Transforming Global Sports: The Rise of Multi-Club Ownership
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 only reshaping the financial dynamics but also igniting debates among traditional sports communities and fans.
Opportunities and Controversies
The numbers speak for themselves. Clubs within MCO networks often experience a significant uptick in commercial revenues, thanks to shared sponsorship deals and global branding efforts. These clubs typically see a 20-30% increase in commercial revenues, while their market value is estimated to be 15-25% higher than independently owned clubs in comparable leagues.
Despite these financial incentives, MCOs face considerable opposition from traditional sports communities. Soccer supporters in Europe, in particular, are predominantly opposed to this new wave of corporate investment. This sentiment is not without reason. A surge in multi-club ownership, particularly in European soccer, has revealed both opportunities and controversies, highlighting issues of competitive integrity and club identity.
The Role of Technology
Technological advancements are playing a significant role in refining the MCO model. Artificial intelligence and data analytics are now pivotal in decision-making processes, allowing for more strategic investments and operations. These tools not only enhance player performance and scouting but also streamline management practices across the clubs within a network.
Private Equity Involvement
Private equity groups are frequently at the forefront of these acquisitions, often with an exit strategy in mind 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 unnamed source notes.
RedBird Capital illustrates this dynamic well. According to them, "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch." This approach highlights how MCOs can optimize resources and enhance performance across a multi-club network.
Legislative Landscape
While the traditional sports community may oppose MCOs, large-scale legislative intervention seems improbable. "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)," the source adds, underlining the challenges that lie ahead for those seeking to curtail the influence of MCOs.
Financial Risks
However, the financial landscape is not devoid of risks. Financial institutions' unwillingness to meet profit targets could lead to "fire sales," where players are sold off and clubs potentially relegated. This scenario could jeopardize the stability and future prospects of clubs under MCO structures.
Influence on Women's Soccer
The influence of MCOs extends beyond men's soccer, impacting women's soccer as well. Michele Kang, a key figure in the sports investment world, states, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." Her perspective underscores the potential for MCOs to bring much-needed investment and attention to the women’s game.
Notable Examples
The number of soccer teams under MCO structures has surged dramatically, from 117 in 2021 to a projected 336 by 2024. Among the most prominent examples is Red Bull, which owns multiple clubs worldwide, including RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino.
In baseball, Diamond Baseball Holdings (DBH) owns 35 of the 120 affiliated minor league franchises. DBH has also secured contracts with MLB to negotiate national sponsorships for all 120 minor league teams, showcasing how MCOs can extend their influence across different sports.
Emerging Players
New entrants are continually emerging in the MCO landscape. Profluence Capital, for instance, is looking to create a multi-club ownership ecosystem, aiming to leverage the synergies and operational efficiencies that come with managing multiple sports franchises.
A Rising Star: Westchester SC
Westchester SC has made headlines by inking the second-largest jersey sponsorship deal in the USL. The club also signed a former Premier League player for his final career stage, adding a touch of star power. Impressively, Westchester SC set records as one of the fastest teams to go from an expansion agreement to a public announcement in USL history, achieving this feat in just four months.
The Future of Multi-Club Ownership
The rapid growth of MCO structures signals a profound shift in how sports teams are managed and operated globally. While the debate around their impact continues, one thing is clear: MCOs are here to stay, and their influence on the sports world is only set to grow.