Illustration: Lorenzo Gordon
The sports technology sector will hit a record high in 2023, with more than $37 billion in deal value and $7 billion in new funding for investment funds, according to a new report to be released later Thursday by investment bank Drake Star. It is said that it has been procured.
“If you look at the $37 billion and $21 billion in deal value in 2022, this is a significant increase and contrasts with the overall market performance in 2023,” said Drake Starr principal and author of the report. said Mohit Parikh, one of the authors. “Capital is increasingly flowing into sports technology despite the global downturn in M&A activity across markets.”
Drake Star, a global technology-focused investment bank headquartered in New York, specializes in mergers and acquisitions, venture and private equity financing, and sports technology, including sports betting, athlete performance, franchising, and media content businesses. We track public market funding.
The bank's total deal value of $37 billion is a combination of both M&A and funding rounds. M&A was particularly strong in 2023, with deals totaling $26.7 billion, nearly triple the previous year's level, led by Endeavor Group's acquisition of WWE for $9.3 billion and Artemis' acquisition of CAA for $3.92 billion. was there. Not only was 2023's largest deal larger, but overall M&A deals also increased to 328, compared to 236 in 2022 and 223 in 2021, according to the Drake Star report.
The financing market was also strong, as potential deals require smaller enterprise values in early rounds, which have reached higher enterprise values in the past few years, limiting companies' need for new capital. , continued to show some weakness in the later rounds. Meanwhile, early-stage funding has been very strong, accounting for the majority of the sector's 796 deals last year (about 5% more than in 2022), totaling $5.7 billion. Drake Star's biggest deal 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 investment in wearables company EGYM. This was followed by a $218 million investment in F1 Team Alpine.
Investment continues to increase in 2023 as the industry continues to replenish capital for investment. Drake Starr said $7 billion was raised for sports technology-focused investment funds last year, including $700 million for Reign Group's media space and sports and gaming focus. It includes $60 million and $500 million to TXV Partners, a new sports-focused Evolution fund. business. Billions more are likely to be pumped into sports technology, given that Saudi Arabia has established a new entity called SRJ Sports Investments. SRJ Sports Investments is looking to use private equity to find companies that offer unique fan engagement activities.
The only area of weakness for sports technology, like the broader market, remains initial public offerings, but the bank expects sports technology M&A to remain strong in 2024 and eventually move into the public markets. “M&A is very active and we know there are a lot of companies ready for IPOs, so we'll see how the market goes,” Parikh said. “We expect 2024 to be another strong year.”
