Scott Longley looks beyond the PASPA hype to uncover a booming sports data industry that igaming firms need to be aware of.
The news being generated by some of the biggest companies in the online gambling sector in the months since PASPA was struck down has been dizzying. Understandably, this once-in-a-generation opportunity has been the focus of much industry speculation.
Yet, in among the US-centred tie-ups, supply deals and acquisitions announced in the past three months the significance of a couple of deals has perhaps been overlooked.
The two investment deals bookending July, first with Sportradar and then with Genius Sports, indicate the growing importance of sports content and data, not just to the sports-betting industry but also much more widely.
For the first, the investment announced on July 9 on the part of the Canada Pension Plan Investment Board (CPPIB) and Silicon Valley-based growth equity firm TCV gives Sportradar an enterprise value of €2.1bn (£1.9bn).
No further financial metrics were given, but current shareholder Ted Leonsis, co-founder and partner at Revolution Growth, said he had previously invested in the company because “we know how powerful real-time data and analytics have become to the live sports business.” This view has been bolstered by the PASPA decision.
Similarly emboldened by recent events are UK-based Apax Partners, now the proud owner of Genius Sports having announced it had bought the company in late July for an undisclosed sum thought to be around 10% of the size of the Sportradar deal. Similarly to Leonsis, Gabriele Cipparrone, partner at Apax Partners, cited live sports data and its attendant technology as “key drivers of growth.”
The latest financial figures available for Genius Sports from Companies House for the year to December 2016 show the historical growth path. Combined the various entities under the holding company umbrella enjoyed a near 50% leap in revenues to £32.2m while the Betgenius data collection arm enjoyed a 68% increase to £26.9m.
If a similar growth path continued into 2017, revenues for the year would almost be between £45m-£50m, driven to some extent by acquisitions including the Italy-based Data Project bought in September last year.
It is the available results from another of the sports data and content world’s largest constituents, Perform, which give a clearer view of some of the broad trends affecting the area of sports content and data collection and distribution.
Perform has its own somewhat complicated ownership issues. At one time listed on the London Stock Exchange, the company returned to the hands of previous owner Access Industries, the privately-owned industrials group controlled by Len Blavatnik.
As can be seen from the below chart, the content side of the business, which includes the Watch&Bet streaming operation, data collection company Runningball as well as Opta, saw revenues climb 41% to £278m in the 12 months to last December.
DAZN is Perform’s over-the-top (OTT) sports streaming service which launched last year in Germany and which takes the sports content familiar to in-play betting offerings direct to a consumer audience.
While Sportradar has a different strategy focused on providing a similar B2B offering to sports-rights holders, the general trend holds true for all. According to Perform, sports streaming has come about in response to “rapid changes” in the consumption of sports and media content.
It is a trend which helps explain the recent corporate activity with these significant investments coming about as a result of the confluence of technology and consumer behaviour.
It also helps explain why sports data – and in-play data in particular – have become that much more valuable.
Add in recreational habits around the consumption of sport and the consequent growth of the sports industry alongside the growth of the betting element and it is understandable why there is so much interest in the sports content area.
The timing of the PASPA repeal is fortuitous but not the major driver. As it stands, there are not all that many investable businesses involved in sport – surely no one other than billionaires truly believe football clubs fall into that category – and it is no coincidence that a good few of them happen to be in the sports content and data delivery sector.
The three companies mentioned, along with the much more secretive IMG, aren’t the whole of the sector though they are currently attracting the most attention. All are currently embroiled in the discussions around official data and integrity fees in the US and similar discussions around the database right in Europe. But behind the headlines lie very solid businesses already with very attractive growth opportunities ahead. The gambling industry should take note.