Multi-club ownership trends: Governance and regulation

In last year’s report, we interviewed Juan Arciniegas, a managing director and Co-Head of Sports, Media and Entertainment at 777 Partners LLC (777), in connection with the rise of multi-club ownership within the football industry and the many benefits that owners can utilise when owning a network of football clubs. Since last year’s publication, Norton Rose Fulbright have advised 777 on their investments into Hertha BSC (in March 2023)  and Melbourne Victory (in October 2022).  Separately, City Football Group have also acquired majority stakes in Palermo (in July 2022)  and Bahia (in May 2023)  to take the total number of clubs in which it has ownership interests to 13. UEFA’s annual “European Club Footballing Landscape Report” identified 82 top-division clubs across Europe – or 11 per cent of the total – as having a “cross-investment relationship with one or more other clubs” and their analysis concludes that this trend is being fuelled predominantly by US-based investors.

UEFA’s report, however, was not wholly complimentary about the increase in multi-club ownership, citing that it “has the potential to distort transfer activity, with an increasing percentage of transfers being executed within multi-club investment groups at prices that suit investors, rather than at fair values, to the detriment of trainer clubs (which receive less compensation in the form of solidarity payments)”. Other critics argue that the expansion of multi-club ownership “raises a potential scenario where football could be dominated by three or four rival networks who own the biggest clubs in every league in every continent” or where clubs sacrifice their identities to become subordinate feeder clubs within a larger corporate structure.

UEFA’s report also acknowledged that multi-club investment “has the potential to pose a material threat to the integrity of European club competitions, with a growing risk of seeing two clubs with the same owner or investor facing each other on the pitch”.  Indeed, in April 2023, French newspaper L’Equipe reported that, despite its Coupe de France victory, Toulouse may not be able to compete in the Europa League next season due to the fact that it is owned by RedBird Capital Partners (who also own AC Milan)  and Article 5 of the Regulations of the UEFA Europa League broadly states that no legal entity can have control or influence over more than one club participating in a UEFA club competition.

The regulations governing two teams within the same ownership structure competing against each other were most significantly called into question in 2017, when RB Leipzig and Red Bull Salzburg – both part of the Red Bull group – qualified for the Champions League. UEFA had initially deemed the clubs could not both compete in the competition due to their ownership links but, after an investigation, UEFA allowed both clubs to qualify due to no individual or legal entity having a “decisive influence” over the two clubs,  which led to some commentators calling into question the effectiveness of the rules.  Indeed, many commentators believed that it would have been unlikely that UEFA would bar both Toulouse and AC Milan from competing in the same European competition due to their ownership and presumed that, with some “structural changes”, a deal would have been reached with UEFA.

The increase in multi-club ownership will inevitably lead to closer inspection and further challenges of these regulations and, earlier this year, the UEFA President, Aleksander Ceferin, acknowledged that UEFA may need to reconsider the current regulatory framework and have “strict” rules in place.  UEFA is certainly in a precarious position in this regard; whilst restrictions on multi-club ownership at a domestic level is common – UEFA’s report indicates that 36 top divisions across Europe have rules restricting multi-club ownership at a domestic level – UEFA cannot currently block the acquisitions of clubs themselves and, instead, UEFA regulations govern access to the tournaments that it manages.

UEFA is, however, by no means powerless when it comes to governing multi-club ownership; qualification for European competition is often a key performance metric for football clubs, not to mention an important source of revenue. Given how embedded multi-club ownership is across European football, it may be difficult for UEFA to take a hard line on this regulation – indeed, Ceferin has indicated that UEFA cannot prohibit the concept completely  – but which direction UEFA takes remains to be seen. Prospective and current owners will no doubt keep a close eye on any developments in this area over the coming years. In the meantime, however, we expect these multi-club ownership groups to expand in both number and in scale. Recent adopters of this model include Todd Boehly and Clearlake Capital, who have recently acquired a controlling stake in Ligue 1 side RC Strasbourg  and Kevin Nagle (owner of US soccer side Sacramento Republic, who currently play in the Western Conference of the USL Championship) who has also recently completed his takeover of Huddersfield Town.