Historically, sports investments have focused on IP owners like teams and leagues. Recent examples of these deals include The Friedkin Group's majority stake in Everton Football Club and Saudi Arabia's Public Investment Fund's (PIF) framework agreement for a minority stake in PGA Tour Enterprises. However, there is a growing interest in investment opportunities beyond IP within the broader sports ecosystem, especially along the fragmented sports media tech value chain ranging from production and transport to distribution.
In this report, we analyze the following market indicators in the sports investment landscape:
- Sports deals, investors, and value creation, including new types of investors involving private equity and sovereign funds.
- Investment strategies and opportunities in the sports industry, including opportunities in technology solutions and enabling capabilities.
- Technology service providers in sports media and opportunities along the media tech value chain in sports.
We believe that these new investments, reaching segments in the wider sports media ecosystem beyond IP, will increase deal flow and attract more types of investors. This will increase competition for assets with very different return/risk profiles and require investors to differentiate themselves.
These investments will accelerate professionalization and value creation through digital transformation as well as diversification of revenue streams by combining an asset optimization view with a portfolio approach.
The sports media value chain can be particularly interesting for investors, given the opportunities and growth enabled by disruption and technological innovation impacting media rights owners and broadcasters. Sub-segments in the sports media value chain, like automated production, IP delivery, advanced content management, augmentation, and gamification, benefit from tailwinds from the streaming transition and maturation of enabling technologies (e.g., the cloud).
To capitalize on opportunities in the sports ecosystem, investors should prioritize:
- Developing a nuanced understanding of today's sports ecosystem and individual segments, engaging with market participants, assessing the difference in return/risk profiles, and underlying market trends.
- Conducting thorough due diligence on the size and dynamics of the underlying market, potential moves of competition, and the robustness of target's ability to scale and grow sustainably.
- Defining a clear strategy of optimization of the individual asset and synergies beyond with portfolio companies or other strategic partners.
