This column is authored by Piyush Kumar, CEO & Founder, Rooter
Sport, for most people, is about the sound of the crowd’s roar upon the wind, the adrenalin coursing through the body. It is the unbridled joy of winning, the passion of competing at the highest level, the acceptance of a well-fought loss. It is a moment of audacious skill and surpassing ability, and it is also the sheer grit and determination of a last-ditch effort when things aren’t going as planned. What they often miss, however, is the fact that it is also an extremely lucrative investment opportunity. The nascent sector of sports-tech, in particular, holds exceptional promise.
The Growing Impact of Sports Technology
Almost every sports fan is today aware of Hawk-Eye, that delightful innovation which makes it possible for players to challenge official rulings and get more accurate computer-visualised results. First implemented for televised cricket in 2001, the technology has since found its way into several popular sports as a technological means of adjudicating decisions. Through various iterations like the Challenge System, Umpire Decision Review System, and goal-line technology, Hawk-Eye is today present in over 20 sports like cricket, football, tennis, baseball, volleyball, table tennis, badminton, rugby, basketball, snooker, and baseball etc.
It is used to annually cover more than 7,200 games and sporting events, including premium competitions like the English Premier League, Serie A, and the German Bundesliga. More importantly for investors, it was sold for £20 million to Japanese electronics giant Sony in 2011, having made a pre-tax profit of £1.1 million on sales of £3.6 million in 2009. Imagine the financial windfall a seed-stage investor would have made.
Similar disruptions are being created by several other high-potential sports-tech ventures across the globe. By integrating technology, entertainment, and sports, these startups are creating massive value for everyone in the sports value chain. From teams, individual players, and managers to broadcasters, sports equipment manufacturers, merchandisers, and fans, everyone is benefitting from the growing technological intervention in what has essentially been an industry running on raw muscle power.
Take, for example, data analytics companies like Opta Sports, which focus on crunching through vast amounts of live, in-match data to generate meaningful insights in real-time. The firm has the capability of generating more than 35 data points for every cricketing delivery bowled, and provides in-depth analysis for more than 2,500 on-ball actions in a single football match lasting 90 minutes. The company was purchased in 2013 by Perform Group in a deal worth around £47 million, leading to massive profits for its nearly 100-odd minority shareholders, including sports betting expert Angus Loughran, Compton Hellyer (Founder – Sporting Index), BSkyB, and Albion Ventures.
The current sports-tech investment landscape
In a 2014 report, leading management consulting firm A.T. Kearney estimated the global sports industry to be worth approximately $600-700 billion. The same year saw investments to the tune of $1 billion poured into sports-tech startups around the world, underlining just how much potential these new-age ventures hold.
Hudl, a video coaching tools platform, secured Series A funding worth $73 million in 2015. While sports video analytics venture Krossover which raised $24 million in various rounds got acquired by Dallas-based Blue Star Sports in May 2017. Sportsradar, a sports data analytics and technology startup, was chosen for strategic investment by Mark Cuban, the owner of Dallas Mavericks; Ted Leonsis, Owner – Washington Wizards, Washington Capitals, and Washington Mystics; and former NBA superstar and basketball great Michael Jordan, currently the owner of Charlotte Hornets.
These investments are indicative of an industry-wide impetus of investment into sports-tech startups. Every aspect of sports consumption – from live fan engagement, player performance, talent identification, content delivery, consumer tracking/insights, and viewer experience – is set to be revolutionised and transformed by these ventures. The time is ripe for investors to capitalise on the exponential growth that the sports-tech industry is expected to witness in the near future. After all, it is simply a matter of staying ahead of the game.