Multi-club ownership: 777 Partners spotlight

Global Publication August 2022

In our report of last year, we made reference to the continuing rise of the multi-club ownership model  and this is a trend that certainly looks set to continue over the coming years. Multi-club ownership is still a fairly recent phenomenon – in 2017, UEFA research stated that “most examples of cross-club ownership have emerged in the last three years”  – however, research conducted by Off The Pitch in March 2022 found 181 clubs where the owner or significant shareholders have stakes in other clubs.

In this section of the report we particularly focus on 777 Partners LLC (777).

777 is a Miami-based alternative investment firm that has, in a short period of time, acquired ownership interests in a number of football clubs across the world, including Sevilla, Genoa and Vasco da Gama. The firm has also recently appointed Don Dransfield, former chief strategy officer of City Football Group, to lead the development of its fast-growing network of football clubs. Norton Rose Fulbright has previously advised 777 on its acquisition of the London Lions basketball club and on its equity investment into the British Basketball League and we sat down with Juan Arciniegas, a managing director and Co-Head of Sports, Media and Entertainment at 777, to discuss 777’s increased investment in the football industry and, in particular, the rise of the multi-club ownership model.

Having completed the acquisition of Genoa in September 2021, 777 have gone on to add Vasco da Gama (February 2022), Standard Liege (April 2022) and Red Star FC (May 2022) to its growing portfolio of football clubs and Arciniegas believes that the multi-club network is the future of sports investment for many reasons. For instance, owning multiple clubs allows investors to diversify risk, especially in Europe where leagues typically have a promotion/relegation dynamic that does not traditionally exist in the US. He also explained how there is significant value in the synergies that naturally arise from running a network of combined clubs that are working in unison – whether that be in data sharing, scouting, sophisticated finance functions or even more mundane back office tasks. This view has been echoed by Pacific Media Group, with the group’s founder, Paul Conway, noting that there is no need to replicate staff in all markets. Arciniegas, however, notes that the most exciting element is the commercial opportunities that arise as owning multiple football clubs allows investors to benefit from economies of scale and potentially increased bargaining power with counterparties.

Despite this, operating a multi-club ownership model is not always plain sailing. When the Red Bull group acquired RB Salzburg (formerly SV Austria Salzburg), many supporters objected to the change of kit colour from violet and white to red and white and formed a phoenix team, Austria Salzburg, who have climbed from the seventh tier to the third and still wear a violet kit. Similarly, the clubs that the City Football Group has acquired in Australia and Uruguay have both seen their names, colours and logo change. In April, City Football Group’s plan to acquire NAC Breda failed after supporter backlash, although they did complete a deal to acquire Palermo in July 2022. We asked Arciniegas about the difficulties of maintaining the balance of ensuring that clubs’ traditions are respected whilst also presenting a unified image of the group as a whole. For 777 though, this is an easy decision; Arciniegas notes that the clubs that 777 has acquired all have strong identities and connections with their fans which often goes beyond sporting performance and 777 have no intention of trying to change their clubs’ traditions and identities.

In terms of the criteria 777 uses to assess the viability of potential clubs, Arciniegas notes that 777 has spent time essentially mapping the globe, assigning a ranking to each market and club using a number of quantitative and qualitative variables. In our report of last year, we discussed the differences between vertical and horizontal integration within multi-club ownership and how some groups prefer a “satellite” model with a few main clubs and others almost acting as feeder clubs, whilst others prefer to acquire clubs of a similar level. We asked Arciniegas whether, after investing in larger clubs such as Sevilla, Genoa and Vasco da Gama, it was a conscious decision to then acquire smaller clubs such as Red Star to ensure that the group contained a range of club sizes. Arciniegas explained that, whilst 777 does assess the ability to send players from one market to another (and vice versa), it does not necessarily see the smaller clubs within its group today as being “small clubs” forever and, crucially, it does not intend for one club to benefit at the expense of another. 

This view has also recently been supported by US investor John Textor, who, having already held ownership interests in Crystal Palace and Botafogo, has recently invested in Belgian second tier club RWD Molenbeek. He, however, states that “no club should be just a satellite for another” and instead focusses on collaboration and opportunities, viewing the network of clubs as “a relationship, not necessarily a multi-club ownership model”.

In terms of what is next for 777, we discussed the influx of US investors within European football generally and whether the English market in particular is saturated when compared to the rest of Europe; the sale of current Italian champions AC Milan to US investment firm RedBird, for instance, reportedly valued the club at £1bn, whilst Chelsea commanded a much larger fee of £2.5bn.  Arciniegas, however, believes that there are still pockets of value within English football, particularly as a number of clubs continue to struggle financially in the wake of the COVID-19 pandemic. 777 is also a prominent investor in women’s sports, particularly through its portfolio company ata football, and it aims to continue this work in the coming years. Standard Liege, for instance, boasts the most successful women’s team in Belgium and Arciniegas stated that 777 intends to ensure that their success continues, whilst also enhancing the potential of women’s teams in other clubs such as Genoa, where the women’s teams have historically not been supported as much as the men’s teams.

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