By way of its agreement with Sportradar, the NHL can take an equity stake in the data provider of up to $90 million, or 1.8 percent, following its upcoming initial public offering (IPO).
In July, the NHL and Switzerland-based Sportradar reached a 10-year agreement.
Under the terms of the NHL License Agreement, we were named as the official betting data rights, official betting streaming rights and official media data rights partner of the NHL, as well as an official integrity partner of the NHL,” according to a Sportradar Form F-1 filing with the Securities and Exchange Commission (SEC).
That filing also reveals plans for the data company’s IPO. The Form F-1 filing was released just over two months after the Swiss firm and special purpose acquisition company (SPAC) Horizon Acquisition Corp. II (NYSE: HZON) scrapped talks for a transaction that would have paved the way for Sportradar to go public.
Good Deal for NHL
As part of the accord with Sportradar, the NHL has three ways in which it can acquire stock in the company. It can purchase 2,127 shares for $4,674.
Then the league can buy another $30 million worth at market prices in the IPO. Additionally, the NHL gains warrants to acquire 2,668 Sportradar shares for $12,234, according to the SEC document. If executed through all three avenues, the league’s stake in the sports betting data and streaming company could be worth $90 million, implying a valuation of $6.5 billion for Sportradar, according to Sportico.
Sportradar hasn’t yet revealed a price range for the offering or how much it’s looking to raise, but if the company is valued at $6.5 billion, it’d be well in excess of rival Genius Sports’ (NYSE:GENI) Sept. 3 market capitalization of $3.78 billion.
It’s possible Sportradar could be valued significantly higher than that. Rumors regarding a Sportradar IPO surfaced over a year ago, with speculation swirling that the company could seek a valuation of $10 billion to $12 billion. Three years ago, the Swiss company sported a private market valuation of $2.4 billion, but that was prior to regulated sports wagering taking off in the US.
Good Timing for Sportradar IPO
With enthusiasm for sports wagering soaring in the US and with the same being true of the related equities, Sportradar is striking while the iron is hot with its IPO. Shares of rival Genius are up 20.34 percent year-to-date following an almost 26 percent run over the past month. Additionally, Sportradar has plenty of room to grow in the US.
“Our business is highly diversified with our largest billing country, the United Kingdom, representing only 14 percent of total revenue for the year ended December 31, 2020,” said the company in the SEC filing. “We believe that we are well-positioned to grow globally due to investments made in strategic markets and continued investments in our product offering. In particular, we have made significant investments in the United States where we have established important league relationships, such as with the NBA, MLB, NHL, FIFA and NASCAR.”
As for the NHL taking an equity position in Sportradar, such moves aren’t uncommon. For example, when Genius reached a six-year data agreement with the NFL, the league took an equity stake in that company that’s worth nearly $450 million today.
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