Under the strategic partnership, which starts in January, Genius Sports (NYSE: GENI) will provide the CFL with its full suite of offerings. That includes data services for sportsbooks, but also analytics platforms for coaches and front offices, marketing services, some international streaming rights, and data-capture via Second Spectrum cameras.
The deal also represents a significant business shift for the CFL, which concludes its season with the Grey Cup on Sunday. The nine-team league is creating a new commercial arm, CFL Ventures, which will house all league-wide revenue from media, sponsorship, merchandise and ecommerce. This is a common structure for sports leagues looking for outside investors, and Genius will receive a piece of that entity, sharing in the upside of growth that it helps facilitate.
While specific terms of the deal weren’t released, sources familiar with the negotiations said the partnership has two main parts—a 10-year data rights agreement that Genius will pay the CFL for, and a broader tech services deal for which Genius will receive equity in the new CFL Ventures. Genius’ stake over the course of the deal will be around 10% of the venture, the people said.
“We’re going to be able to do things with the CFL that have never been done before with any other league,” Steve Bornstein, president of Genius Sports’ North American business, said in an interview. “When you take all of the assets of Genius Sports, including Second Spectrum and Spirable, along with the gaming business, we’ll have a great opportunity to really push the envelope in terms of technology and integration.”
As sports entities increasingly look to add strategic partners and private equity investors, one common route is to create a commercial arm that can accommodate outside equity holders. Back in 2012, Major League Soccer’s commercial arm, Soccer United Marketing, took $150 million in outside investment from Providence Equity (the league bought the stake back five years later). Potential private equity investments in European soccer leagues like France’s Ligue1 and Spain’s LaLiga have similar structures, as does a proposed $281 million investment from Silver Lake into New Zealand Rugby.
This will represent a new type of strategic partnership for Genius, which has never before struck an equity-for-technology services deal. The London-based firm is trying to expand its pitch to leagues beyond just data capture and distribution, under the belief that its full suite of technology can help governing bodies and leagues like the CFL expand their commercial footprint in other ways.
It also provides a testing ground for Genius to perfect how recent acquisitions like ad tech startup Spirable, scoreboard data firm Sportzcast, and video analytics platform Second Spectrum fit within the broader portfolio of its technology. That should not only help the CFL, but also enhance the company’s relationships with groups like the English Premier League and the NFL.
Genius paid hundreds of millions in cash and equity to secure exclusive NFL data rights earlier this year, and now, the company now has long-term relationships with the two most popular football leagues in the world.
“What the CFL has done in the Canadian market is extraordinary,” Bornstein said. “We look at it as an opportunity to bolster the meaningful footprint in Canada, but also to make Canadian football compelling in the lower 48 states, and then ultimately to export that internationally as well.”
Genius Sports went public in April in a $1.5 billion SPAC deal. The stock has fallen more than 50% in the past few months, part of a wider market slump for gambling operators and data providers.
O’Melveny and McCarthy Tetrault LLP advised Genius on the CFL transaction.