Sports data and analytics giant Sportradar Group has gone public, pricing its initial public offering at $27 a share, raising more than $670 million and valuing the company at $7.98 billion.
“It is difficult to describe how much it means. I think it’s an inflection point and the next big milestone we have reached with the listing,” said Sportradar founder and CEO Carsten Koerl, in a video call. “We have a public face now, and that is super helpful for attracting more talent to our business, and of course, at the IPO we also get some proceeds, and we can use this to invest in growth.”
The Switzerland based company sold 19 million shares—with underwriters holding a 30-day option to purchase an additional 2.85 million shares. At the same time a syndicate of investors, led by Los Angeles Dodgers co-owner Todd Boehly, purchased $159 million of equity, or 5.98 million shares. Sportradar began trading this morning on the Nasdaq Stock market under the ticker SRAD.
The stock perked briefly higher than the IPO price during the day as large buy orders came in. Investor follow-through was muted after the start of trading, however, and shares sold down 8% on lighter volume to finish the day at $24.81 as the overall market traded down Tuesday.
“When we look at where the sports industry is today, and where it is going, data analytics is without a doubt one of the most important tools for sports teams, for media companies, and for betting organizations,” Monumental Sports & Entertainment founder and CEO Ted Leonsis said in a statement to Sportico. Leonsis (through Revolution Growth) first invested in Sportradar in 2015, along with Dallas Mavericks owner Mark Cuban and NBA icon Michael Jordan. “No organization is better positioned than Sportradar to be the dominating force at the nexus of sports and big data,” Leonsis added.
Sportradar provides data analytics and other technology services to 900 sports betting operators and 350 media companies, including coverage of about 750,000 events annually worldwide. Last year, its sales neared $478 million, mostly from betting services outside the U.S., according to its prospectus. A minority, 11%, of 2020 sales were in the U.S. market, where Sportradar was the largest provider of data to sportsbooks. The explosion of the sports betting in the U.S., since becoming broadly legalized in 2018, has investors excited about the business.
“Looking to the U.S. market growth opportunity, it is by far the biggest growth market worldwide when it comes to sports betting,” said Koerl. The U.S. sports betting market was about $1 billion total in 2019 and can grow to $23 billion by 2031, according to data from Gambling Compliance Monitor, included in the prospectus.
“That is the most fascinating market opportunity. We got a lot of questions from investors around this,” added Koerl. “We luckily can demonstrate, with our scale and our results, that we’ve already managed to leverage this in the U.S.”
The IPO closes a process Sportradar started last July to go public, exploring both a merger with a special purpose acquisition company and going the traditional IPO route. After discussions with a number of SPACs in 2020, Sportradar and Boehly’s Horizon Acquisition II SPAC signed a formal letter of intent to merge earlier this year, but the parties couldn’t bring the deal to fruition given industry-wide difficulties with SPACs finding interim PIPE investors to finance the closing. Boehly’s privately held business, Eldridge Industries, along with existing Sportradar shareholder Radcliff Management, led a syndicate of investors buying shares at the IPO.
While Sportradar is sometimes viewed as a provider of data feeds on events, the potential for sports data is only starting to be tapped, and as a tech business Sportradar is well-positioned to lead the evolution, according to Koerl.
“Everybody needs to understand that sports data is a raw material, a fuel, the same like audio visual rights. The real value is generated in collecting more and more data, putting it into an engine, processing this with algorithms and then applying machine learning to power future services for teams and leagues, sports betting operators and for sport entertainment,” the executive said from a conference room in Manhattan. “That is the ecosystem we are speaking about, and it will provide enormous opportunities.”
(This story was updated to fix the spelling of Ted Leonsis’ name and clarify that his investment was made through Revolution Growth. It was also updated in the fourth paragraph with information on how the stock traded throughout the day.)