In late July 2024, Austrian beverage maker Red Bull reached an agreement to acquire Japanese third-tier professional soccer team Omiya Ardija from telecoms operator Nippon Telegraph and Telephone East. This would be Red Bull’s first football foray into Asian markets
Red Bull is one of the earliest proponents of multi-club ownership structure, long before it became the fancy for investors. In this blog, we trace their journey back to the initial days and their growth
Multi-Club Ownership
Long before the entry of large scale private capital investment which led to the growth of multi-club ownership (MCO) structure, Red Bull ventured into the path, albeit for a different reason. Before we get into it, what is MCO? UEFA European Club Investment & Finance Landscape defines ‘multi-club ownership’ a situation where a party exerts control and/or decisive influence over more than one club, while ‘multi-club investment’ refers to a situation where a party has investment interests in more than one club (without exerting control or influence)
The modern attractiveness of MCOs to private equity investors lies in the core word ‘synergy’. A multi-pronged approach, the ‘synergies’ created by the group clubs can offer various benefits to its stakeholders. The infographic shares the benefits that can be generated
In the recent few years, the rapid spread of MCO network has been astounding. What began as an ambitious idea from Red Bull has now engulfed estimatedly 366 clubs across the globe. According to research done by Play The Game, estimatedly 134 MCO groups now control or hold stakes in 366 clubs covering over 13,000 players
Red Bull: The Start
Red Bull is one of the highest selling energy drinks in the world with over 12bn cans sold in 2023. The interesting part is they do not manufacture the drinks, it’s outsourced. In a way, their strategy was to focus their entire resources in one thing – marketing. At the core of their marketing strategy is ‘content-led’ which they pioneered over the years centering on sports. The difference being they owned the content. True to their brand positioning, they have been creating high voltage sports-led content like space jump (remember Felix Baumgartner) and many others leading to F1 (where they owned a team)
That’s when a meeting with Red Bull owner Dieter Mateschitz’s friend Franz Beckenbauer, then club president, Bayern Munich gave him the germ of an idea to build long term brand association with fans through football which eventually led Red Bull to purchase SV Austria Salzburg in 2005 & renaming it to Red Bull Salzburg
That incident opened the floodgates to the MCO of today
Red Bull Way of Football Business
Red Bull re-engineered the football business through its approach which eventually set the tone for all MCO networks of today
Each Red Bull franchise employs a similar style of playing which enables players to transition easily within group clubs helping maximise their transfer value with the peak value targeted for RB Leipzig, the club at the top of the network. RB Leipzig is essentially the final destination for talent that has been nurtured by the other clubs where they can then be sold on to giant clubs like Manchester City or Bayern Munich for massive profits
This can be seen studying the transfer income of the last 5 years where RB Leipzig has generated a positive €117mn in net transfer balance, a very impressive sum!
The success of this model hinges on strategic planning and close synergy between clubs which needs footballing experts to oversee this. The rest of the company is, as usual, looking after what they know best, marketing and of course, HR and other functions to oil the marketing machine. Our flagship program Master in Football Business and Management has a module dedicated to the MCO business
In Conclusion
Love it or hate it, Red Bull has set the trend for the next generation of private capital invested football. MCO operating model has been sort of created by them and with the latest association in English Premier League and acquisition in Asia, they are keen to keep the juggernaut rolling
