
The economic benefits of MCOs are evident. Clubs within these networks enjoy operational synergies, shared best practices, and increased market values. The average market value of MCO-affiliated clubs is estimated to be 15-25% higher than independently owned clubs in comparable leagues. This isn’t surprising given the extensive resources and strategic advantages provided by multi-club structures.
"There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch," says RedBird Capital, a prominent player in the multi-club ownership space.
With financial benefits so clear, it’s easy to see why investors are drawn to the model. Private equity groups, in particular, often have an exit strategy in mind even before they purchase their stakes. "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake," an unidentified source observes. This short-term vision can further intensify fans' reservations about the genuine commitment of such owners to the long-term welfare of the clubs.
Technological Influence
Innovation and technological advancements are adding another layer to MCO’s rapidly evolving landscape. The deployment of artificial intelligence and data analytics is refining the model, enabling more informed decisions and efficient operations. These technologies provide vital insights into player performance, fan engagement, and commercial strategies, fostering further growth and competitive prowess among MCO-affiliated clubs.
Resistance and Legislative Hurdles
Despite the evident advantages, MCOs face considerable opposition from traditional sports communities. Fans and purists argue that the practice erodes the unique culture and heritage of individual clubs, transforming them into mere assets within a broader investment portfolio. However, a large-scale legislative intervention to roll back MCOs remains unlikely. "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)," notes an anonymous source.
The Women's Soccer Dimension
The influence of MCOs extends beyond men's soccer, significantly impacting women’s soccer as well. Michele Kang emphasizes the crucial role of multi-club ownership in the growth of the women's game, stating, “Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing.” This reveals a broader acceptance within certain sectors of the soccer community where the benefits may outweigh the concerns.
Financial Challenges and Risks
The MCO model is not without its financial vulnerabilities. When financial institutions fail to meet profit targets, the outcome can include “fire sales,” where players are sold off rapidly, sometimes leading to club relegations. This underscores the risk attached to the investment-heavy nature of MCOs, where financial stability is often contingent upon continuous success and profitability.
Global Reach
The expansion of multi-club ownership is not confined to soccer alone. Baseball shows a similar trend, with Diamond Baseball Holdings (DBH) owning 35 of the 120 affiliated minor league franchises. DBH's contracts with MLB enable it to negotiate national sponsorships for all 120 minor league teams, illustrating the broad appeal and applicability of multi-club ownership across different sports.
Individual Success Stories
Noteworthy success stories include the rapid progression of teams like Westchester SC, which set records as one of the fastest teams to go from an expansion agreement to a public announcement in USL history, achieving the feat in just four months. The club also sealed the second-largest jersey sponsorship deal in the league and signed a former Premier League player for the latter stages of his career, signaling its ambitious trajectory within the league.
The multi-club ownership model, with its blend of sophisticated business strategies and technological integration, is set to continue shaping the future of global sports. While it brings undeniable financial benefits and growth opportunities, balancing these gains with the preservation of sports heritage and club identity remains a critical challenge for the industry.