![The Rise of Multi-Club Ownership in Global Sports](/img/breaking.png)
In recent years, the landscape of global sports has experienced a seismic shift due to the rise of multi-club ownership (MCO). This trend, particularly prevalent in soccer, involves investors acquiring stakes in multiple teams simultaneously, aiming for synergies across various aspects of management and operations. However, despite the financial benefits, this approach has not been without controversy, especially among European soccer supporters.
The Mechanism of MCO
Under the MCO model, private equity groups and other investors weave a network of clubs, optimizing resources and maximizing commercial opportunities. According to 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 often translates to shared sponsorship deals and unified branding efforts. Consequently, clubs within these networks frequently experience a 20-30% increase in commercial revenues. Furthermore, the average market value of MCO-affiliated clubs is estimated to be 15-25% higher than independently owned clubs in comparable leagues.
Opportunities and Advancements
The advent of artificial intelligence and data analytics has refined the MCO model, allowing for better player scouting, performance analysis, and injury prevention. These technological advancements give multi-club networks an edge, providing tools to make more informed decisions, thus enhancing their competitive capabilities.
Interestingly, the influence of MCOs is not restricted to men’s soccer alone. Michele Kang highlights, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing," indicating a broader impact. This approach can provide the investment needed to elevate the profile and quality of women’s leagues, an area often sidelined in the grand financial schemes of sports.
Controversies and Opposition
Despite the financial and operational efficiencies, MCOs face significant opposition, particularly from traditional sports communities. Soccer supporters in Europe have expressed a strong preference for independently owned clubs, fearing that the corporate nature of MCOs could erode the cultural and local essence of their beloved teams. Legislative intervention to reverse the trend, however, appears improbable. As one insider puts it, "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)."
Challenges and Risks
While MCOs offer potential financial windfalls, they are not without risks. Private equity groups often have an exit strategy in mind when acquiring stakes. An insider reveals, "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake." This approach can occasionally lead to "fire sales," where financial pressures force owners to sell off players, weakening the clubs and risking relegation.
High-Profile Examples and Expansion
Among the notable examples of MCOs, Red Bull has established a significant global footprint, with ownership stakes in clubs like RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. This extensive network exemplifies how MCOs leverage global branding to amplify their reach and revenue. Similarly, Diamond Baseball Holdings (DBH) owns 35 of the 120 affiliated minor league franchises in baseball, with contracts to negotiate national sponsorships for all minor league teams.
New entrants are also eyeing opportunities within this model. Profluence Capital is looking to create a multi-club ownership ecosystem, while Westchester SC made headlines by inking the second-largest jersey sponsorship deal in the USL and signing a former Premier League player. The rapid progression of Westchester SC from an expansion agreement to public announcement within just four months underscores the dynamism and ambition driving MCOs.
The number of soccer teams under MCO structures skyrocketed from 117 in 2021 to a projected 336 by 2024, highlighting the rapid adoption and growth of this approach. However, as the trend expands, the balance between financial gain and the sport's integrity remains a contentious issue.
In conclusion, the MCO model continues to redefine global soccer, blending business acumen with sporting ambitions. While the financial upsides are evident, the cultural and operational challenges cannot be overlooked. As this trend evolves, its impact on the essence and ethos of global sports will be closely watched by stakeholders and fans alike.