Multi-Club Ownership Goes Institutional
What began as opportunistic acquisition of feeder clubs has become a deliberate portfolio strategy, with a player-development pipeline as the principal asset.
Photograph: Jonathan Hutchins · CC BY-SA 2.0 · Wikimedia Commons
Multi-club ownership has passed the point at which it can be described as a curiosity. Well over a hundred professional clubs now sit inside groups with common ultimate ownership, and the largest groups hold stakes across four continents. The structure has moved from opportunistic to designed, and the design has a clear internal logic that is worth setting out plainly, because the public discussion of it rarely does.
The pipeline is the asset
A group’s value is not the sum of its clubs. It is the throughput of the pathway connecting them. A player identified in a South American or African market is acquired by a group club in a jurisdiction with permissive work-permit rules and a lower wage base. He develops there, in competitive senior football rather than in an academy. If he progresses, he moves within the group to a club in a stronger league, and potentially again to the group’s flagship. If he does not, he is sold externally from a club whose wage structure could absorb him.
Executed well, this compresses the cost of talent acquisition dramatically. The group is buying at the point of lowest information and lowest price, holding the development risk across a portfolio large enough to diversify it, and realising value at the point of highest liquidity. It is, in structure, closer to a venture portfolio than to traditional scouting.
The group is not buying clubs. It is buying the right to move players between jurisdictions on its own terms.
Where the regulatory framework fails
The rules governing this were drafted on the assumption that a club is an independent competitive entity transacting at arm’s length with other independent entities. Three provisions in particular are now doing work they were not designed for.
Related-party transfer pricing. When a group club sells to another group club, the fee is set internally. It can be set high to move value into a club approaching a financial-fair-play threshold, or low to move a player without triggering an amortisation charge. Regulators have responded by requiring that related-party transactions be assessed at fair market value, but establishing fair value for a twenty-year-old with sixty senior appearances in a second-tier South American league is not a determinable exercise. The assessment is a judgement, and the group has better information than the assessor.
Competition integrity. Rules prohibiting clubs under common control from competing in the same competition exist in most confederations, and groups have generally structured around them through minority holdings, blind trusts and staggered ownership percentages. These arrangements satisfy the letter of provisions written before anyone contemplated a nine-club portfolio.
Loan limits. Restrictions on the number of players a club may loan were introduced specifically to prevent stockpiling. Groups achieve the same effect through permanent intra-group transfers with buy-back clauses, which are not loans and are not counted.
| Tier | Function | Typical league level |
|---|---|---|
| Flagship | Value realisation, brand, media income | Top-five European league |
| Bridge | Development in competitive senior football | Second-tier European / top-tier smaller market |
| Entry | Talent acquisition, work-permit pathway | South America, Africa, Asia |
| Ancillary | Regulatory optionality, market access | Varies |
| Composite structure drawn from publicly disclosed group holdings. Arena Journal analysis. | ||
What the selling leagues get
The case made to smaller leagues is that group ownership brings investment, infrastructure and professional management to clubs that would otherwise struggle to fund any of it. That case is frequently accurate. Several entry-tier clubs in these groups have materially better facilities, medical provision and coaching than they could have financed independently.
The cost is that those clubs cease to be competitive entities pursuing their own sporting maximum. An entry-tier club’s function within a group is to develop and transfer players upward. It is not to win its domestic league, and where those objectives conflict — a player performing well being moved in January, a squad assembled around development rather than results — the group objective prevails. Supporters of those clubs are, in effect, funding a talent pipeline for a competition they will never play in.
The regulatory direction
Two responses are under serious consideration. The first is a hard cap on the number of clubs a beneficial owner may hold across affiliated competitions, with genuine look-through to ultimate ownership rather than the nominal-percentage tests currently applied. The second, and more interesting, is a requirement that intra-group transfers above a threshold be approved by an independent valuation panel with access to the group’s internal records.
The second provision would be substantially more effective and is being resisted much more strongly, which is generally a reliable signal about which measure the industry expects to bite.