Multi-club ownership (MCO) is emerging as a powerful force transforming the contemporary sports landscape, particularly in soccer. This revolutionary concept involves investors acquiring stakes in multiple teams simultaneously, offering both opportunities and controversies in equal measure.
The Mechanics of Multi-Club Ownership
At its core, MCO enables private equity groups and other investors to diversify their portfolios by holding shares in multiple sports clubs. Often, these investors aim for an eventual exit strategy rather than a 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," a source explains.
One of the primary advantages of this ownership model is its potential to boost commercial revenues. Clubs affiliated with MCO networks frequently experience a 20-30% increase in commercial revenues thanks to shared sponsorship deals and global branding efforts. 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 Operational Synergy
In recent years, technological advancements have significantly refined the MCO model. Artificial intelligence and data analytics now play crucial roles in optimizing both player performance and business operations. Investors see operational and investment synergies as a key benefit. As RedBird Capital puts it, "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch."
Resistance from Traditional Sports Communities
Despite its financial advantages, MCO faces considerable opposition from traditional sports communities. Soccer supporters in Europe, for instance, are predominantly opposed to the concept. The idea of conglomerates owning multiple teams tugs at the romanticism many fans associate with their clubs. However, a large-scale legislative intervention to roll back MCOs appears highly improbable. A source notes, "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)."
Real-World Examples and Expansion
The influence of MCO reaches far beyond men's soccer; it extends to women's soccer as well. According to Michele Kang, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." The benefits are multi-fold, from operational efficiencies to increased investment in grassroots and developmental programs.
The number of soccer teams under MCO structures has surged dramatically. From 117 teams in 2021, the figure is projected to reach 336 by 2024. Prominent examples of extensive MCO portfolios 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.
Even in baseball, MCO is gaining traction. Diamond Baseball Holdings (DBH) owns 35 of the 120 affiliated minor league franchises and has signed contracts with Major League Baseball to negotiate national sponsorships for all 120 minor league teams. Meanwhile, Profluence Capital has announced its intentions to create a multi-club ownership ecosystem, signaling that the model's influence will only continue to grow.
The Case of Westchester SC
Westchester SC represents a compelling case study in the rapid success that MCO can bring. The club set records as one of the fastest teams to transition from an expansion agreement to a public announcement in USL history, achieving this in just four months. They also inked the second-largest jersey sponsorship deal in the USL and signed a former Premier League player for his career's final stage.
The Challenges Ahead
Despite these impressive strides, the path ahead is not without challenges. Financial institutions' unwillingness to meet profit targets could lead to "fire sales" where players are sold off, and clubs face potential relegation. Moreover, while permanent capital is considered suitable for sports, the public markets are not yet ready to fully serve this need, according to RedBird Capital: "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 summary, multi-club ownership is shaking up the sports world with technological advancements and increased commercial revenues. Despite facing staunch opposition from traditional sports communities, its growth trajectory seems unstoppable for now.