Sports Technology Sector Activity Continues at Healthy Levels Following Expansion of Total Addressable Market
June 2022 Sports Technology Update, reporting that the Sports Technology (SportsTech) sector’s performance was bifurcated at the onset of the pandemic as franchises and tangential companies serving the professional sports community suffered as venues and stadiums were closed due to health and safety protocols. On the other hand, segments with less reliance on traditional professional sports, including E-Sports and Fitness Technology (FitnessTech), experienced heightened demand. Sports franchise revenue is expected to have surpassed pre-pandemic levels in 2021 with valuations increasing significantly across leagues. In addition, the proliferation of fan engagement technology has assisted in the sector’s recovery, reinvigorating viewership and altering the ways in which fans can engage with their favorite franchises and players. FitnessTech and E-Sports categories are expected to continue to generate strong revenue as the pandemic bolstered the total addressable market for companies in these segments.
In congruence with elevated demand, the SportsTech Mergers and Acquisitions (M&A) market recorded strong transaction volume in 2021 and has experienced healthy levels of activity in year-to-date (YTD) 2022. Strategic buyers accounted for the largest share of acquisitions to-date, utilizing inorganic initiatives to enhance their penetration in growing segments. Privately owned businesses with unique digital offerings are expected to continue to attract strategic interest, particularly if the target’s product offerings complement the acquirer’s product portfolio. In addition, startups leveraging technology-enabled capabilities in promising channels have attracted substantial venture capital interest. Venture capital funding has been augmented by regulatory changes in the Sports Betting space, the proliferation of non-fungible tokens (NFTs), the introduction of new technologies serving Professional and Amateur Sports markets, and reinvigorated fan bases for sports franchises. Although financial investment in SportsTech has historically been dominated by venture capital firms, private equity firms are expected to increasingly pursue target companies in lucrative segments.
“Sports Franchise and SportsTech M&A continues to be in high demand, and the growth of each is often linked and complementary. As valuations continue to rise, private equity ownership is becoming more prevalent. Recent sports franchise transactions include the sale of the Denver Broncos for a record $4.65 billion, sale of Chelsea FC for $5.3 billion, RedBird Capital’s $1.3 billion acquisition of AC Milan, and Apollo’s $1.25 billion investment in Liga MX Soccer,” said Capstone Partners Director, Peter Bailey, lead contributor in the newly released report.
Also included in this report:
- A summary of segment-specific trends and drivers that will impact performance across the SportsTech sector in 2022
- An overview of the exuberant venture capital funding that occurred in 2021
- Summaries of recent notable M&A transactions and funding rounds
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