Sports Tech Sees Record $37 Billion Deals in 2023, Drake Star Says

The sports tech sector had a record 2023, with more than $37 billion in deals and $7 billion in new money raised for investment funds, according to a new report from investment bank Drake Star to be released later Thursday.

“If you look at deal value of $37 billion versus $21 billion 2022, it’s a huge uptick and in contrast to how the overall markets performed in 2023,” Mohit Pareek, a principal at Drake Star and one of the report’s authors, said. “Sports tech has been getting more and more of an influx of capital, defying the global downturn in M&A activities across the market.”

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Drake Star, a global technology-focused investment bank headquartered in New York, tracks mergers and acquisitions, venture and private equity financings, and public market fund raising for sports tech, which includes businesses in sports betting, athlete performance, franchises and media content.

The bank’s headline $37 billion deal figure combines both M&A and financing rounds. M&A in particular was especially strong in 2023, with $26.7 billion in deals, nearly three times prior-year levels, led by Endeavor group’s acquisition of WWE for $9.3 billion and CAA’s acquisition by Artemis for $3.92 billion. Not only were the largest deals of greater size in 2023, but there were also more M&A transactions overall, at 328, compared to 236 in 2022 and 223 in 2021, according to the Drake Star report.

The financing market was also robust, though it did continue to show some weakness in late-stage rounds, where high enterprise values reached in prior years capped companies’ appetite for new money, since potential deals would require a smaller enterprise value to earlier rounds. On the other hand, early-stage financings were very strong, accounting for most of the sector’s 796 deals last year—about 5% more than 2022—with a total value of $5.7 billion. The largest deal flagged by Drake Star was a $265 million investment in China’s VSPO, an esports tournament operator, led by Saudi Arabia’s Savvy Games Group, followed by a $225 million round into wearables firm EGYM and a $218 million investment into F1 team Alpine.

Even as investment continued to grow in 2023, the industry continues to restock capital to invest. Drake Star says $7 billion was raised for sports-tech focused investment funds last year, including $760 million for Raine Group’s focus on the media space and sports and gaming, as well as $500 million for TXV Partners, whose new Evolution fund seeks sports-related businesses. There are likely billions of dollars more committed to sports tech, too, given Saudi Arabia formed a new entity, SRJ Sports Investments, which seeks to use an undisclosed sum of capital to find businesses offering unique fan engagement activities.

The one poor area for sports tech—as it is for the broad market—continues to be initial public offerings, but the bank expects continued strength in sports tech mergers and acquisitions in 2024 to eventually push up into the public markets. “M&A has been very vibrant and we know there are a bunch of companies that are IPO-ready and we’ll see how the market performs,” said Pareek. “We expect 2024 to be another strong year.”

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