The $8 Billion Company Backed By Michael Jordan

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Hey Friends,

After declaring their intention to go public more than a year ago, the leading data technology provider to the U.S. sports betting industry has finally finished the process.

Sportradar, a Switzerland-based company founded in 2000, priced its initial public offering at $27 a share and raised more than $513 million earlier this week, resulting in a valuation that nearly hit $8 billion.

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, to bring the total amount of money raised to $672 million.

The stock ($SRAD) fell about 7% on its first day of trading but regained its momentum yesterday, closing at $27 per share.

First, let’s address the elephant in the room. Why was Michael Jordan ringing the bell on IPO day? Well, Michael Jordan, Dallas Mavericks owner Mark Cuban, and Monumental Sports CEO Ted Leonsis — the owner of the NBA’s Wizards, the NHL’s Capitals, the WNBA’s Washington Mystics, and more — invested $44 million in the Swiss company in 2015.

Keep in mind; sports betting didn’t even get legalized in the United States until the Supreme Court ruled PASPA unconstitutional in 2018, paving the way for states to self-regulate retail and online sports betting.

But the early bet has paid off tremendously. Sportradar covered about 325,000 live events at the time of the investment but now covers about 750,000 events annually, providing data analytics and other technology services to 900 sports betting operators and 350 media companies.

The valuation at the time of their investment wasn’t disclosed, but Sportrader revealed in 2018 that the business was worth $2.4 billion.

Given they invested three years prior, they likely came in at a significantly lower number, but still, even at that number, their $44 million would be worth nearly $150 million today.

There’s nuance to this, of course. We don’t know if they invested additional capital, were diluted through later rounds, etc., but you get the point — Michael Jordan, Mark Cuban, and Ted Leonsis all made significant money on the deal.

Sportrader Valuation

• 2018: $2.4 billion

• 2021: $8 billion (+233%)

But here’s the interesting part: Sportrader did nearly $500 million in sales last year, but just 11% of that came from the U.S. market, where they are already the largest provider of data to sportsbooks.

Sure, they lost their exclusive partnership with the NFL earlier this year — the NFL signed a cash/equity deal with Genius Sports Group despite already owning equity in Sportrader — which canceled their plans on a $10 billion SPAC deal.

Still, with the US sports betting market expected to grow from a $1 billion industry today to potentially a $25 billion industry over the next decade, investors can’t help but be excited about the future of the business.

Here’s how I think about it — Wall Street firms collectively spend hundreds of billions of dollars annually to ensure they have accurate, real-time data. It’s the lifeline of their business. And with sports, it’s no different.

Whether it’s the casual fan looking to check their fantasy football lineup, a sports bettor looking to gain an edge, or a professional sports franchise looking to analyze complex data sets to determine their next draft pick, the thesis remains true — hundreds of millions of people can’t get enough real-time information about players, teams, and leagues.

That’s where Sportradar has and will continue to thrive.

As the US sports betting market continues to mature, it’ll be interesting to see how much additional revenue and market share Sportradar can capture. But when it comes to that, only time will tell.

Have a great day, and I’ll talk to everyone tomorrow.

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Huddle Up is a daily newsletter that breaks down the business and money behind sports.

If you would like to join more than 47,000 other professional athletes, business executives, and casual sports fans that receive it directly in their inbox each morning, subscribe now.