The sports tech industry saw a surge of mergers and acquisitions in the first half of 2024, with a record 225 deals worth a total of $27.3 billion. This includes major transactions such as Disney and Reliance merging Star India and Viacom 18, Silver Lake taking Endeavor private for $13 billion, and Liberty Media acquiring Dorna Sports for $4.6 billion. The sector has become a red-hot asset class, with significant interest from investors and companies looking to capitalize on the growing value of sports properties.
As team values continue to rise and ownership opportunities become limited, investors are turning to adjacent businesses in the sports sector. This includes areas like wearables, performance enhancement, fan engagement, media and broadcasting, data analytics, ticketing, venue management, and artificial intelligence. The majority of mergers and acquisitions involve earlier-stage startups, with deals ranging from $30 million to $500 million. This trend is leading to consolidation in the industry, as smaller startups are forced to sell to larger competitors rather than continuing to grow on their own.
The decline in private financing has also contributed to the surge in mergers and acquisitions in the sports tech sector. Fundraising in the first half of 2024 was down to $1.9 billion across 342 deals, compared to $3.3 billion on 354 deals in the first half of 2023. This has led to small startups seeking acquisitions by bigger players in the industry in order to survive and thrive in a competitive market. The trend is expected to continue for the rest of 2024, with a similar number of M&A deals forecasted in the sports tech sector.
Investment firm Verlinvest, known for its investments in consumer packaged goods, has also shifted its focus towards experiences for disposable income. The firm made an undisclosed investment in K1 Speed, an electric go-kart racing business, as part of its strategy to capitalize on the growing consumer interest in sports and lifestyle experiences. This reflects a broader trend of investors and companies moving towards opportunities in the sports and entertainment sectors, where there is significant potential for growth and innovation.
Overall, the sports tech industry is experiencing a period of rapid change and consolidation, driven by the increasing value of sports properties, limited ownership opportunities, and investor interest in adjacent businesses. This trend is expected to continue for the foreseeable future, with a similar number of M&A deals forecasted for the rest of 2024. While the total transaction value may decrease without large acquisitions like those seen in the first half of the year, the sector is expected to outpace other industries in terms of growth and activity. Investors and companies are looking to capitalize on the opportunities presented by the evolving sports tech landscape.
