Summary
In the rapidly changing landscape of the global football industry, a new trend known as multi-club ownership (MCO) is reshaping the business dynamics of the sport. By 2023, over 300 football clubs were integrated into MCO systems globally, a notable figure highlighting its growing significance. But why is there so much hype about MCO, especially in the football industry? The MCO model involves entities owning multiple football clubs, which are often based in different continents and participate in different leagues. But what is driving MCO motivations? These range from talent development to financial synergies and strategic market expansion. In the following article, I aim to provide a high-level examination of the implications associated with the operation of MCOs by drawing on insights taken from industry reports and academic perspectives.
The concept of MCO through a management theory lens
The reason behind the growing interest in MCO and its emergence as a trend in the football industry and beyond draws heavily on management theories traditionally linked to multinational enterprises. Such a theoretical framework is the so-called Internalisation Theory, which explains how firms internalize operations with the aim of reducing market inefficiencies.
The term and theory were originally coined by Stephen Hymer and later expanded by Buckley & Casson (2011). Under Internalisation Theory it can be explained how MCOs mitigate risks related to external markets, such as inflated transfer fees or inadequate health and fitness data on players. By keeping operations like scouting, training, and player transfers within their network, MCOs enhance efficiency and achieve economies of scale by spreading costs and sharing resources across clubs. Another insightful academic perspective in explaining the emergence of MCOs is the Business Group Theory, which emphasizes the collaborative benefits of interconnected networks (Khanna & Palepu, 2000). MCOs are capable of bundling resources, sharing best practices, and facilitating knowledge transfer across clubs in their portfolio, creating operational efficiencies.
This model is met particularly in decentralized MCO structures where no single flagship club dominates, thus fostering a culture of mutual growth and exchange of expertise, which in football is more tacit and less explicit in nature (e.g., know-how of managing football operations, experiential learning of the club’s football director, etc.).
The evolution of MCO
The concept of MCO in football was first observed in the early 2000s, while the first time it gained traction and popularity was with the emergence of the City Football Group (CFG) in 2008. Starting with the acquisition of Manchester City, CFG expanded its portfolio to include a total of 13 other clubs globally to date, including Girona FC in Spain and Melbourne City in Australia (see Table 1 for the latest CFG formation). CFG’s strategy exemplifies the interconnectedness of MCOs, leveraging shared resources to nurture talent and amplify their global footprint.
At the same time, the Red Bull Group emerged as another pioneer of MCO, acquiring and developing clubs like RB Leipzig in Germany and Red Bull Salzburg in Austria. This global network promotes player development, with football players often moving from smaller clubs of the portfolio to flagship teams, creating a talent pipeline while ensuring competitive performance across leagues. In the last 4-5 years, we have observed the most recent wave of MCOs in the global football industry. This time, the investors are mainly investment funds and diverse stakeholders.
For instance, Groups like 777 Partners and BlueCo have invested heavily in acquiring or partly acquiring European football clubs aiming at a common goal; to broaden their football club portfolios to span multiple leagues. Middle Eastern and Asian investors, such as the Saudi Arabian Public Investment Fund (PIF), are also driving the global trend.
These entities view MCOs not only as a financial opportunity but also as a means of general influence across their home borders. This is particularly important as through MCO, many state-owned organizations, mainly from Middle Eastern countries, are able to exert influence in the global sports industry and beyond.
Table 2 presents numbers on MCO investment transactions in the period between 2012 and 2022.
MCO benefits
There are many benefits associated with the operation of MCOs. First, MCOs have transformed football transfers by internalizing player movements in clubs of the same portfolio. Transfers between clubs under the same ownership umbrella often bypass market inefficiencies, such as inflated fees, which typically erupt from external bidding wars.
For instance, the transfer of Erling Haaland from Red Bull Salzburg to Borussia Dortmund shows how Red Bull’s system supported the Norwegian talent’s development before he moved to a higher-tier club within the MCO. Second, the structure of multi-club ownership allows teams within the same network to navigate Financial Fair Play regulations more efficiently by redistributing resources across their portfolio, including player transfers, loans, and financial investments. For instance, the transfer of David Carmo from Porto FC to Nottingham Forest FC and immediately his loan to Olympiacos FC, both part of the same ownership group under Evangelos Marinakis, exemplifies how MCO clubs leverage their networks to comply with FFP while boosting sporting performance.
Third, the ability to move players seamlessly also offers developmental advantages. Young talents can progress through structured pathways within an MCO, gaining experience in lower-pressure environments before competing at the highest levels.
MCO risks
It goes without saying that MCO offers several operational benefits. Yet, everything beneficial has its price.
First, a key challenge for MCOs is the potential conflict of interest. With multiple clubs under a single ownership, questions arise about the integrity of competitions, especially when clubs within the same network compete in the same league or continental tournaments, such as the UEFA European competitions.
Second, MCOs can increase inequalities within football. Smaller and financially less independent football clubs may struggle to compete against MCO-backed powerhouses, which are characterized by having access to a pool of extensive financial and non-financial resources. Such a practice grants more power to a handful of wealthy entities, potentially jeopardizing the diversity and unpredictability of the sport.
Finally, some fans and local communities feel alienated by the corporatization of their clubs. For instance, while City Football Group has achieved remarkable success, critics argue that its globalized approach detracts from the unique identity and heritage of its individual clubs.
Some final thoughts
As a reaction to the risks and challenges discussed above, football governing bodies, with key entity leading the discussion being UEFA, have put MCO practices under scrutiny. UEFA, for instance, has tightened rules to prevent clubs with shared ownership from competing in the same tournaments.
However, regulatory enforcement is more complex than it looks, as MCOs have the ability to diversify across continents and leverage legal obscureness. Given the voices raised and the backlashes emerging from regional football associations, football fans, and the whole football ecosystem in general, it is expected that MCOs are likely to face stricter regulatory oversight as the regulatory bodies responsible for the governance of the football industry aim to balance innovation with fair competition.
As the MCO concept continues to evolve, its impact on football will depend on how stakeholders address these challenges. Striking a balance between innovation and preserving football’s core values will ensure that this model benefits players, fans, and the broader football ecosystem.
Academic sources
· Buckley, P. J., & Casson, M. 2011. Marketing and the multinational: extending internalisation theory. Journal of the Academy of Marketing Science, 39(4): 492–508.
· Khanna, T., & Palepu, K. 2000. Is group affiliation profitable in emerging markets? An analysis of diversified Indian business groups. The Journal of Finance, 55(2): 867–891.
Online media sources:
· World Soccer. (n.d.). Special report: Multi-club ownership. Retrieved from https://www.worldsoccer.com/best-of-ws/special-report-multi-club-ownership-412142
· Conn, D. (2023, June 17). Multi-club ownership becomes the risky model for America’s soccer spree. The Guardian. Retrieved from https://www.theguardian.com/football/2023/jun/17/multi-club-ownership-becomes-the-risky-model-for-americas-soccer-spree
· SportBusiness. (2023, December). Rapid rise of multi-club ownership posing challenges for football, report reveals. SportBusiness. Retrieved from https://www.sportbusiness.com/2023/12/rapid-rise-of-multi-club-ownership-posing-challenges-for-football-report-reveals/