Cooperation for the future: Bayern President Herbert Hainer (l.) with CEO Jan-Christian Dreesen. (IMAGO / Sven Simon)
Munich and Los Angeles are around 9,600 kilometers apart, but FC Bayern and Los Angeles FC, or LAFC for short, have been getting closer in terms of football for some time. In March 2023, both clubs will establish a joint venture, i.e. a joint company: “Red&Gold Football”, red for Bavaria and gold for LA. Both clubs share the opportunities and risks.
The norm in top football is now so-called MCOs, multi-club ownership. With MCOs, a company manages several clubs under one roof. For example, talent can then be exchanged more easily between clubs. There is often one club at the top: one example is the City Football Group with Manchester City as Croesus.
Talent development in North America and other parts of the world is the focus of “Red&Gold Football”, says managing director Jochen Sauer: “Then of course there is a very mundane administrative relief. If at the end – let’s take a typical scouting trip – you have costs, If there are two football clubs, then you start thinking: ‘Who initiated this scouting trip or not?’ And if you do that administratively in a joint venture, then in the end it’s always 50-50.”
In addition to the advantages, Christoph Breuer from the German Sport University Cologne also sees disadvantages in a joint venture: “If you look at it from Bayern Munich’s perspective: It is much more difficult to have your own game concept, your own development concept, your own culture, the so-called “Mia san mia” should also be implemented in this company because we have the same say as the other shareholder, LAFC.”
First “Red and Gold” branches in Uruguay and Gambia
“Red&Gold Football” has recently announced two ventures: it has become the majority shareholder of Racing Club de Montevideo from Uruguay and a partner in a football academy from Gambia. In South America, where Bayern have found what they are looking for in the past one or two times, Jochen Sauer says it’s about “developing talent together locally, finding players together, training players together, them Then prepare for the journey to the USA or Europe. And of course the same applies to Africa. West Africa is a very large talent market, but Gambia in particular, as a small country, is very successful and talented in terms of football.”
Gareth Bale, Mia Hamm, Magic Johnson – well-known names at LAFC
In the global competition for talent, this seems understandable for Bayern and LAFC, who currently have ten Latin Americans in their squad. LAFC is not just any club from the US Major League Soccer, but a glamorous project with dazzling co-owners such as former basketball star Earvin “Magic” Johnson and two-time world footballer Mia Hamm.
LAFC was founded in 2014, with veteran star Gareth Bale the club will win the championship in 2022. But the goals go beyond success in the MLS, as has been apparent for several months. James Corbett, senior correspondent for sports business publication Off The Pitch, has researched LAFC extensively. He says: “It turns out that many of LAFC’s part-owners are heavily involved in private equity, particularly private equity firms that have a strong interest in football, such as Ares Management and Oaktree.”
LAFC boss Rosenthal with many interests in the football business
The connections are diverse. LAFC Chairman Bennett Rosenthal is also co-founder of Ares Management. The investment company has invested hundreds of millions of euros in professional football. Either directly to clubs like Chelsea or Inter Miami. Or through another investment firm, Eagle Football Holdings. It is the majority owner of Olympique Lyon, the Brazilian club Botafogo and RWD Molenbeek from Belgium. Eagle Football Holdings also holds minority shares in the English first division club Crystal Palace, in which US sports investor David Blitzer also has a stake. Blitzer is also a minority shareholder in FC Augsburg, a league rival of Bayern Munich.
Increasingly complex ownership structures in football
The football world is becoming increasingly complex due to these ownership structures – and at the same time a well-connected investor elite is emerging, which increasingly comes from the United States. “There is a danger point. You have to be aware of this when it comes to the governance of football and the football leagues in particular and also the international football associations have to be aware that interconnections will of course become more and more likely the more this MCO idea takes hold. And the whole thing “It becomes very confusing very quickly. So you need specific units in the football associations that keep an eye on this,” says Christoph Breuer.
LAFC not only has highly committed owners, but is now acquiring clubs itself. LAFC recently became the majority shareholder of Wacker Innsbruck and Grasshopper Club Zurich. Grasshopper seems to be relieved that the former Chinese owners have been replaced by the strategically thinking LAFC, says Stefan Legge, lecturer in economics at the University of St. Gallen: “The club is making big losses and then it was clear for a long time that they wanted that “And of course that’s an unpleasant situation for the club, also for the fans, if the owner doesn’t have a real strategy and actually just wants to get rid of the thing. That’s why we’re happy now that the issue is over.”
FC Bayern part of the brave new football world
Bavaria’s CEO Jan-Christian Dreesen spoke last year that multi-club ownership constructs needed to be regulated in order to prevent distortion of competition. When Red&Gold Football announced its takeover of Racing Club de Montevideo, the press release emphasized that it respected the club’s “tradition and identity.” However, without a network with other clubs and possible farm teams to promote talent, top-level football no longer seems to be possible.