The National Hockey League has purchased more than $10 million of Sportradar stock, and let another $30 million worth of options expire, as the sports data giant’s stock price sags below its IPO levels.
As part of the NHL’s 10-year data and streaming deal with Sportradar signed last July, the league received three different buckets of equity options, in total worth about 1.8% of the company. The league has made decisions on two of those options, according to a recent Sportradar (Nasdaq: SRAD) regulatory filing.
In October, the NHL bought 1,116,540 million Sportradar shares at a strike price of $8.96, which gives it about 0.4% of the company. The league also had the option to purchase another $30 million worth of shares at the IPO price ($27), which it declined to do. That option has now expired, according to the filing.
The NHL still has a third equity option—a warrant to purchase another 1,353,740 shares at a price of $23.45. Sportradar opened Tuesday at $16.03. The league can wait for the shares to rebound; the warrants are good for 10 years.
A representative for the NHL didn’t immediately respond to requests for comment.
Official data feeds have become one of the most direct ways for leagues to profit off the expansion of sports betting in the U.S., and these long-term exclusive partnerships are among the biggest non-broadcast deals in the market. Companies like Sportradar act as middlemen, recording data and packaging it into products purchased by media companies and sportsbooks. Sportradar’s portfolio includes various rights across the NBA, NHL, MLB, UEFA and a number of other global leagues and governing bodies.
To sweeten the pot—and to secure business—data providers often include equity options for their most prominent partners. When Genius Sports inked a long-term exclusive deal with the NFL, for example, it included hundreds of millions in equity. The NBA’s deal with Sportradar also has an equity component, with options to buy up to 3% of the company.
These equity-heavy deals are often frowned upon by investors, who worry that data companies will be unable to monetize the stats in a way that makes the deals profitable. Costs for data and IP usage by sports books has increased by four-fold thanks to such exclusive deals, which suggests that pricey exclusive data rights could backfire if sportsbooks balk at higher prices.
The argument appears to be behind the slumping stock prices of sports-data companies. After debuting at $27 a share with the IPO in September, Sportradar stock has slipped to $15 on broad market fears of sports betting’s profitability in light of data rights costs and taxes. Other stocks with exposure to sports betting have similarly suffered declines over the same period.
“The U.S. betting market is still in its early innings,” Sportradar Chief Commercial Officer Eduard Blonk said in an email. “Our significant investments have helped us develop a strong market position and make the U.S. business our fastest growing region with 108 percent growth year-over-year, despite only accounting for less than 15% of Sportradar Group’s revenues. Globally, Sportradar has a well-established business that is fast growing and highly profitable.”
Even with growth ahead for business, it’s a sign of how leagues can strike good deals today for their data – despite Sportradar’s 40% share decline the past six months, the NHL still sits on a 67% profit for its shares.