Multi-club ownership (MCO) is rapidly reshaping the global sports landscape, significantly influencing the world of soccer. This investment trend sees stakeholders acquiring multiple teams simultaneously, aiming to harness shared resources and strategic advantages. Despite its promising financial benefits, MCO remains a divisive topic among fans and traditionalists.
A Transformative Trend
The surge in MCO, particularly within European soccer, is laying down a blueprint for modern sports investments. Traditional private equity groups, which typically have an exit strategy in mind, along with dedicated sports investment firms, are capitalizing on this model. "Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake," noted an industry insider.
Amidst this booming trend, RedBird Capital has been vocal about the operational synergies that MCO offers. "There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch," a representative from RedBird Capital commented. Such synergies often manifest as increased commercial revenues for clubs within MCO networks, reportedly up by 20-30% due to shared sponsorship deals and global branding efforts.
Economic Upsides and Technological Integration
From a valuation perspective, clubs tied to MCO structures are experiencing a market value uptick of 15-25% compared to their independently owned counterparts. This financial viability is further bolstered by technological advancements. Artificial intelligence and data analytics are playing pivotal roles, refining scouting, training, and operational efficiencies.
While the economic incentives of MCO are evident, with multi-club owners navigating profit-driven pathways, concerns loom large over its long-term impact on soccer’s competitive essence. Soccer supporters, particularly in Europe, remain predominantly opposed to MCOs, fearing it undermines the traditional and community-centered spirit of the sport.
Women's Soccer and Legislative Hurdles
The reach of MCO isn’t confined to men’s soccer alone. Women's soccer is also benefiting from this investment model. Michele Kang succinctly remarked, "Multi-club ownership is ‘a necessity’ for women’s soccer to continue growing." This inclusive growth signifies a broader impact of MCO on the global sports ecosystem.
Despite widespread apprehensions, a rollback of MCO practices appears highly unlikely. "Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely)," emphasized an anonymous expert. This legislative inertia suggests that the MCO model will likely remain a staple of modern sports investments.
Challenges on the Horizon
However, financial pressures threaten to disrupt this progressive trend. Should financial institutions waver in meeting profit targets, clubs might face "fire sales," leading to player sell-offs and potential relegations. This precarious balance underscores the financial tightrope MCO investors walk, where sustained profitability is essential to maintaining stability.
The scale of MCO's adoption is illustrated by figures that reveal the number of soccer teams under such structures surged from 117 in 2021 to a projected 336 by 2024. This expansive growth showcases investor confidence but also raises questions about the potential for overreach and market saturation.
Pioneers and Influences
Prominent entities like Red Bull exemplify successful MCO models, owning multiple clubs worldwide, including RB Leipzig, NY Red Bulls, Red Bull Brasil, Red Bull Salzburg, and Red Bull Bragantino. Similarly, Diamond Baseball Holdings (DBH) demonstrates MCO’s versatility beyond soccer, controlling 35 of the 120 affiliated minor league franchises in baseball. DBH's contracts with MLB to negotiate national sponsorships for all minor league teams highlight the commercial muscle MCO can exert.
New entrants like Profluence Capital are also looking to carve out their niche within this burgeoning ecosystem, suggesting that MCO’s attractiveness as an investment vehicle continues to expand.
Westchester SC: A Case in Point
Taking the USL by storm, Westchester SC epitomizes the rapid ascension possible within MCO frameworks. In a remarkable feat, the club secured the second-largest jersey sponsorship deal in USL history and signed a former Premier League player, showcasing its market pull and ambition. Achieving public announcement status within just four months from their expansion agreement, Westchester SC set a new benchmark for operational efficiency in the league.
As MCO continues to evolve, its impact stretches beyond immediate financial gains, shaping the future of sports in unprecedented ways. While financial stability, strategic synergies, and technological augmentation present clear benefits, the traditional spirit of the sport and community sentiments remain in delicate balance.