Transformation of Global Soccer through Multi-Club Ownership
In recent years, the global sports landscape, particularly soccer, has witnessed a transformative shift with the advent of multi-club ownership (MCO). This strategy, where investors acquire stakes in multiple teams simultaneously, is rapidly reshaping the sport’s dynamics and commercial potential.
One of the notable features of MCO is the involvement of private equity groups. These entities often prioritize short-term gains, with an eye on an eventual exit strategy rather than long-term operational commitments. "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake," states an industry insider.
Opportunities and Controversies
The surge of MCOs, especially in European soccer, brings both opportunities and controversies. Traditional soccer supporters across Europe have largely voiced their opposition to this model, raising concerns about the dilution of club identities and competitive integrity. Despite the outcry, a significant rollback of MCOs appears improbable. "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)," notes a source familiar with the situation.
However, MCO-affiliated clubs are reaping substantial financial benefits. Clubs within these networks typically experience a 20-30% increase in commercial revenues, thanks to shared sponsorship deals and enhanced global branding efforts. Furthermore, the market value of these clubs tends to be 15-25% higher than their independently owned counterparts in comparable leagues.
Advancements in Technology and the Role of AI
Technological advancements are playing a pivotal role in refining the MCO model. Innovations in artificial intelligence and data analytics are enhancing operational synergies and investment strategies. This approach echoes the sentiment expressed 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."
Expanding Influence
MCO's influence extends beyond men's soccer, significantly impacting women's soccer as well. Michele Kang underscores this sentiment, asserting, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." The coordinated effort across multiple clubs can provide the necessary resources and visibility to elevate the women's game.
According to data, the number of soccer teams functioning under MCO structures is set to rise sharply, from 117 in 2021 to an estimated 336 by 2024. This growth trajectory underscores the model's expanding footprint in global soccer.
Case Studies: Red Bull and Diamond Baseball Holdings
Prominent examples of successful MCOs include the Red Bull conglomerate, which owns several clubs worldwide, such as RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. These clubs benefit from shared resources, best practices, and a unified branding strategy.
Beyond soccer, Diamond Baseball Holdings (DBH) exemplifies MCO's reach into other sports. DBH owns 35 of the 120 affiliated minor league baseball franchises and has contracts with MLB to negotiate national sponsorships for all minor league teams. By centralizing commercial operations, DBH maximizes revenue opportunities for its extensive network of teams.
The Case of Westchester SC
Westchester SC is another testament to the accelerated growth and influence of MCO structures. The club made headlines by signing the second-largest jersey sponsorship deal in the USL and bringing on board a former Premier League player for the latter stages of his career. Remarkably, Westchester SC set records as one of the fastest teams to move from an expansion agreement to a public announcement in USL history, accomplishing this in just four months.
Future Outlook
While MCOs continue to attract attention and stir debates, the model appears to be entrenched in the contemporary sports business environment. As RedBird Capital illuminates, "Permanent capital is an appropriate type of capital for sports — and while the public markets aim to serve that, they’re not ready yet." The integration of technological innovations and the synergistic potential across multiple clubs position MCOs as both a disruptive and perhaps indispensable force in modern soccer and beyond.