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- [00:02]
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- [01:01]
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- [01:28]
Athletic FC Podcast Network
The Athletic FC Podcast Network.
- [01:34]
IO Akinwalere
Welcome to the Athletic FC Podcast with me, IO Akimwaleere. Whether it's Manchester City, Chelsea or even Bournemouth, more and more Premier League clubs are sitting as part of a multi club ownership portfolio. But why? How do multi club ownership groups work? Are they purely about making money or do they help guarantee success on the pitch? Right, with us today we've got Matt Slater, who will be with us for the next three days. Actually, as we take time during the international break to explore the concept of multi club ownership, or as you'll probably hear more often now, MCOs. Right, Matt, this is fascinating because we've spoken about this before several times on the podcast, but just break it down very quickly in the next three episodes. What are we looking to?
- [02:23]
Matt Slater
Well, I think the first thing we're going to try and do is just define some terms, right? What are we talking about? I think, you know, we're going to bandy these phrases around. I just think we shouldn't assume too much knowledge. Right? So what is a multi club group? You know, and I think people are probably grasping, right, well that's One owner or one group of owners and several clubs. Right. And that could be in one sport, it could be across a range of sports. So we're going to get into all of that. So once we've sort of defined basic terms, we're going to then move on. Right. Why, given that we talk so often about how hard it is to run one club, why would you willingly, knowingly run several? Now again, different strokes for different folks. There are some people doing it because they think they can save a lot of money on back office, just sort of consolidate and you can cut costs there. Other people are doing it because they really, really interested and they're convinced that you can make money on player trading. So you create almost like a little walled garden. Other people are doing it because they are, it's all about strategy. Right. They want to be in key markets and they are maybe sort of projecting something to the world. Other people just, it really is about the top club and winning and they think that by having a farm system for the other reasons, you know, that player development, that recruitment, that cutting of costs, everything just serves the mothership. So there are loads of reasons that's why people are doing it. It has become sort of the idea of the moment, but at the moment it is kind of an idea. Yeah. You know, no one's really, I don't think anyone's absolutely nailed it. People have got close and people are sort of in the process maybe of nailing it but no one has smashed it out of the pipe. All my metaphors all over the place here. Some people are absolutely failed. So you could be like, well, is it one of those ideas? So that's where we are with it. It is like I say so many of the conversations I have about buying new clubs, it's someone that's already bought a club somewhere else and it is actually a multi club play.
- [04:20]
IO Akinwalere
Well, it's also true, you know, we've been speaking to some really interesting people and also we've been listening to you guys as well because on Wednesday we're going to attend to answer your questions on multi club ownership. So please do let us know what you think and hopefully we'll try and give you our best answers to what you are looking for. Right. Matt, what do you think we're going to learn in the upcoming episodes about MCOs? I guess in comparison to what you and I as the fan might think of them. Right.
- [04:47]
Matt Slater
If we do it right, this is what we're going to get. I think what they are, we're going to talk about who's doing it. Well, we're going to find some examples and we're going to hear why they're doing it. So that's part two. And then I think we're going to also talk about some of the cons, if you like the negatives from the outset. This is an unproven thesis. We have seen over the last 5, 10 years several examples of clubs that have been bought have been added to multi club groups who frankly feel like they've been colonized, they have become feeder clubs. No. 1. Well, unless it's kind of baseball, where your kind of place in the pecking order is very, very clear, I wouldn't want my team to become part of a multi club group. We've seen a lot of this. There's been pushback certainly in certain countries like Belgium, Netherlands, France, where so many of these multi club groups have looked right, they've had a mothership, they've had the biggest, you know, alpha club. And they're thinking, what markets do I need to be in? Where, where are players? Well, players are in Belgium. It's great, great for, for player development, Paris. And they're also sort of thinking, well, those clubs, those leagues don't have great TV deals. There's a lot of losses there. They kind of struggled in Covid. Basically they're cheap, they're affordable, they're, they're a little bit desperate, some of them. So Belgium in particular has just been picked apart by multi club investors. France is going that way and frankly, some of those fans are like, no, it wasn't that long ago where our owner was the local Mr. Big and we didn't always agree, but at least that guy, we were top of his list of priorities. So that I think is something we're going to explore too.
- [06:22]
IO Akinwalere
Yeah, I love that. And also I'd love to know if anyone's actually making any money out of it. Anyway, today's episode is focusing on what MCOs are involving. A conversation you've had with AJ Swoboda from 21st Group. Now let's break this down very quickly. Who is AJ Swoboda and what is 21st group?
- [06:41]
Matt Slater
Well, we'll do 21st group. Group first. They are, I mean, there's several of these out there. They're a really clever consultancy. They use a lot of data and analytics and they advise clubs, leagues, potential investors on, you know, how best to structure their businesses to spot opportunities, you know, clubs to buy. They do all kinds of work. Like I said, it's very sort of data led football and golf, I think are their main sports. But they're into everything now. So I've known those guys for a while. AJ is their guy in the States. He's their guy on the West Coast. He's very, very good at sort of football investment. How often do we talk about football takeovers? And the money is American money. He's the guy that they should be calling to do due diligence, to sort of talk through their plan. So that's why I thought he'd be great for this.
- [07:29]
IO Akinwalere
Okay, fantastic. Well, next we'll hear from AJ Swoboda, speaking with Matt all about mcos.
- [07:36]
You're listening to the Athletic FC podcast with IO Accamulere.
- [07:41]
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- [08:11]
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- [08:42]
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- [09:15]
IO Akinwalere
All right, well, let's find out more about what MCOs actually are and more importantly, who actually does it. Well, here's Matt Slater in conversation with AJ Swoboda.
- [09:29]
Matt Slater
Aj, thanks very much for joining us. Can we just start off by explaining what is multi club ownership?
- [09:37]
Athletic FC Podcast Network
You know, I guess at its most basic definition, multi club ownership Refers to a single, either an entity or an individual or investment group owning stakes in multiple sports organizations across different leagues, different countries. I think the term MCO in particular has really led to an assumption of that being just football clubs. But it doesn't necessarily need to be just football organizations. It could be multi sport as well. It could be something that's true. Common ownership, majority control of a bunch of organizations that all are branded similarly. So I think the likes of Citi Football Group or Red Bull could be more affiliate networks. So, you know, some majority control stakes, some minority stakes, but some joint ownership that know, infers some level of coordination or cooperation across those entities or across those regions. Or it could be exclusively a minority investment play that has less to do with the operations and more to do with the exposure to sport and wanting to diversify the financial exposure to sport across an industry. So you think a firm like Arcto Sports Partners, who pride themselves on taking specifically non control positions in sports assets around the world, but have a very particular methodology within individual sports, but then also across sports, what can you tell.
- [11:04]
Matt Slater
Me about the history of it? When did, let's say football people start talking about mco?
- [11:11]
Athletic FC Podcast Network
The first real concept of that actually was Sir Alex Ferguson. So back in the late 1990s, Manchester United loaned a bunch of players to a Belgian club. I think that was way before the time of what we're talking about now, but I think at least planted. Yeah, exactly. Yeah, I planted the seed of what an informal or formal alliance between clubs might look like across different regions. I think the, the first in football, the first real formal example of it I think would have been Red Bull. You know, they were obviously branding Red Bull the energy drink and using sport to do so play a certain type of way, have a certain model to how they want to feel the roster and have that be emblematic of, of their company brand. And I think that then led the way to the likes of Manchester City and the creation of Citi Football Group. And then since then it's been a bit of a hockey stick curve up to the right of different ownership groups and different owners finding reasons why an MCO model might work for them. And we've definitely, you know, we're in inning four or five of the progression of what that model might look like as people look at other examples and then find their own version of creativity of what that might look like.
- [12:23]
Matt Slater
Okay, well we got a definition, we've got some history. Give me the thesis. What is throw them all out there? Why do we do this?
- [12:32]
Athletic FC Podcast Network
I think the reality is in multi club ownership, it can be incredibly varied depending on the institutions you're involved in, but ultimately the thesis of, of the investors and, you know, or the principle of whatever it is that they, they're starting off. So the classic advantages that are mentioned are things like player development, creation of player pathways, data driven scouting and recruitment networks, kind of financial efficiency or operational efficiency, shared resources within clubs, brand expansion. Any MCO will have some version of those. Some of them will be weighted more towards some than the others. For every MCO that we will talk about today, but others that might pop up, I'd really encourage anyone listening or thinking about this topic to really drill down into what's really the leading strategy here, what's really the leading motivation for why a group is doing this? Because in our research and our understanding, working with groups, it's really truly varied.
- [13:34]
Matt Slater
So, AJ those are the positives, what are the potential pitfalls?
- [13:38]
Athletic FC Podcast Network
Why?
- [13:38]
Matt Slater
What you know, what should you be careful of if you are going into an MCO strategy?
- [13:44]
Athletic FC Podcast Network
Owning and operating just one sports team, one football club, is difficult. And doing it successfully requires real and consistent effort. Even being a minority investor in a sports team football club is not for the faint of heart. Doing that across multiple organizations, particularly if it's your first time doing that, starts to multiply the complexity of those challenges. You know, you're talking different regions, different cultures, different tiers within the ecosystem, perhaps. So different levels of professionalism and the amount of variables and challenges you're dealing with can multiply very quickly. Other challenges or kind of controversies that I imagine you have in mind are things like potential conflicts of interest. So UEFA and FIFA trying to figure out how to draw lines around organizations that traditionally were independent but are now interdependent. I think Red Bull is a great example of that. Historically, I think that was probably the first time as, as Leipzig improved as an organization and Salzburg did as well, and you had two teams playing in the same UEFA competition. Red Bull needed to create clear lines of demarcation between what was an operational mco, what maybe was a branded MCO to the public to make sure that they could quell some of those concerns. Likewise, competitive integrity issues. If you know teams are prioritizing player development in some region and diminishing the performance of some teams in order to help the performance of another team, what is the impact of that not only on that team's fan base and community, but on that broader region? Right. So if an entire league becomes a bunch of teams owned by MCO owners, but those Clubs are not the marquee club or equal to being the marquee club, then what does that create for that environment? Related to that is fan backlash. So we've seen that a lot in the last ham handful of years as newer MCO owners or operators have come to the fold and maybe haven't had the right understanding of how to engage with a community and the club around their strategy and instead are just focused on their strategy in the clouds. There's also a lot of regulatory uncertainty. So governing bodies and leagues are changing, they're evolving their rules as different actors in the space stretch the bounds of what counts as an MCO and how different relationships work. That's kind of an interesting segue into another type of, I guess, multi organization ownership model, which is there are a lot of these MCOs that will leverage other assets in their broader portfolio to create value for their property. Right. So an ownership group might also own a brand or have a certain influence in the brand and use that brand to sponsor their team and create value for both entities within their investment portfolio. Is that a conflict of interest? Is that legitimate? Working through those types of problems, I think will only be more and more necessary, but it's starting to create a more complex ecosystem that maybe reflects more of traditional business.
- [16:46]
Matt Slater
Yeah, well, it certainly is. Look, given all those potential problems and actual problems, real problems, and we talk about them on the podcast regularly, why has multi club become almost the sort of idea du jour? Why do I hear it constantly, particularly aj dare I say, from people from your side of the Atlantic?
- [17:10]
Athletic FC Podcast Network
Yeah, it's a good. I appreciate the jibe. I think again, I would really be hesitant to classify or archetype North American investors in a particular way because there really is a pretty wide array of both understanding as well as maybe respect and caution about the history of global football or European football or whatever it may be. So it's very difficult, given particularly the amount of activity coming out of North America, to kind of pin everybody in the same description. One thing that is true about North American approaches to sport is it really is a different ecosystem. I think by and large the North American sports ecosystem is commercially driven. I think there is an understanding that ownership has the kind of right or the duty to make money and create value for whatever that enterprise may be that they have. There's also been, I think, a history of this multi club ownership concept in North America that predates a lot of this growth. So I'd kind of peg MCO growth really starting to pick up in maybe 2015. 2016 in global football. But if you think about ownership groups of major sports franchises, a lot of the initial ones started in North America, whether that's Kroenke Sports and Entertainment, you name it. There are a lot of groups that might own multiple franchises within the same city and try to create a bit of a monopoly of sports and entertainment in that city. It's venues, it's sports teams, it's potentially media companies or something around that. And then there are others that have that same construct, but it's not defined to just a particular region or a particular city. So there's definitely more of an understanding of the fact that that can be done, whether that's at a holding company level or just sharing IP between sports organizations. And, you know, let's be real. I. I guess I'm North American in the sense that I believe that sports organizations should be run as businesses. But what I mean by that is, you know, if you're running a good business, you are treating fans right, you are treating the community right, you are making sustainable decisions that are good for the health of that entity, because that's good business. What I don't mean run as a business is you run it into the ground and take all the money out of it while you're doing that. Right. So I think it's difficult in today's world of sports professional sp to believe that an owner should be a benefactor, should be willing to just lose money endlessly on behalf of the community's success. I think that's certainly a model, but I think more and more what you're seeing is a transition to more of this North American model, which is, can you create good business which is good for the community, which is good for the team? So long winded intro to saying, I think now what we've got is as North American investors have come in to looking at international sport, and particularly global football, particularly European football, for, you know, the scale of influence that you can have and the level of operational growth and improvement that they believe that these teams can have relative to what the norm is in North America. They say, if we're going to go do this for one, should we build a strategy where we can do this across multiple and does that create different avenues of growth for us? I will at the same time, though, be appropriately, I guess, skeptical. I hope this doesn't come off as cynical, that most of the people that are trumpeting the value of MCOs are people who are still fundraising to raise money to be able to invest in MCOs. You don't often see people who are using their own money or people who already own multiple stakes in multiple organizations out there broadcasting the benefits of MCOs that maybe I laid out at the beginning. And so I do think there's a kind of depth versus breadth dynamic going on right now with the reference of MCOs where it's kind of this tagline, headline grabbing way to try to explain narratives. But, but in reality the, the way you make the economics work can be very different depending on what that strategy might be.
- [21:14]
Matt Slater
I think that leads me nicely to a question really about who's doing it well. Okay, so who's doing it well in terms of their own terms of reference? So who is actually delivering on what they set out to do?
- [21:27]
Athletic FC Podcast Network
I like that question. I mean the obvious one I think will be City Football Group or Red Bull. I'll go with City Football Group because I think they really push the envelope that Red Bull started. But they've got a very clear kind of holding company at City Football Group operational network and strategy. They've got folks who work across multiple clubs and they have a very, I guess a clear top down directive of what they want to be doing. But then they have a set of a management team that's truly empowered along the directive of what the global strategy is. They're empowered to then figure out how to make their own decisions within the kind of broader pieces of the portfolio. Got a strong recruitment network across continents. They've been really building out their brand, both the City Football Group brand, but really the Manchester City brand and big markets that may not be traditionally footballing markets where you might think a player coming from that market will then play for Manchester City in competition. But they found ways to extend the reach of their, their brand and their. I kind of liken them to Disney as a corporation. So you know, your, your Manchester City players are these characters that you want people to start to follow, you want people to start to understand and you want to then spread that awareness around the world as much as you can because that ultimately helps the kind of crown jewel in your empire. So it's not to say that, you know, their efforts in New York City for example, or in Girona or in South America are, are invalid. But there is this kind of global brand building strategy that they've been building out at both the club level and the player level that I think has been pretty difficult to see anyone do better over the last, call it, decade of, of that effort. Since they've really been starting their, their multi club expansion.
- [23:22]
Matt Slater
Who's doing the player trading model.
- [23:24]
Athletic FC Podcast Network
Well, that I think is a great question because I A common refrain that comes from our business or comes from me is player trading in an MCO for profit or for financial return. To believe that that is sustainable as a business plan I think is a fallacy. Player trading is a valuable component of an mco. I would actually argue that your player recruitment network growth is more valuable in an mco. So if you own a team in Uruguay as well as in Europe, as well as in Asia, you start to have a local knowledge base of all of the talent that might be in that ecosystem. Right? You might have 20, 30 players in your first team in that team, but you also are going to be more aware of other talent that might be on a competitive team or might be, you know, in a different country that you just wouldn't be aware of if you weren't in that market. So I think there's a, there's kind of a player development lens that isn't as clear as buy a club in Japan, develop a player in Japan, have them transfer over into Europe and then play in the Champions League. And you know, you got that player for free because they were within your network and within a transfer. When we've done analysis in the past, I'm not going to say who it is, but the multi club ownership group that best transfers players between its clubs transfers an average of about one player per club per team within the network. So that is really not going to move the needle financially in our basis. It's not a bad model, but that can't be the financial model or the strategy behind why you're making those investments. Because the cost of doing that and the operational burden of doing that relative to the return tends to be a bit misaligned. We find though that that's quite a long tail and the kind of median, or maybe what you might expect of a, of an MCO is more like, you know, a transfer per club per, per two to three to four years. And so you're, you're not, not moving players. But it requires a lot of things to go well, right? You, a player needs to be willing to move. They need to be able to then perform well in a new environment and a new geography, most likely, which already comes with a lot of uncertainty. And player trading in general already has a lot of uncertainty. So it'd be hard to point to an MCO that religiously is player trading. Well, I would though point to a couple of organizations that do that well, but I don't think it's only because of their mco. So Brentford initially were part of an MCO and also having FC Midgelands that they've since sold. But for a period of time, as Brentford climbed up from the championship to the Premier League, they had another club that they were able to not only consider sourcing talent from if they wanted to, but they actually used that as a place where they could innovate on ideas that they wanted to try to implement in how the organization performed on the sporting basis. And if there were ideas that worked or systems that seemed to work well, processes that seemed to work well, then they would bring those in to their main club in Brentford to make sure that they weren't testing out ideas that would then fail when they were on the kind of knife edge of either getting promoted or not.
- [26:40]
Matt Slater
Where do you see this going? Where are the trends going with mco? So what kind of countries? I mean obviously people were thinking Brazil, Portugal is a kind of landing spot for Brazilian players, obviously Africa, Eastern Europe. Where's buzzy? Where's the sort of buzzy place? And then as a sort of second bit of this question, is it maybe not buying another club, Is it maybe doing something else? Is it maybe buying a different sport? Where are the clever people going with this?
- [27:13]
Athletic FC Podcast Network
I think the way to maybe structure answering that question, is the intent behind an MCO sporting led or is it commercially led or is it some combination of both? So if it's sporting led, if you think about the global football ecosystem, just the professional ecosystem, I guess you've got 60, 70 world class players who are like truly what you would classify as kind of best in the world. And then the pyramid of players that sit underneath that in the ecosystem is unbelievably vast. So you've got then 250, 300 elite kind of big five players who you expect to be starting for a potentially winning team in those leagues. You've got another thousand players that are a bit more average, that are getting real minutes for a competitive team in those leagues. You've got a couple thousand players that round out the rest of that type of a tranche of teams. And then you've got like 30,000 other players that are around the ecosystem. So the breadth of what you can do lower down in the ecosystem is kind of eye watering. It's difficult to really imagine and I would imagine that there will be owners who will come up with more and more innovative strategies for how to use the breadth of that ecosystem. I think a great example of that, that they tend to fly under the Radar, but right to dream as an organization had been around for I think a couple decades now and had a very particular model for how they wanted to not only scout, but really produce and create a kind of professional talent ecosystem that originally started in Africa and Ghana. And then as they started to do that and had success developing individuals that operated more like a professional sportsman, then they found a way to get a foothold in Europe and they bought a team in Denmark that wasn't a big city team, didn't have a big commercial brand and used that as a destination point to be able to test their talent at a professional level. And that, you know, FC Norgeland has still had huge success in European competition while executing the strategy that they've looked to execute, which is trust young players, empower young players, team effort. They always played some of the youngest starting 11 squads in European competition and they perform. And then what do they do from there? They go and invest in a majority stake of an MLS team. This is the inaugural season in San Diego and they are doing well. I think they're surprising everyone in the league with their, not only their style of play, but their talent that isn't marquee talent, but it's in that it's from that huge ecosystem of global football. And they have a really clear sports operations lens through how to find talent in that murky ecosystem. And I think there'll be a lot more commercially led focuses too, where an owner might say, hey, we're a North American sports franchise or we have multiple of them and we know how to build stadiums or how to commercialize match day revenue, or know how to kind of elevate the brand IP of a sports organization into something that creates value and then as a result can produce revenue. So we're going to take that model and we're going to bring it into a new sport of European football and we're going to find these assets. We might not actually even be involved in the sporting operations, but we can help build out a new stadium or we can help figure out how to commercialize a new stadium that may exist. And I definitely think there'll be more of that because I think North American investors see an opportunity for growth of that again, that North American sports mindset. And then I think you'll have some folks that will look at it through the operational efficiency lens. So very crudely, we know how to operate professional sports teams. It may be in a different league or maybe in a different sport, but there's a general method to the madness of knowing how to run a sports team like a business, but have it be a successful sporting product, not just something that you, you know, extract dividends from. And we're going to take that model to other sports. It might be new sports, it might be more venture sports, it might be existing sports that need, you know, that commercial partner, an operational partner that sits behind the existing ownership. But I think you'll start to see that as well. And again, I. Arctos are clearly have been doing this well over the last five, six years, but, but they bring a wealth of expertise. They're not trying to pick a roster or pick players, but they're bringing a wealth of expertise and a network. So when an owner needs help or needs a partner to look to, they can pick up the phone and speak to someone that's been solving those problems all over the world.
- [31:51]
Matt Slater
Well, look, A.J. that's fantastic. I think you've given a wonderful overview of what's going on, what we're talking about. I think you've set us up really, really nicely for the rest of the series. Thanks very much and I'm sure we'll speak again. Certainly your answer there about the stadium operations made me think of a big team in the northwest of England that is talking about, you know, building a brand new stadium. And I think they need partners, they need help.
- [32:15]
Athletic FC Podcast Network
Great, thanks for having me.
- [32:20]
IO Akinwalere
All right, next we'll break down Matt's conversation with AJ before looking ahead to what comes next in our focus on multi club ownership.
- [32:29]
You're listening to the Athletic FC podcast with IO Akinwalere.
- [32:34]
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- [34:05]
IO Akinwalere
This is the Athletic FC podcast with IO Acamolera.
- [34:11]
Such an interesting interview, Matt. Honestly, so fascinating to hear what AJ Swaboda had to say from 21st Group. And I think you caught him off guard on a couple of questions, if I'm honest. But he answered it hopefully as honest as he possibly could. Now, a lot of the focus on investors from North America, understandably, I was really interested in what he had to say about how investors from across the Atlantic see this as a business opportunity, Matt, as opposed to being benefactors. What do you make of that? Firstly, but secondly, that point he said about buying a business, but also not just taking from the business and, you know, thinking about the fans. Is there such a thing as ethical capitalism? Is there such a thing as buying and also thinking about the people that might have made this club what it is?
- [34:59]
Matt Slater
Oh, yeah, we're getting into some deep, deep territory early on here. Well, look, I think good capitalists and Americans would say they're good capitalists. I've heard that one would tell you that good business is looking after your best customers. Now, I know football fans go, oh God, I want to be a customer. I'm a fan. Right? Okay, fine. If we can just sort of get over that. You are customers. They're in the entertainment business. The thing that you like is an entertainment product. I know we feel about it more strongly than we do about favorite film or a TV program, but if we can just sort of get our heads around that. A good owner should be trying to please you. So is it ethical or not? They would just say it's good business. So that is, I want a good product on the pitch, right? So I'd like to win. I'd like a nice range of drinks and food at reasonable prices. I'd like to go to the club shop and see a good range of stuff there that's reasonably priced. Yeah, I'm a good guy. So I'd like this stuff to be kind of ethically made. And I'd like the idea of Us doing something in the community because you know, I'm about that. So all these things that we would consider ethical, a cold hearted capitalist would say, yeah, I've got no problem with that because I'm about making my best customers happy. That's your virtuous circle. So yeah. Does it always work out like that? No, of course not. In any sphere are there times where ethics and cash sort of hurtle into each other and one of them falls over? Yeah, otherwise I wouldn't really have a job. That's kind of what I do here. So you know, generally speaking I think you can do ethical things because it's in your interest to do them.
- [36:38]
IO Akinwalere
Okay, fair enough. Now City Football Group and Red Bull were two oper actually and examples that AJ noted as MCOs that were doing it. Well, is it that because they're probably the longest running ones?
- [36:51]
Matt Slater
Yeah, I think so. I mean look there, there are people have been doing a bit longer. So you know a good example would be the Pozzos Udanasi and Watford. People first really started talking about this with enic. You know, ENIC are the people that also ultimately own Spurs. I don't want to get into a whole nother podcast about who actually owns spurs at the moment but, but you know, theoretically they do. They were doing this in the 80s 90s, they were sort of buying stakes in Slavia, Prague and Vicenza and lots of other clubs. So they were the ones that kind of got you away for thinking about this. You know, the, the potential conflicts of interest and the impacts on their own competitions. So people have been doing this for a while and, and also as AJ talks about, there have been multi club models that have spanned sports. So this is really common in America, you know, where Mr. Big will own the baseball, the NFL team, the ice hockey team. Right. So that, you know, that's been out there for a while and even sort of Sir John hall, that Newcastle was doing this, this idea of the, the rugby team, the, the football team and you could look at Barcelona with their handball and their bus. So look, that stuff's out there. But you're right more recently and I think if we are just sort of talking about what we have come to understand as mco, the two big examples are City Football Group and Red Bull. What I think's fascinating about those two is how different they are. So City Football Group is very much about making Man City win. It's about being in strategic places. So it works for Abu Dhabi, it works for the money. It's a very long term Play they've invested billions. Man City make money or certainly wash their face. The rest of the group lose money. Now they would say, oh, that's because we're playing a 20, 30, 40 year game. That's what sovereign wealth does. And don't worry, we're going to make money in the long term. And they may well be right. I suspect they will. But at the moment it is a very cash heavy play to sort of help Man City and then help Abu Dhabi be in all the key places. Red Bull on the other hand was to sell fizzy drinks. All right, so just think about the way they play football. Fast vertical football, young buzzy, they all play the same way. They press. What does it make you think of?
- [39:02]
IO Akinwalere
Yeah, caffeinated drinks, high energy drink.
- [39:04]
Matt Slater
Yeah. And then think about the other sports they do. It's all, it's, it's, it's snowboarding, it's mountain biking, it's F1 octane. High octane. Yeah, yeah, yeah. So, so. And they've been really clever, they've hired really good people and their model is young players. There is a sort of player trading element that kind of supposed to sort of sustain it all. But they're in all the right places. I mean obviously they started in Germany and Austria which is where the company's based, but they got into Brazil early, they're in the States. They've been a clever group and when I talk to people they often sort of go, yeah, everyone okay look, of course it's your football group are really good because they've been successful and they do loads of smart things. But Red Bull have probably delivered more bang for your buck if you like.
- [39:46]
IO Akinwalere
When you said you a for them I thought that's quite fascinating because I wonder if there are, there are some conflicts of interest with multi club ownership. You know, let's say the same teams that are owned by the same group end up playing the Champions League or even the Europa League. You know that's quite a fascinating one to think about.
- [40:02]
Matt Slater
There is and I think this is something that has kind of crept up on UEFA. So if we go right back to when Enec were doing it, they were sprinkling their money around on similar sized teams who could theoretically all qualify for Europe. There were three competitions back then as well and that was the problem. I can't remember which competition it was. I think it was the UEFA cup in the mid-90s and two or three of them were qualified. And yeah, UEFA had to say, look, this, this is pretty basic stuff, right? We can't have one owner, two teams. This just isn't great for the competition. So they sorted that and then no one really worried about it for a while, I think, for several reasons. One, because the multi club thing didn't really take off for a while. UEFA, you know, dropped all those other competitions. And I think what's sort of changed it is we are seeing these groups proliferate and we're seeing them pick up more and more clubs and some of them have very, very. I don't know, I think it's on purpose, have gone for sort of better clubs than perhaps previous investors were thinking. So instead of having a really, really clear pecking order and we're all serving that top club, it's all about funneling talent up and sort of cutting costs and helping them recruit better. They started to sort of almost sort of hedge their bets a bit. Right, we're going to have a decent team there, we'll have a decent team there and we'll just sort of see how it goes. I'm not going to pick a favorite here. And then, hey, presto, they all qualify for Europe and you're like, ah, well, that's a nice problem to have because our teams are quite good. But now we have this UEFA issue. So we've had Villa and Vittoria, we had Brighton and Union Son Gilois, we've had Nice and Manchester United, we've had. Is it Braga and psg. I know, I'm forget where they've qualified for European competition. And UEFA have said, oh, my God, we didn't. Well, we didn't really see this coming, but now it's right in front of us. What are we going to do? And of course, sorry, of course, Red Bull were the first. This, this strange split they did between Salzburg and Leipzig, where Red Bull almost sort of dared Matt Uefer to do something about it. Go on, we're going to play in this competition, we qualify fair and square. What are you going to do about it? And UEFA said, well, we're not going to let you. Right, okay, well, we'll separate staff. We'll. We'll sort of ring fence this. We'll change the name of Leipzig became Razen Bo and we'll just kind of create Chinese walls. There you go. And UEFA kind of blinked and went, yeah, okay. And there was your precedent that if you can create Chinese walls, you should be okay. UEFA do appear to have kind of perhaps realized that was a mistake and they have been a lot more interventionist. So they kind of have forced Brighton is a good example. In Union Sajilwa to properly separate Bloom had to hands over some shares. They also put some kind of guardrails in place saying, you know, you can't trade players to each other. You. We're not. I don't know how they'd even police this, but we're not even going to let you share recruitment data. I think they did the same with Villa. Had to dilute some of their shareholdings of Vitoria and I think Braga and PSG as well. So they've been tweaking, I think Nice and Man United was quite an interesting one. They basically asked Man United and Radcliffe Ineos to almost put Nice in a trust and again create really strict separation between staff. So that's where we're at. We're at almost with almost like a bespoke approach where you wait for a kind of looking at the groups and going, oh, right, okay, he's both qualified. Oh, geez. Okay, well, look, we're not gonna let you trade players. He can't work for both of you. Get him off the board. Can we knock you down to below 30? It's almost a bit like that. They're kind of going through a bit of a menu and it's a negotiation now. I'm not. I think that's the best they can do. Yeah.
- [43:42]
IO Akinwalere
All right. And you mentioned something there as well that sort of got me interested was. Was player trading, funny enough and absolutely gobsmacked when AJ was literally saying just like one player per group or something like that, which I thought was really interesting. And then just before we started recording the podcast, you almost sent me a challenge. You went so on, name me two or three players that, you know that have been traded successfully between a multi club group. I think I came up with Savinha for Manchester City and that was it.
- [44:10]
Matt Slater
I know it's not many. I mean, and it's funny because I have spoken to would be investors and then people who became investors in multi club groups who have basically told me that's what they're convinced that's going to be their thesis. Right. We are genuinely going to make money on transfers. We don't really have it in the States. We're intrigued by what you guys have got in European football. We think we can do it better. We think because the nature of our game, which is about drafting and free agency and we're really good at identifying talent, we're really good at developing talent. What we don't have in our country is the transfers. Right. Where you can make money on it. So we're going to apply what we know and do it better and make money. And I've got. All right, okay, well, let's see how you get on. As though no one hears all of that and hey, presto. Or you know, qed. No, no one has, I think, really delivered on that model where the return on investment is two, three big transfer fees. I've spoken to various people who say, oh, you know, yeah, yeah, we, we sold a player, we got them for half a million and we SOL for 10 and that great, we'll do it again because you also lost 7 or 8 million that year. So that's where we're at now. I think City Football group would say an early one for them and it's sort of in the kind of textbooks is Aaron Moy, who I think they got via their Melbourne team and then sold to Huddersfield. And that was sort of like an early proof of concept. I think Savino is, is probably the best example, brought him into the group. I believe he went to Troy in France first. Then it was Jerome, it was Girona where he really delivered. And then, you know, now is it City and if you were to track his value, it's gone, it's gone up.
- [45:49]
IO Akinwalere
Even if he's not a successor, City probably has gone up.
- [45:52]
Matt Slater
Even if, even if next year they go, do you know what, you know, you're lovely looking player, but the end product's not there. We'll sell you for 50 million. There you go. It's kind of worked. And there was because it really upset LaLiga a few years ago, they loaned quite a few players to Girona and La Liga, then went well. For our FFP purposes, we're going to have to assign proper values to these loans. This looks like a gift that's not fair on the rest of them. So they did. They kind of assigned higher costs or higher values to these loans that I think upset CFG and Girona. But, you know, it all worked out in the end. So, you know, I think Red Bull would say they've made money on players that they found early and crucially gave playing time to early and gave and put in their shop window. I suppose Harlem would be an example, maybe, you know, and there's others. So those are ones that spring to mind. I'm sure there are. There are other examples of, of multi club groups that have had. I've had a win. I think the key point is, and AJ's really kind of brought it home to me, is if you really analyze it. There are actually not many. And for that model to really work, they should be doing it two or three times a season.
- [47:09]
IO Akinwalere
All right, now the final point on operational success was another key point actually that was raised at the end. Is that something you expect to hear more about tomorrow, Matt, when we chat with people who work within MCOs, this idea of operational success.
- [47:26]
Matt Slater
Okay, well look, we're talking to two people in our Tuesday episode. One is Tim Basbetchenko who is the president of Black Knight. Black Knight are a really interesting multi club group, kind of newish, but they are doing really well. So they, it's Bill Foley's the main, the main man there. They own Bournemouth. He first started off with the Vegas Golden Knights who are an ice hockey team. They were an expansion team, immediately successful and still good. So they're really good in the NHL. He loves football. He's an Anglophile. Buys Bournemouth. I think we've talked about Bournemouth. Bournemouth doing well. He's just started a relationship with Hibs. Hibs have started to pick up. He owns 30% of Lorient in France. They got relegated last year. Boo, hiss. But they're top of legde and they looks like they're heading back. And another really interesting move, he bought, bought another expansion team in the A league. He bought the Auckland City franchise, the New Zealand franchise that's gone into the A league in Australia. And last time I looked, they're top. So at the moment you've got Bournemouth doing really, really well, Laurie on top of their league, Walker City top of their league and Hibs have got better. So I think they're really interesting. You know, Tim's an ex player, he's ex mls. I think he's trained as a lawyer. Really excitingly that I know Tim will talk about. We were going to sort of go down and actually chat to him in person. They've just opened their new training ground. All right, so this is where the money comes in. They are. And what I like when I've spoken to Bill Foley about Bournemouth, they're quite unashamed about it. They're like, well, Bournemouth are our top dog at the moment because they're in the most important league. They're in the Premier League. If something was to change, we might have a different top dog. But Bournemouth are our top dog. So we have an amazing player.
- [49:12]
Athletic FC Podcast Network
Yeah.
- [49:12]
Matt Slater
Ideally we're going to try and funnel them towards Bournemouth. So I think that's quite interesting. We're also going to talk to Larry Berg who is one of the really interesting group of money investors who are in lafc, very successful MLS team. They have a really intriguing relationship with Bayern Munich. They bought Grasshopper in Zurich. Zurich, yeah, yeah. From the people that Folson Group who own Wolves. So there was another multicore group. So they bought somebody else's part there. So they've built a really interesting group. LAFC are probably their main thing, the thing that they're really interested in. I really like the Bayern joint venture. I don't think I want to hear from Larry. Has it actually started to deliver yet? They've got this really cool looking academy in Gambia and as I say, I think they're just opening one in Senegal. So I think Larry's going to talk a bit more from a kind of an investor point of view. Like what does he want? Why is he doing this?
- [50:09]
IO Akinwalere
Fantastic look. Thanks for your time today, Matt. Really appreciate it. And also to AJ Swoboda 21st group as well. Tomorrow we'll be talking about what it takes to run an mc. And remember to get your questions on multi club ownership for Wednesday's episode as well. And also thank you lot for joining us as well. Right, that's it for now. We're back.
- [50:29]
Next time you've been listening to the Athletic FC Podcast. The producers were Guy Clark, Mike Stavroot and Jay Beal. The executive producer was Ailey Moorhead. To listen to other great athletic podcasts for free, search for the the Athletic on Apple, Spotify and all the usual places. The Athletic FC Podcast is an athletic media company production.
- [50:52]
Athletic FC Podcast Network
The Athletic FC Podcast Network.