Football’s multi-club owners start to feel growing pains

Bill Foley’s budding football network is in expansion mode. The US billionaire made his first move into the sport in December, buying English Premier League club AFC Bournemouth for £120mn. Less than a month later, he added a stake in French team FC Lorient, a decision he said would help turn his new venture, Black Knight Football Entertainment, into a “leading multi-club football operator”.

Foley is just one among a host of US investors seeking to tap into the football boom by snapping up stakes in several clubs. The model was pioneered more than 15 years ago by energy drinks maker Red Bull but has recently become a mainstream investment play, with half the clubs in the Premier League now linked to counterparts elsewhere through their owners.

But as the multi-club structure gains traction, it is also beginning to ruffle feathers among fans and regulators. Foley’s arrival as a shareholder at Lorient was met with an open letter from one of the club’s fan groups, warning the club’s heritage was at risk.

“FC Lorient has boasted for years that it’s a family club with a strong identity,” they wrote. “Why then would an American, who knows nothing of our history, be allowed to buy shares?”

Days later, the mood worsened with the transfer of Dango Ouattara, Lorient’s star player, to Bournemouth.

Other investors are also encountering some pushback. John Textor, whose Eagle Football Holdings owns a 40 per cent stake in Crystal Palace, was greeted with protest banners at one recent home game following a report in the Financial Times that he was planning to list the group in New York.

“Multi-club ownership. Stock market gambling. Textor, we don’t trust you,” the message read. Eagle Football also owns Brazil’s Botafogos, Belgian tier-two club Molenbeek and acquired French team Olympique Lyonnais in December for €800mn.

Football clubs have increasingly turned to investors for capital since the coronavirus pandemic battered balance sheets. European governing body Uefa estimated that top-division clubs lost €7bn due to the pandemic over the 2019/20 and 2020/21 seasons.

Around 200 football teams belong to a wider ownership group operating a multi-club model, according to CIES Sports Intelligence, an increase from 111 before the pandemic.

⚽️ The rapid growth of football multi-club ownership is evident in the number of individual MCO cases (https://t.co/f00U3uklo5) and total number of clubs involved. At least 195 sides are currently part of a multi-club structure – a 75% increase in less than three years 🌎 pic.twitter.com/ZpHVoEI8BK

— CIES Sports Intelligence (@CIESsportsintel) September 15, 2022

That number is growing fast. Qatar Sports Investment, which has owned Paris Saint-Germain since 2011, recently bought a 22 per cent stake in Portuguese title challengers SC Braga, and has its sights on an ambitious move into multi-club ownership this year.

Miami-based 777 Partners is awaiting approval for its acquisition of a majority stake in Hertha Berlin. It also has a minority stake in Sevilla FC and Melbourne Victory, and owns Genoa, Standard Liège, Red Star FC in Paris and the Rio club Vasco da Gama.

Advocates of the multi-club model say it can bring financial stability, with benefits including shared central costs and a broader platform of teams across markets to attract sponsors.

“It is possible that global brands would be more attracted to a global club network even if [the clubs] are individual brands,” said 777 managing partner Joshua Wander. “We do believe that the overall multi-club strategy will help these clubs prevent long periods of distress.”

However, fans of Red Star FC protested against the 777 takeover. Wander said: “It’s really a small percentage of fans that are opposed to us [and] in most cases we’ve been welcomed with open arms.”

Some investors have looked to implement a joined-up game philosophy so that players and young coaches can easily move from one club to another within the group as they develop. At youth level, clubs can also share data and any insights into talent development.

If you invest in six clubs and one gets relegated, you still have five that haven’t

For owners, the multi-club model also hedges the risk of relegation, the practice of demoting teams for poor sporting performance over a season. In the US, leagues are typically closed and the same teams play against each other every year, whereas European clubs fight to avoid dropping to a lower division with greatly reduced income. Genoa was relegated to Italy’s second tier soon after being bought by 777.

“When you think about why not to invest in a football club, it’s relegation,” said Patrick Massey, a partner at Portas Consulting. “[But] if you invest in six clubs and one gets relegated, you still have five that haven’t.”

The same works in reverse — owning a handful of lower leagues clubs gives an investor a number of shots at promotion each year.

While there are few restrictions on investing in or owning clubs in different countries, there are rules on whether clubs controlled by the same entity can participate in the same European competition, such as the Champions League.

Industry executives say Uefa, which runs these competitions, is closely monitoring the trend.

Uefa’s latest report on the European club landscape found that multi-club ownership “is becoming more and more of an issue”. At a convention in November, Uefa said “regulation of multi-club investment [was] intensively discussed” . . . “with the aim to strengthen the protection of integrity and competitiveness of domestic and European club competitions”.

“I definitely think that the regulators will be considering this, because fundamentally how they consider the multi-club model is imperative — not just to protect sporting integrity, but also to keep the European football market free and open,” said Tim Bridge, head of Deloitte’s sport business group.

Some investors recognise that regulation is likely to rise up the agenda as more and more clubs join multi-club groups.

Wander of 777 Partners said: “My sense is in the coming year or two there’ll be a lot of engagement with global football governing bodies about what multi-club ownership should look like.”

Others, meanwhile, question whether clubs and sporting officials can afford to rebel against the model.

Jeff Luhnow, the former baseball executive who led the buyout of Spanish second division team Leganés through his investment firm Blue Crow Sports Group, said: “The multi-club model is drawing a lot of money and attention and interest into the game. I don’t see why any governing body would want to do anything to stop that.”