From City Football Group to Red Bull, the multi-club ownership model has shown that it can bring success on the soccer pitch. Now, with an increasing number of private equity funds getting involved in soccer, this MCO model could become more common.
Given the potential for MCOs to improve both on-the-pitch and off-the-pitch performance, George Syrianos, founder and CEO of Fenida, a specialized soccer strategy and analytics consultancy, says that when it comes to the area of MCOs, there are still some “exploitable inefficiencies” where clubs can easily create benefits. He currently works as an advisor to the board for Premier League side Nottingham Forest, whose owner Evangelos Marinakis also owns Greek side Olympiacos and is in the process of buying Portuguese side Rio Ave.
Syrianos says MCOs allow owners to “diversify their investment across different markets and capitalize on synergies in player recruitment, sponsorship and branding opportunities,” but that the most intriguing aspect of MCOs is the ability to manage the player recruitment holistically, creating value in the process.
He points out that when it comes to looking at MCOs, Red Bull, which owns teams in Austria, Germany, the U.S. and Brazil, is a bit of an exception as “Red Bull has somewhat started from scratch” so is very identity-led and has “effectively standardized the entire player development and recruitment system.”
With other MCOs, this is unlikely to be the case as they will be made up of already well-established clubs with their own cultures and traditions. According to Syrianos, the biggest challenge in multi-club ownership is balancing and honoring the competitive interests, history and traditions of each club.
As well as transparent communication, he says “it is imperative that each club within the group remains ambitious” as it’s crucial for players to compete at higher levels to continuously improve as well as ensuring that “fans see the best possible version of each” club in the MCO.
City Football Group has certainly been the poster boys for MCO success on the pitch with several of its clubs winning league titles and now its team in Spain, Girona, being in contention for a Champions League spot in La Liga this season.
Another challenge for MCOs is finding the optimum level of connectedness between its clubs. MCOs can make strategic decisions through centralized management, and see huge benefits from having centralized recruitment, but it is also important that each club remains agile enough to adapt to their own unique situations.
But the benefits of getting an MCO right can be staggering.
Syrianos says a Premier League player costs on average $40 million to $50 million in transfer fees and salaries, but a club in Portugal or Belgium could be bought for a lot cheaper, even below $10 million. An MCO could then invest in three top talents from outside Europe for lower prices, create clear player pathways within the group, and try to use the Belgian or Portuguese club to develop those players to Premier League standard.
He says Brighton and Hove Albion are a good example of a club that has found a niche and discovered really undervalued players. Brighton have used their links with Belgian side Union Saint-Gilloise to help develop talents like Japanese midfielder Kaoru Mitoma.
They key to maximizing the return on investment as an MCO, according to Syrianos, is having better player valuation and player development models than other clubs. He says that even though club valuations might have potentially peaked in Europe, there are still many opportunities for smart owners and investors to explore. Africa and South America could be the next areas of MCO expansion, with Brazil in particular offering many commercial opportunities as well as being a soccer talent hub.
But simply being part of an MCO is not enough. More important is whether the MCO is structured properly to bring the most benefits to its clubs.