The Surging Influence of Multi-Club Ownership in Global Sports
Multi-club ownership (MCO) is swiftly reshaping the global sports arena, particularly within the realm of soccer. This business model, wherein investors acquire stakes in multiple teams simultaneously, has sparked considerable debate. While proponents highlight the financial and operational benefits, critics voice deep concerns over its impact on the integrity of the sport.
Private equity groups are at the heart of this MCO trend. Typically, these investors eye eventual exits rather than long-term engagements, seizing opportunities to capitalize on the market's "low-hanging fruit." In discussing the strategic benefits, RedBird Capital notes, "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch." Their perspective underscores the operational efficiencies and potential cross-club synergies that MCOs can harness.
Europe has emerged as a hotspot for MCO activity, with the number of soccer teams under such structures soaring from 117 in 2021 to a projected 336 by 2024. This rapid proliferation highlights both opportunities and controversies inherent in the MCO model. On the one hand, clubs within MCO networks can see commercial revenues surge by 20-30%, thanks to shared sponsorship deals and a unified global branding strategy. Additionally, 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 have further refined the MCO model. The integration of artificial intelligence and data analytics is playing a significant role, enabling clubs to optimize performance, scout talent more effectively, and streamline operations. These technological tools provide a competitive edge that standalone clubs may struggle to match.
Despite these benefits, MCOs face significant opposition from traditional sports communities. Soccer supporters in Europe, in particular, express strong disapproval of MCOs, fearing that such ownership structures compromise the authenticity and competitive spirit of the sport. Yet, a large-scale legislative intervention to roll back MCOs appears improbable. 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)."
The financial risks associated with MCOs also warrant attention. Should financial institutions fail to meet profit targets, there could be "fire sales" where players are sold off and clubs face potential relegation. This precarious financial balancing act adds another layer of complexity to the MCO landscape.
The influence of MCOs extends beyond men's soccer, reaching into women's soccer as well. Michele Kang asserts, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing," emphasizing the role MCOs can play in nurturing and expanding the women's game.
Other sports are not immune to the MCO phenomenon. In baseball, Diamond Baseball Holdings (DBH) owns 35 of the 120 affiliated minor league franchises. DBH's contracts with Major League Baseball allow it to negotiate national sponsorships for all 120 minor league teams, indicating the substantial influence an MCO can wield.
Profluence Capital is another player seeking to establish a multi-club ownership ecosystem. Their objectives align with the broader trends of consolidation and strategic investment witnessed across the sports world.
Westchester SC, a club within the United Soccer League (USL), exemplifies the swift impact MCO-backed entities can achieve. Westchester SC secured the second-largest jersey sponsorship deal in USL history, signed a former Premier League player for his final career stage, and set records for the fastest transition from expansion agreement to public announcement in USL history within just four months.
The trajectory of multi-club ownership is undoubtedly transformative. While substantial benefits like increased commercial revenue, higher market valuations, and technological advancements present a compelling case, the resistance from traditional organizers and supporters cannot be ignored. Moreover, the precarious financial dynamics necessitate caution. As the landscape of global sports continues to evolve, the long-term implications of MCO's rise remain a critical narrative to monitor.