- The sports tech sector had one of its best quarters ever in Q2, according to investment bank Drake Star.
- Mergers and acquisitions reached a quarterly high of 105 deals.
- The WWE-UFC merger resulted in a combined business valued at $21.4 billion.
The sports-technology sector had one of its busiest and most lucrative periods during the second quarter of 2023, according to a new report from the tech investment bank Drake Star.
The period saw the highest number of mergers and acquisitions in the years Drake Star has been analyzing the sector with 105 announced deals that totaled $14.5 billion, based on the deal values that were disclosed. By comparison, there were 61 deals announced in Q2 2022.
The large number of new M&A deals, coupled with an influx of capital and a rebounding market, are driving growth in sports tech, Drake Star principal Mohit Pareek told Insider.
“While all other industries are in an innovate-and-watch situation in terms of doing more acquisitions and financings, I think sports has seen a lot of activity,” Pareek said.
This comes after a record year for sports-tech dealmaking in 2022.
In Q2, the biggest deal — and one of the largest ever sports-tech deals — was the April acquisition of WWE by Endeavor, the parent company of the UFC. With WWE valued at $9.3 billion, the resulting combination is worth $21.4 billion.
Other billion-dollar deals outlined in the report include the $1.25 billion acquisition of sports-focused education brand IMG Academy by private-equity firm BPEA EQT and the $1.2 billion acquisition of the online-gaming company NeoGames SA by gaming and tech giant Aristocrat.
The biggest change Pareek said he sees in the space is a growing inflow of capital. At the end of 2022, the bank had tracked more than $5 billion in new funds, such as venture capital and private equity, going into sports tech and it’s already seeing in 2023 nearly $6 billion coming in, he said.
“The sports-tech industry is getting a lot of eyeballs from all these institutional investors as well as strategics to grow this ecosystem,” Pareek said, referring to strategic investors.
Fanatics was especially active during the second quarter. It bought four companies including the online sportsbook PointsBet.
Pareek said he sees a continually improving market after a tough year in sports tech that saw post-pandemic challenges for companies including Peloton and FuboTV.
Media and broadcasting stocks in sports tech, such as Endeavor, FuboTV, and Sportradar, grew by 25% during the first six months of the year, per the report.
Fundraising is also picking back up among private sports-tech companies, from startups to later-stage businesses. Drake Star found 199 private-funding deals closed in Q2, up from 176 deals in Q1. Overall, though, less money was raised with the Q2 deals totaling $1.6 billion, compared to $1.7 billion last quarter.
“I’m just very pumped about the future,” Pareek said. “The next two to four years are going to be very exciting for sports tech.”
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