Transformation of Global Sports Landscape through Multi-Club Ownership
The world of sports, particularly soccer, is witnessing a significant evolution with the rapid rise of multi-club ownership (MCO). This concept, where investors acquire stakes in multiple teams simultaneously, is changing the dynamics of the game. Private equity groups are at the forefront, often with the intent of an eventual exit strategy rather than a long-term operational commitment. This strategy has brought both opportunities and controversies, especially in European soccer, which is seeing the most pronounced impact.
A striking feature of MCO is its ability to increase commercial revenues for clubs. Teams within MCO networks often experience a 20-30% surge in commercial revenues, buoyed by shared sponsorship deals and global branding efforts. This trend is backed by tangible data; the average market value of MCO-affiliated clubs is estimated to be 15-25% higher than their independently owned counterparts in comparable leagues. The model's efficiency is amplified by technological advancements, with artificial intelligence and data analytics playing crucial roles in refining operations.
Despite these financial benefits, MCO is not without its detractors. Soccer supporters in Europe are predominantly opposed to the concept, viewing it as a departure from traditional club ownership structures. The resistance from traditional sports communities highlights a significant cultural divide. As one observer noted, "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)." This entrenched opposition raises questions about the future of MCO in regions with deep-rooted soccer traditions.
Nevertheless, legislative intervention on a large scale seems improbable. The financial mechanisms underpinning MCO are complex and deeply integrated within the global sports economy. However, financial institutions' unwillingness to meet profit targets could lead to "fire sales," where players are sold off, and clubs face the risk of relegation. This potential volatility adds another layer of unpredictability to the MCO landscape.
Implications for Women’s Soccer
Interestingly, the influence of MCO extends beyond men's soccer, impacting women's soccer as well. Michele Kang, a prominent figure in the sport, asserted, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." This statement underscores the perceived importance of MCO in providing the necessary financial and operational support to elevate the women's game to new heights. Consequently, the number of soccer teams under MCO structures has surged from 117 in 2021 to a projected 336 by 2024, reflecting a broader acceptance and implementation of this ownership model.
Case Studies: Red Bull and Diamond Baseball Holdings
Red Bull is a notable example of MCO in action, owning multiple clubs worldwide, including RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. This broad ownership allows for operational synergies and strategic investments across different markets. A spokesperson from RedBird Capital, another major player in the MCO space, noted, "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch."
The trend is not confined to soccer alone. Diamond Baseball Holdings (DBH) exemplifies MCO's reach in baseball, owning 35 of the 120 affiliated minor league franchises. DBH has secured contracts with Major League Baseball (MLB) to negotiate national sponsorships for all 120 minor league teams, showcasing the potential for centralized commercial strategies under the MCO model.
New Entrants and Noteworthy Deals
New players are continuously entering the MCO arena. Profluence Capital is looking to create its own MCO ecosystem, while Westchester SC is making headlines within the USL. Westchester SC recently inked the second-largest jersey sponsorship deal in the league and signed a former Premier League player for his final career stage. The club has also set records as one of the fastest teams to progress from an expansion agreement to public announcement in USL history, achieving this milestone in just four months.
As the landscape of global sports continues to be reshaped by multi-club ownership, the debate around its implications for tradition, commercial success, and the future of soccer remains vibrant. The ongoing developments will undoubtedly be closely watched by stakeholders across the sports world, from club owners and investors to fans and players.