The landscape of global sports is undergoing a seismic shift thanks to the increasing prevalence of multi-club ownership (MCO). This phenomenon, especially pronounced in soccer, involves investors acquiring stakes in multiple teams simultaneously, fundamentally altering the dynamics of sports ownership and management.
A Transforming Paradigm
The rapid rise of MCO has been particularly notable in European soccer. Investors see both opportunity and controversy in owning multiple teams, with private equity groups showing a marked interest. "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake," an unnamed source reveals, highlighting a focus on short-term gains rather than long-term stewardship.
The benefits of such ownership structures are not trivial. Clubs within MCO networks frequently enjoy a 20-30% boost in commercial revenues, thanks to shared sponsorship deals and enhanced global branding efforts. In fact, the average market value of MCO-affiliated clubs is estimated to be 15-25% higher than that of independently owned clubs in comparable leagues.
Technological Advancements and Their Role
The role of technology in this evolving model cannot be overstated. Technological advancements, particularly in artificial intelligence and data analytics, are refining the MCO framework. By leveraging data, owners can implement best practices across their network of clubs, optimizing both operational and investment strategies. "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch," states RedBird Capital, encapsulating the strategic advantage offered by these advancements.
Controversy Among Traditional Sports Communities
Despite the financial upsides, MCOs face significant opposition from traditional sports communities, especially soccer supporters in Europe. Many fans see multi-club ownership as a threat to the sport’s integrity and traditions. Calls for regulatory intervention have surfaced, but large-scale legislative changes seem unlikely. "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)," suggests an unnamed source.
The controversy extends beyond fan discontent. Financial turbulence within MCOs can lead to drastic measures such as "fire sales," where players are offloaded to meet profit targets, sometimes resulting in club relegations. This raises questions about the sustainability of multi-club ownership models in maintaining competitive balance and ensuring long-term club stability.
Women’s Soccer and MCOs
The influence of MCOs is also making waves in women's soccer, a sector that Michele Kang believes requires multi-club ownership to grow. "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing," she asserts. The infusion of capital and resources that come with MCOs could be crucial for the development and professionalization of women's leagues worldwide.
Case Studies: Red Bull and DBH
Successful case studies provide a blueprint for the potential and pitfalls of MCO. Red Bull, for instance, owns multiple clubs globally — including RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino — each benefiting from shared resources and branding. Diamond Baseball Holdings (DBH) is another prominent player, owning 35 of the 120 affiliated minor league franchises in baseball. DBH has even secured contracts with Major League Baseball (MLB) to negotiate national sponsorships for all minor league teams, showcasing the expansive reach and influence of MCOs.
The Surge in Numbers
The growth trajectory of MCO is impressive. The number of soccer teams under MCO structures surged from 117 in 2021 to a projected 336 by 2024. This explosion indicates not only increasing investor interest but also the deepening entrenchment of MCOs in the sports ecosystem.
One notable example is Westchester SC, which has made headlines with the second-largest jersey sponsorship deal in the USL and the signing of a former Premier League player for his final career stage. In just four months, Westchester SC transitioned from an expansion agreement to a public announcement, setting records in USL history for the speed of execution.
Conclusion
In sum, multi-club ownership is rapidly reshaping the sports landscape, bringing with it both exciting opportunities and significant controversies. As this model continues to evolve, it will be fascinating to watch how it impacts the various stakeholders in the world of sports, from investors and clubs to the passionate fans who live and breathe the games.