Rise of Sports Multi-Club Ownership (And It’s Altering Impact)

Once a rarity…

Multi-Club Ownership (MCO) has gained significant traction in recent years, altering the landscape of professional sports.

There are many forms of multi-club ownership, but it typically refers to investors buying stakes in two or more teams simultaneously.

The goal? To maximize performance and profitability, leverage synergies, share resources, and centralize operations.

Let’s Dive In 👇

Understanding Multi-Club Ownership

MCO is shaping the future dynamics of sports, impacting competitive balance, talent distribution, and global branding.

The concept of MCO can be traced back to the early 20th century, with sporadic instances where wealthy individuals owned multiple clubs.

But it’s hit the mainstream over the last few years:

• leagues allowing private equity investors
• the boom of sports team franchise valuations
• interest in developmental leagues like MiLB & tier 2 Euro Soccer

The thing is…

Most private equity groups buying up the ‘low-hanging fruit’ will have an exit in mind before they buy their stake.

This is why soccer supporters in Europe vehemently oppose MCOs (especially considering it’s mainly foreign groups executing them).

If the financial institutions cannot meet their profit targets, then fire sales are likely; players will go, and sides will be relegated.

Rollback is out of the equation unless governments do it through legislation forcing owners to divest their interests (highly unlikely).

Interestingly…billionaire Michele Kang said multi-club ownership is “a necessity” for women’s soccer to continue growing.

Benefits of Multi-Club Ownership

When you go to sell…having multiple clubs typically receives better multiples than just one stand-alone team.

On top of that:

• Clubs within MCO networks often experience a 20-30% increase in commercial revenues due to shared sponsorship deals and global branding efforts.
• The average market value of clubs under MCO structures is estimated to be 15-25% higher than independently owned clubs in similar leagues.

AI, data analytics, and other technologies are set to enhance talent scouting, performance analysis, and strategic decision-making, further refining the MCO model.

RedBird Capital has publicly stated they like multi-club ownership for a few reasons:

1. Diversification is risk-prudent.
2. There is a synergy operationally and investment-wise with best practices that you can do across all of the IPs that you touch.

Permanent capital is an appropriate type of capital for sports — and while the public markets aim to serve that, they’re not ready yet.

Let’s look at some MCO examples.

Diamond Baseball Holdings

Diamond Baseball Holdings (DBH) didn’t exist four years ago…

Today, they own 35 of the 120 affiliated minor league franchises (29%).

• ‌Triple-A (11)
• Double-A (12)
• Single-A (6)
• High-A (6)

They are agnostic to geography and club affiliation — if you’re one of the 120, they are interested.

DBH has taken advantage of new rules:

• The MLB increased the number of teams you could own to 14 per league, giving DBH an upper limit of 56 teams (47% of the total).
• The group has a contract with MLB to help negotiate national sponsorships for all 120 teams, giving it a hand in the strategic direction of the entire organization.

What’s next for DBH?

Acquiring more teams and generating additional revenue by hosting non-baseball events at their stadiums on the nearly 300 days per year when there’s no game.

Multi-Club Ownership in Soccer

The increase in teams owned by MCO’s is astonishing:

• 2021: 117
• 2022: 227
• 2023: 300
• 2024: 336+

Multi-club ownership allows owners to diversify their investment across different markets and capitalize on synergies in:

• sponsorship
• player recruitment
• branding opportunities

The most intriguing aspect of MCOs in soccer is the ability to manage player recruitment holistically, creating value in the process.

RedBull, the energy drink company, owns multiple soccer clubs globally:

• RB Leipzig 🇩🇪
• NY Red Bulls 🇺🇸
• Red Bull Brasil 🇧🇷
• Red Bull Salzburg 🇦🇹
• Red Bull Bragantino 🇧🇷

There’s big money in transfer fees and RedBull has perfected this between their teams (which have also drastically increased in valuation).

Profluence Capital MCO

For example, one of our operating investments at Profluence Capital is Westchester SC (an expansion USL1 soccer team).

In only a few months we’ve:

• Inked the 2nd largest jersey sponsorship deal in the USL (without even playing a game yet).
• Signing a former Premier League player who has scored goals in the World Cup to finalize his career with WSC.
• One of the fastest teams from expansion agreement to public announcement in USL history (4 months, the average team takes 2 years).
• Acquired a local youth academy & have land/stadium situated for when we want to complete those.

With all this early traction what are we looking to do?

• potentially raise outside capital to replicate the playbook and create our own multi-club ownership ecosystem

And this gets interesting…

Considering our media reach, global network, and access to the newest & greatest technologies in and around sports.

Looking Ahead

The evolution of sports team ownership is:

families ➞ billionaires ➞ private equity ➞ fan ownership ➞ public markets

I expect multi-club ownership to ramp up in:

• upcoming leagues and sports
• college sports (once they hit the market)
• emerging markets (Africa, Middle East, & Asia)

Exciting times ahead!