Multi-club ownership (MCO) is swiftly reshaping the global sports arena, with a pronounced impact on soccer. The model, wherein investors acquire stakes in multiple teams concurrently, is stirring both admiration and controversy.
The essence of MCO lies in leveraging synergies across investments. As articulated by 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 integration of operations and investments often results in improved financial outcomes for clubs within these networks. For instance, teams under MCO frameworks typically witness a 20-30% boost in commercial revenues driven by shared sponsorship deals and enhanced global branding initiatives.
Financial Implications
The financial effects of MCO are palpable. The market value of clubs affiliated with MCO arrangements tends to be 15-25% higher than their independently owned counterparts in equivalent leagues. This uptick is largely attributable to the consolidation of resources and strategic collaboration across the clubs.
However, the influx of private equity groups into this space highlights a potential caveat. Private equity often seeks an exit strategy rather than enduring operational involvement. "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake," underscores the transient nature of some investments.
Technological Advancements
MCO is also benefiting from technological advancements. Artificial intelligence and data analytics are refining the model, offering deeper insights and efficiencies that weren’t previously possible. These tools aid in better player scouting, performance analysis, and strategic planning, further bolstering the competitive edge of MCO-affiliated clubs.
Opposition and Controversies
Despite the evident financial advantages, MCO faces considerable resistance, particularly from traditional sports communities. European soccer supporters are predominantly opposed to the model, perceiving it as a potential threat to the heritage and identity of their beloved clubs. There is also concern about the ethical ramifications and competitive fairness in leagues dominated by MCO-linked teams.
Nonetheless, a large-scale rollback of MCO is deemed unlikely. As one source puts it, "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)." This entrenched dynamic suggests that MCO is here to stay, continuing to evolve within the existing regulatory landscape.
Expanding Influence
The reach of MCO extends beyond men's soccer and into women's soccer as well, where it is seen as a critical growth catalyst. Michele Kang highlights this sentiment, stating, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." This broader applicability underlines the versatility and potential of the MCO model across different segments of the sport.
The growth trajectory of MCO is evident in the numbers. From 117 teams in 2021, the projection surges to 336 by 2024. Prominent examples include Red Bull’s expansive portfolio, encompassing RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino.
Beyond Soccer
MCO isn’t confined to soccer alone. Diamond Baseball Holdings (DBH) is a notable player in baseball, owning 35 of the 120 affiliated minor league franchises. DBH's strategic contracts with MLB to negotiate national sponsorships for all 120 minor league teams underscore the model's utility beyond soccer.
Spotlight on Profluence Capital and Westchester SC
Profluence Capital exemplifies the strategic ambitions within this space, as it aims to cultivate a multi-club ownership ecosystem. Meanwhile, Westchester SC's rapid ascent in the USL highlights the operational efficiencies and market impact achievable under the MCO framework. The club secured the second-largest jersey sponsorship deal in the USL and added a former Premier League player for his final career stage, underlining its strategic prowess.
Westchester SC also set records for the fastest transition from expansion agreement to public announcement in USL history, achieving this milestone in just four months. This rapid progress exemplifies the dynamism and operational efficiency that MCO can bring to a club.
While the complexities of MCO continue to unfold, its growing influence across global sports is undeniable. From accelerated financial growth to strategic expansions, MCO is redefining the paradigms of ownership in the sporting world.