Multi-club ownerships – Is it the future of football?


It has become one of the most prevalent topics in professional sports media: multi-club ownership, in many cases, has been deemed as a business model that may dominate the next chapter of world football. However, while multi-club portfolios offer much appeal, such complex ownership structures also pose special risks and should only be pursued and implemented if they provide the best approach for achieving the goals of the shareholders. With those sentiments top of mind, KPMG Football Benchmark reflects on recent industry trends and assesses underlying strategic considerations related to multi-club ownership structures.

As of 2017, and based on UEFA’s analysis, there were at least 26 first-division clubs across Europe involved in cross-ownership, in which a private person, club or entity had control of or a decisive influence over more than one club. The number of such scenarios is surely higher today, also due to the fact that UEFA’s list is limited to cases where at least one European club is included. Moreover, because of various legal and regulatory aspects there are ’hidden’ cross-ownership relations, where UEFA’s official definition of the phenomenon is not met.

Illustrated by the growing number of clubs involved, multi-club ownership has become a spectacular and popular approach over the past decade. With growing commercialisation and broadcast appeal, professional football has presented an increasingly lucrative investment opportunity. However, buying and running a top football club has mainly become the privilege of private investors or organisations with outstanding financial capabilities, whereas these individuals or entities are also in a position to be able to establish portfolios with a wide range of assets. In addition, increasing polarisation within professional football has resulted in financial disparity between a handful of ‘elite’ clubs and other members of the football landscape, enabling powerful clubs to extend their own business operations through the acquisition of other smaller clubs of strategic fit.

Diversifying the business portfolio, growing the brand, gaining global exposure or optimising operations are among the expected benefits that drive owners toward multi-club structures. However, despite the potential offered by the complex business model, challenges and risks are accordingly manifold: running clubs in various jurisdictions and business environments, sometimes on various continents and with varying fan expectations, amongst others. Therefore, multi-club ownership structures in particular require a clear vision and strategy and should only be implemented if they are aligned with the owner's core purpose.

The major decision to be made has to do with moving towards a multi-club ownership structure, or following a single-club model. Multi-club ownership is an alternative business model and should not be considered the ultimate objective of every club; it has clear benefits, but should only be implemented if it is the best approach to achieve the goals of the shareholders. Derived from the group strategy that considers the whole portfolio, the next question is whether there is a flagship club with other supplier clubs in the hierarchy, such as in City Football Group, or, at the other end of the spectrum, there are more equal peer clubs across the portfolio – a consideration common in other ‘traditional’ industries, where either horizontal or vertical integration through M&As are typical. Furthermore, club-level strategies should clarify and specify the goals, roles and responsibilities of individual clubs, to prevent counterproductive competition within the group instead of fostering the exploitation of synergies. Finally, the specific business functions and activities of the football clubs need to be established.

The most obvious area where a chain of clubs can realise a competitive advantage, compared to independent individual clubs with divergent interests, are the areas of on-field performance and player development in particular. As there is an ever-increasing fierce competition for accessing and developing top talent globally, clubs are looking for alternative solutions. One dominant approach is vertical integration, meaning that some club owners, mostly from the biggest competitions, are acquiring satellite clubs in smaller leagues with the aim of securing playing time for their young talents, who would otherwise be blocked from getting first team opportunities. Once they reach their full potential, they can either return to the parent club or find permanent positions in- or outside the group. Examples include English Premier League side Leicester City’s owners, the Srivaddhanaprabha family, which also controls OH Leuven, currently in Belgium's top division; or French sides AS Monaco’s and Lille’s satellite association with Belgian clubs Cercle Brugge, and Royal Excel Mouscron, respectively. The latter deal, struck last summer, triggered the transfer of over 10 young players from LOSC to Mouscron. Lille’s owner, Luxembourg businessman Gerard Lopez, also expects that Mouscron’s famous academy will create more young local talents to play later, not only for Mouscron but Lille as well, or to be sold to other top clubs at a premium.

The Red Bull portfolio represents a similar approach and covers even more levels of the pyramid (including FC Liefering, a second-division Austrian club, seen as a feeder club for Red Bull Salzburg and RB Leipzig), offering an ideal ladder for a young player to develop before reaching the highest stage of football.

Alternatively, if a group structure comprises more peer clubs, they are able to minimise sports-related risks and optimise on-the-pitch performance by transferring or swapping players to specific positions in case of injuries or a shortage in the squad. Watford and Udinese, for example, both under the ownership of the Italian Pozzo family, have completed over 50 transfers between themselves in the past decade, often sending some players back and forth. During this year’s summer transfer window there were seven players involved, including Spanish midfielder Gerard Deulofeu and Argentinian attacker Roberto Pereyra, leaving relegated Watford and joining Udinese on loan, with the goal of securing top-tier football.

Groups may effectively manage the professional development of players within the portfolio and thus can circumvent the traditional mechanisms of the transfer market in a win-win situation for both players and the organization, which can offer players a career path within the portfolio, whilst optimising the player trading balance of the whole group at the same time. However, it is important to establish principles around player development in line with the group strategy, and to lay down technicalities about transfers of individual players, such as internal pricing, to avoid, or at least tackle clashing interests.

In addition to enhancing sporting performance, synchronised business operations might yield a competitive advantage from various angles, as a multi-club portfolio provides efficiencies and synergies within cross-club value chains. Firstly, the centralisation of certain functions can be beneficial for various reasons. Although the global presence and influence of some football clubs might create a false illusion, even the organisational size of the biggest clubs is relatively small compared to entities in many different industries. Clubs are often struggling from lacking a sufficient level of human resources in departments of the business. Through the establishment of totally or partially centralised service functions in certain areas, such as finance, HR, or marketing, clubs can take a step towards cost-efficiency as well by sharing costs among several clubs.

An even greater advantage might be capitalising on synergies across the whole group. Institutionalised and incentivised knowledge sharing at all levels among clubs can help all parties stay competitive in an increasingly professional industry. A great example of the power of knowledge and experience is the current news surrounding OL Groupe, the listed parent company behind the men's and women's teams of Olympique Lyonnais, which has taken over the US-based National Women’s Soccer League side Reign FC (since renamed to OL Reign) in a USD 3.51 million deal. Among the reasons for the expansion, Vincent Berthillot, appointed COO of the NWSL team, mentioned the possibility to "build as many synergies as possible between the two clubs, both on the playing side and the business side".

Marketing is another area where a group of clubs may possess better opportunities than a standalone side. Individual cases vary to a large extent, but in almost all cases marketing considerations have served as a strong motivation for multi-club ownership. A portfolio of clubs can provide access to various markets, increasing their owners' bargaining power. City Football Group’s global deal with Puma, covering five clubs worldwide, including its flagship Manchester City FC (but excluding New York City FC due to the MLS’s collective sales approach), is reportedly worth GBP 650m (USD 860m) over 10 seasons. Based on financial statements released by Manchester City FC, 92% of the revenue is attributable to the Citizens’ men’s and women’s teams. Other, smaller clubs in the group are benefitting from the centrally-brokered deal, allocating funds to them proportionately. On the opposite side of the agreement, the German sportswear giant gained access to markets on four continents. Clubs in the CFG portfolio also benefit from sharing similar brand characteristics, values and visual identity.

Another well-known example where a global brand is looking for global exposure and visibility, is the Red Bull footballing empire. The Austrian-based energy drink producer considers investment into football as a global marketing tool, and clubs are deliberately located in some key markets: Europe, South America and North America. Branding, from kits designed to match the Red Bull visual elements to integrated communications, is at the core of all business functions at the clubs within the group.

As the idea of multi-club ownership filters into the mainstream of football management thinking, the more decision makers have to strategically evaluate the opportunities entailed in the concept of multi-club ownership. The likes of Andrea Radrizzani, majority owner of Premier League outlet Leeds United, who reportedly envisions the creation of a group involving two or three clubs from other European leagues, are finding themselves at crossroads, where all of the strategic considerations summarized above should be carefully explored.