Getty Images
The global sports technology market generated US$90 billion in disclosed deal value from more than 1000 partnerships last year, according to Drake Star Partners’ Global Sports Tech Report for 2022.
Confirmed:
- Study analysed mergers and acquisitions (M&A), financing, and public market activity throughout the year,
- Mergers and acquisitions market generated US$78.3 billion in deal value, marking a 70 per cent year-over-year (YoY) increase, with the lion’s share generated by Microsoft’s US$68.7 billion proposed takeover of Activision.
- Fantasy sports, esports and gambling were the most active markets in the M&A space
- Fan engagement sector was up 70 per cent YoY in terms of deal volume
- Private companies raised more than US$9 billion in financing, including 19 raises worth more than US$100 million
- Most active venture capital firms were Acies Investments, Animoca, Harris Blitzer Sports Entertainment (HBSE) Ventures, a16z, Elysian Park and Courtside Ventures
- Q4 was the most active quarter of 2022, with 67 deals announced during the three-month period
Context:
The year 2022 presented numerous economic challenges for the sports technology industry, amid rising interest rates globally as a result of events such as Russia’s invasion of Ukraine, and the ongoing impact of the Covid-19 pandemic. Funding is becoming increasingly difficult to find, while a number of big tech companies have been reducing their workforces after a period of expansion.
Despite significant momentum in the sports technology space, there had been concerns that startups and other companies would find it harder to attract investment given wider macroeconomic challenges, including rising interest rates. Big tech companies have not been immune to these challenges, as evidenced by several significant rounds of layoffs.
Nonetheless, if there is to be a significant impact on the sector, this report shows it is not being felt just yet, with significant takeovers in the betting and esports spaces, and major investment in fan engagement and media and consumption.
Comment:
“The Rapidly growing sports etch market witnessed record consolidation during 2022 and a very strong inflow of investment into private companies” said Mohit Pareek, principal at Drake Star Partners.
“We expect 2023 to be another year of strong consolidation and growing investment in the Sports Tech ecosystem as strategics and financial investors/buyers continue to be highly acquisitive and there is a large pool of existing as well as fresh capital (over US$5 billion raised in 2022) available for deployment in sports tech.”
Coming next:
In Drake Star’s outlook for 2023, the study lists companies such as Entain, Fanatics, DAZN, Sony, Ares and CVC as ‘buyers to watch’, and forecasts a ‘strong flow of investments’ across the industry for the new financial year. Meanwhile, the tech investment bank predicts that private equity-backed organisations such as Kore, TGI and Hudl will continue to lead their buy-and-build strategies.
Fan engagement will continue to be an area of focus, as will artificial intelligence (AI), and ticketing and venue management.
