Sports Tech M&A Takes Off in 2024 Despite Late Stage VC Slump

Mergers and acquisitions deals reached their highest level ever in sports tech in the first half of 2024, says investment bank Drake Star, even as last stage venture capital investments continue to face a sluggish market stemming from frothier days.

“Over $27 billion in 225 M&A deals in the first half of 2024 is practically double what  we saw at the end of 2023, and it continues to just go up,” said Mohit Pareek, a banker at Drake Star and one of the authors of its first half 2024 global sports tech report. “The market is very vibrant, there’s a lot of deal activity happening.” 

A technology-focused investment bank, Drake Star tracks the financing activity in sports tech M&A, venture capital, and debt and equity market offerings.

In M&A, activity was highlighted by a few large deals, including Silver Lake’s $13 billion purchase of the portion of Endeavor Group Holdings it didn’t already own, Liberty Media’s $4.6 billion buy of motorsport league Dorna Sports, and Disney’s $8.5 billion deal to merge with Reliance and carve up India’s cricket media rights. The number of smaller M&A deals has stayed remarkably consistent the past 18 months, according to Drake Star’s report. Data analytics firms had the busiest start to the year, with 99 deals, followed by 38 deals in betting and fantasy and 35 mergers in fan engagement.

The situation is more complex in venture capital, which saw a total of 342 private placements the first half of the year. That’s down in both deal volume and dollar value, but the second quarter showed some promise, with deal value showing its first uptick since the end of 2022, according to the report.

The largest deal was a $400 million investment into football helmet maker Riddell by BC Partners, a combination of both equity and debt convertible into equity. BC partners is a British PE firm best known in sports for an investment in sports marketing agency GSE Worldwide earlier this year. Other large VC deals included a $100 million raise by Dude Perfect, a YouTube channel that focuses on trick shots, and another $100 million deal by sports-focused streamer Minute Media.

Large deals and VC investments into late stage companies have been hard to find as the venture capital industry across sectors continues to suffer an overhang from richly valued deals struck during the pandemic. Basically, companies are loath to raise more money at a lesser valuation set in earlier rounds, and investors are balking at those prices.

“Everyone believes in the space, but I think for larger companies today’s capital is still a bit challenging given the investment sentiment in the market,” Pareek said on a video call. “Interest rates have come down, but not enough to have a very good environment. There is a lot of money getting pumped in but still largely into the early stage part of the business.”

Ryan Sports Ventures has been a particularly active VC player this year, with six deals in the early to late stages. It’s the VC arm of Chicago’s Ryan family, led by Aon founder Pat Ryan. In the seed stage area, Drake Star pegs Eberg Capital as the leader with 10 deals, including into Betr and PLN. Eberg is the sports-focused investing arm of investor Roger Ehrenberg, who owns parts of the Miami Marlins, Real Salt Lake and Alpine F1.

Despite headwinds in later stage VC, there are signs things may be improving, with recent deals including a $250 million investment into Cosm, a Sphere-like sports entertainment chain, and a deal of undisclosed size into U.K. sports marketing agency Two Circles by David Blitzer and Otro Capital.

“That tells you that the money is still around if you have the right set of expectations and the business KPIs [performance metrics],” Pareek added.

(This article has been corrected in the second paragraph to indicate there were 225 M&A deals in the first half of 2024.)