Multi-Club Ownership: Conflict & Temporary Solution

Multi-club Ownership (MCO), the fastest growing investment buzzword across private capital in world football today, is at an inflection point. It can either go rapidly upwards or plateau itself on a wait-and-watch mode.

The reason is the absence of a structured governance framework from the bodies like FIFA / UEFA leading to unnecessary complicated situations. Case in point, the dilemma between admitting Crystal Palace and Olympique Lyonnais in European competitions. We will discuss about this in a detailed manner in the later part of this blog.

First, what is MCO? UEFA European Club Investment & Finance Landscape defines ‘multi-club ownership’ a situation where a party exerts control and/or decisive influence over more than one club, while ‘multi-club investment’ refers to a situation where a party has investment interests in more than one club (without exerting control or influence). In the recent few years, the rapid spread of MCO network has been astounding.

The idea of owning multiple clubs began to take its present-day shape in the form of Red Bull acquiring clubs for its marketing purposes followed by the formation of City Football Group (CFG), probably the first serious pursuer of the modern day MCO structure with its 13 football clubs spread across North America, South America, Europe, Asia and Australia.

The success of CFG followed by a combination of macroeconomic factors, financial weaknesses of multiple football clubs accelerated by COVID and emergence of football as asset class investments have resulted in an increasing number of investors, both private and institutional, to venture in the multi-ownership route.

The attractiveness of MCOs, for investors and club owners alike, lies in the core word ‘synergy’. A multi-pronged approach, the ‘synergies’ created by the group clubs can offer various benefits to its stakeholders. From player development giving them a clear pathway to stronger commercial value to partners, a MCO would be in a better position to offer this, and more.

What began as a shareholding idea has now over 140+ operating MCO groups, a mix of small and big players, having around 400+ clubs and over 13,000 players under them.

Spread Across Leagues

Over the past few years sports, especially football, has transitioned rapidly from vanity to asset class investment leading to involvement of institutional investors like private equity (PE) or venture capital (VC) firms, family offices etc. With an increasing number of such institutional investors coming in, as a natural diversification and risk management, a greater number of MCO’s are getting established across European football leagues.

Clubs from higher revenue generating ‘big five’ leagues have become the primary target followed by the clubs from lower-division leagues. As per UEFA Benchmarking Report 2024, 105 top-division clubs (13% of all UEFA clubs) have a cross-investment relationship with one or more other clubs.

Another set of groups who have consciously stayed in the lower division leagues with the aim of increase in valuation / revenue with the advancement in leagues.

Across the top-30 highest revenue generating clubs in 23/24:

– 47% or 14 clubs are backed by investors with a private equity (PE) connect.

– 60% or 18 of the top 30 money-league clubs are part of the multi-club ownership (MCO) network

– 30% or 9 of the top 30 money-league clubs are part of both, the MCO network as well as PE connected

The trend is expected to continue at a faster pace. The chart displays the entrenchment of MCO-affiliated clubs across the ‘big five’ leagues:

SBI’s Masters in Football Business and Management program has a dedicated module with the top football industry decision-makers, best speakers and material on the emergence of multi club ownership and their growth. The course si designed to kickstart your career in the football industry.

Please read here for more details.

The Conflict Situation

Crystal Palace has for the first time ever in their history reached a European competition after their historic victory over Manchester City. Palace’s complicated ownership structure includes John Textor’s 43 per cent stake, who is also holding an 88 per cent stake in the French club Olympique Lyon, incidentally, who have also qualified for the Europa League.

The situation is further complicated by another Palace shareholder, David Blitzer, who happens to hold a stake in the Danish club Brondby, who have qualified for the UEFA Conference League. As per the current rules, this makes all or one of clubs to disqualify from competing in European competition.

Way out? Put one club into a ‘blind trust’. This framework is a temporary measure to ensure a complete separation of operational activities, including governance, transfer targets, and scouting data, between the affiliated clubs.

However, it is completely temporary. Many clubs had taken this route to ensure continuance in European competition participation like Nottingham Forest owner Evangelos Marinakis placing his shares into a “blind trust” should Forest have qualified alongside another of his clubs, Olympiacos, for the Champions League. Similar move was done by Todd Boehly’s Chelsea and Strasbourg. This will barely solve the issue till a final permanent governance benchmark is created.

In Conclusion

Multi-club ownership is here to stay and grow. With each passing year, the number of clubs becoming part of such groups will only grow. It’s time to create the best business practice structures, from governance to regulatory controls to address potential conflicts of interest.

Regulators like UEFA have their job cut out and they need to act fast.