Multi-club ownership in football challenges governance at many levels

Football is swamped with acronyms, but a new abbreviation has now become part of the game’s lexicon. Multi-club ownership (MCO) has become symbolic of the game’s globalisation with clubs owned or connected by owners from around the world and this growing interconnectedness has implications for the sport’s governance.

Formal and informal links between clubs around the world have existed for decades. The Parmalat conglomerate ran by Calisto Tanzi controlled Italian club Parma and the Brazilian side Palmeiras, while English company ENIC owned stakes in Glasgow Rangers, Slavia Prague, AEK Athens, Vicenza Calcio, Basel and Tottenham Hotspur.

ENIC’s ownership triggered a UEFA investigation into MCOs in 1999 when AEK and Sparta qualified for European competition. Subsequently, a rule banning two clubs with the same majority shareholders were banned from playing each other in the same European competition was brought in. Since then, what was then an oddity has ballooned into a phenomenon involving clubs all round the world.

The multi-club market is constantly shifting with stakes bought and sold, but open-source research by Play the Game at the start of October 2021 found 60 MCO groups with holdings in two or more clubs.

This research uncovered a network of 156 clubs from around the world, with owners or significant shareholders having stakes in two or more football teams. As tables 1 and 2 below shows, the largest number of clubs in MCOs is in the United States, but 106 clubs from 25 European countries ranging from England, Italy and Spain to Cyprus, Latvia and Luxembourg are also in MCOs.

Table 1: Multi-club ownership in the world as of October 2021

Table 2: Multi-club ownership in Europe as of October 2021

UEFA’s own research identified “just over” 100 European clubs involved in MCOs and three-quarters of cases involved a majority shareholding. In the remaining quarter of cases, the stake was below 50 per cent.

The rise of MCOs in Europe
In Play the Game’s research, England had the largest number of clubs involved in an MCO as the high value of TV rights and opportunities for sportswashing attracts foreign investors.

A number of Premier League teams are part of MCOs including Manchester City, which is part of the 10-club City Football Group controlled by the Abu Dhabi royal family, to Arsenal, whose owner Stan Kroenke also controls Major League Soccer club Colorado Rapids and US franchises in American football, ice hockey, lacrosse and esports.

In Italy, the growth of MCOs has prompted regulatory action. Two clubs with the same owner are prohibited from playing in the same league. In the summer of 2021, the Italian federation, the FIGC, acted after the promotion to Serie A of Salernitana, which is owned by Claudio Lotito, who also owns Lazio. The FIGC forced Lotito to place his ownership of in a trust and pledge to sell his stake by Christmas.

Aurelio De Laurentiis also owns Serie A side Napoli and Bari, who play in Serie C, while Maurizio Setti controls Verona and Mantova, and the FIGC recently brought in new legislation to deal with the issue.

“Not only will absolute control of the company be categorically excluded, but no participation will be possible either,” said Gabriele Gravina, president of the FIGC, which has banned MCOs but given existing owners until 2024/25 to resolve their cases.

In Denmark, eight clubs are now part of MCO groups after overseas investors left Naestved and Vendsyssel. Those departures caused some financial chaos and the Danish Football Union has started a review into foreign ownership in the country’s football clubs according to Offthepitch.com.

Foreign investors have been increasingly active in Belgium in the decade since Indonesian conglomerate Bakrie Group acquired lower league club CS Vise in 2011. Bakrie sold up three years later after buying A-League club Brisbane Roar, but there are now at least a dozen clubs in Belgium in MCOs.

In the neighbouring Netherlands, recent liberalisation of the rules now allows foreign ownership and Pacific Media, which controls clubs in Belgium, Denmark, England, France and Switzerland, took control of Dutch side Den Bosch in September.

In some cases, discerning the level of control can be difficult. Saudi Arabian businessman Turki Al-Sheikh owns Spanish side UD Almeria and in December was appointed as president of Sudanese club Al-Hilal. This role is only honorary but Al-Sheikh has reportedly been the financial backer between signings of foreign players to Al-Hilal this year. 

UEFA rules prohibits MCO clubs to play each other
UEFA has recognised the change between ownership and control and changed Article 5 of its competition rules. The controlling interest of 50.1 per cent brought in after the ENIC case was replaced by a rule that prohibits two clubs playing each other if the same person or group can “exercise by any means a decisive influence in the decision-making of the club.” How that control is regulated appears open to interpretation.

In the 2020/21 Europa League, Milan and Lille played each other twice as the French team’s owner Gerard Lopez was involved in a lengthy battle for control of the club with its main backer, fund manager Elliott, which also controlled the Italian side.

No impropriety is suggested and both clubs qualified from their group, but the games were not subject to any intervention from UEFA, which had earlier allowed two Red Bull subsidiaries – Leipzig and Salzburg – to compete in the 2017/18 Champions League after an investigation.

MCOs affects the competitiveness of the market
The commercialisation brought by larger MCOs such as Red Bull is not always readily accepted by some supporter groups, but their concerns extend into the impact on governance.

Antonia Hagemann, chief executive officer of Supporters Direct Europe, says:

“It creates different tiers of clubs: the parent and a feeder club. If you are a fan of a parent club then you are lucky, but not if you are a fan of a feeder club.”

“It could also be the end of transfers as we know it as there could only be transfers between clubs. As a player you can start off with a feeder club and move up to a parent club, but this promotes inequality and poisons the competitiveness of the market. If you have this group of clubs that trade between themselves and shift players back and forth it is cheaper and puts them at a competitive advantage.”

At some MCOs, there is a clear attempt to establish a group philosophy in terms of pooling resources and a common playing style, which can allow players to move more easily from smaller to larger clubs.

Although international players union FIFPRO has said any clauses in contracts that force players to move to another club in an MCO against their will would be “abusive”, this type of intra group trading has benefits for the owners.

Shifting players between clubs within the same MCO means there is no need for transfer fees, or any fees can be set by the group for a financial benefit, such as shifting losses onto one club to potentially evade taxes.

Financially stronger clubs snap up weaker clubs
Over the years, there have been many examples of teams suffering after becoming part of larger concerns, including the collapse of Parmalat in 2003 with Calisto Tanzi jailed for fraud and the Italian club becoming insolvent.

More recently, the investment in MCOs has come from US investment groups and Fernando Roitman, the founder of CIES Sports Intelligence, says:

“At the highest level, there is an increase in the quality of investors but if you go lower down the pyramid, you see more shady investments, and these should be looked at.”

Taking control of small, weak clubs is easier and often little can be done when complications arise. In March 2021, entrepreneur Flavio Becca, who controls Swift Hesperange in his native Luxembourg and Royal Excelsior Virton in neighbouring Belgium, was sentenced to two years in prison and fined 250,000 Euros for abusing company assets but remains in control of both clubs.

Heritage Sports Holdings (HSH) took over Gibraltar United and in 2018 bought a stake in Italian side Rimini with financing for both based on cryptocurrencies. HSH was also involved with another Italian club, Mantova, but a year later Gibraltar United – one of the British territory’s oldest clubs – collapsed amidst claims of unpaid wages for players.

This summer, an MCO created by Armenian group Noah halved in size. Three players at Noah Jurmala in Latvia – all from abroad - were banned and fined 1,000 Euros apiece for match fixing, while another subsidiary, German club KFC Uerdingen, nearly collapsed due to financial problems. Noah has since exited Latvia and Germany but retains control of Yerevan FC in its native Armenia and ACN Siena in Italy.

Yet the MCO model looks likely to persist with many smaller clubs struggling to survive in the wake of the COVID-10 pandemic. Financially stronger larger clubs are well-placed to snap up fiscally weakened clubs, and in recent months Andrea Radrizzani and the Fenway Group, owners of English Premier League clubs Leeds United and Liverpool respectively, admitted they are considering acquiring other clubs.

MCOs could threaten UEFA
Another development expected is consolidation between groups. Of the 60 MCO groups identified by Play the Game, 40 groups had stakes in just two teams, but Olivier Jarosz, managing partner at sports consultancy Club Affairs, warns that larger groups will appear and pose a threat to the game’s governing bodies:

“UEFA have to regulate because potentially [MCOs] are competition,” says Jarosz.

“If there are a handful of MCOs with a lot of clubs then that is power. Unity is power.”

The number of known MCOs is highest in Europe and the USA but Play the Game’s research also found 50 teams further afield from Australia to Bolivia, Cambodia, China, Ecuador, Mexico, Sudan, Uganda and the United Arab Emirates.

This increase in pancontinental MCOs increases the chance of two clubs qualifying for FIFA’s Club World Cup, which would also create a problem, but how UEFA or FIFA can regulate MCOs remains difficult.

Previous regulation has been from a competition perspective but Alex Phillips, former head of governance at UEFA, says that the increase in MCOs does not have to be bad if regulated differently.

“You have to ask what the purpose of an MCO is,” says Phillips.

“If it’s to evade taxes and launder money then it’s obviously bad but if it is investment then it doesn’t have to be. From a financial perspective, it can make a lot of sense. But regulators should regulate from a transfer perspective and regulate the number of contracts each club can offer. If you limit contracts, clubs need to rely on their academies.”

This, he argues, would stop clubs stockpiling players and instead of alienating fans could create a greater bond.

MCOs are unlikely to go away any time soon and how the game’s administrators deal with regulating challenge will affect the relationship between fans, players and clubs in the years ahead.