Multi-club ownership (MCO) is revolutionizing the soccer landscape at an unprecedented pace. MCO entails investors acquiring stakes in multiple teams simultaneously, a concept that has seen substantial growth, particularly in European soccer. What was once a novel idea has swiftly gained traction, revealing both promising opportunities and stirring controversies alike.
Growth of MCO
In 2021, the number of soccer teams under MCO structures stood at 117. By 2024, this figure is projected to soar to 336, indicating a significant shift in how soccer clubs are managed and owned. The driving force behind this trend includes private equity groups and investment entities who see enormous potential in leveraging shared resources across their networks.
Nevertheless, these investors often look to exit strategies rather than long-term operational involvement. As one insider puts it, "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake." This emphasis on short-term gains has raised questions about the sustainability and intentions behind such acquisitions.
Commercial and Market Benefits
The financial upside for clubs involved in MCO structures is evident. Teams within such networks frequently experience a 20-30% increase in commercial revenues thanks to shared sponsorship deals and global branding efforts. Additionally, the average market value of MCO-affiliated clubs is estimated to be 15-25% higher than independently owned clubs in comparable leagues. Clearly, the economic benefits of MCO are substantial, offering clubs financial robustness and enhanced market positions.
Technological advancements further bolster these advantages. The integration of artificial intelligence and data analytics into club operations signifies how MCO is continuously evolving. These tools enable clubs to refine on-field strategies, optimize player performance, and streamline management practices.
Controversies and Opposition
Despite the apparent benefits, MCO faces considerable criticism, especially from traditional sports communities. Soccer supporters in Europe have predominantly expressed their opposition to MCOs. For them, the concept runs counter to the traditional ethos of sportsmanship and local club loyalty. "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests, which is highly unlikely," says an observer, highlighting the contentious nature of the debate.
This opposition isn’t just limited to fans but extends to broader cultural sentiments within the sport. The idea of seeing cherished local clubs subsumed into larger corporate networks creates discomfort among purists and long-time supporters.
Impact Beyond Men’s Soccer
The influence of MCO has also permeated women's soccer. Michele Kang succinctly stated, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." This assertion underscores the role MCO can play in elevating women's sports, bringing in much-needed investment and fostering development at various levels.
Examples of MCO Success
Red Bull serves as a prime example of successful MCO. With clubs like RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino under its umbrella, the sports energy giant has demonstrated the potential of MCO in building globally recognized brands.
In baseball, Diamond Baseball Holdings (DBH) has made significant strides by owning 35 of the 120 affiliated minor league franchises. DBH's contracts with MLB to negotiate national sponsorships for all 120 minor league teams illustrate the potential of MCO beyond soccer, making inroads in America's favorite pastime.
Profluence Capital is another name seeking to create a multi-club ownership ecosystem. The firm’s vision aligns with the operational synergies and investment best practices emphasized by experts. "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch," notes RedBird Capital, highlighting the coherence and efficiency gains of MCO.
Challenges on the Horizon
Despite the positive narrative around MCO's growth and benefits, financial realities pose significant challenges. The unwillingness of financial institutions to meet profit targets could lead to "fire sales," resulting in mass player transfers and potential relegations for some clubs. This underscores the volatility and risks associated with the practice.
Conclusion
Multi-club ownership is undeniably reshaping the global sports scene, buoyed by economic advantages and technological advancements. However, as it continues to grow, the accompanying controversies and opposition can't be ignored. Whether MCO will ultimately benefit or harm the sport remains an ongoing debate, but what is certain is its profound impact on how we view and manage sports today.