Capital, Code & Circularity: How Technology is Reshaping Sports Business

Hey ,

Welcome to the 13th edition of The Sports Stack, unlucky for some, but let’s hope not for us. This week, we're exploring the flow of capital, information, and innovation across sports.

Drake Star's annual report reveals record-breaking dealmaking in sports tech, with private equity firms evolving beyond trophy asset acquisitions to building integrated technology ecosystems. Meanwhile, Perplexity's expansion into F1 highlights how AI platforms are becoming legitimate distribution channels for sports data, reshaping how fans discover and consume content. To round things out, we'll look at how Under Armour and Slow Projects are proving that innovation isn't always about creating something new; sometimes, it's about reimagining what already exists in more sustainable ways.

This week’s main chapters:

• Record-Breaking Dealflow: Inside Drake Star's 2024 Sports Tech Report

• First-Person Formula: How Perplexity's F1 Experience Is Racing Beyond Traditional Sports Data

• Circular Innovation: Where Sustainability Meets Sports Heritage

• Quick Hits: This Week’s Stories & Updates

👉️ Before you dive in, I’d love for you to share The Sports Stack with your friends and colleagues. In return, you’ll receive a brilliant report on Caitlin Clark’s rookie season from Genius Sports.👇️ 

🤑 Record-Breaking Dealflow: Inside Drake Star's 2024 Sports Tech Report

Drake Star recently released their Global Sports Tech Report 2024. As noted in previous editions, 2024 was a record year for Sports Tech M&A, but now we have the full numbers to back it up. Make sure to check out the full report.

There was record-breaking dealmaking in Sports Technology

• $86bn in total deal value across 1,152 announced deals in 2024. 

• 1.7x growth in M&A deal value compared to 2023, with 453 announced deals totalling $67.8bn. For example, DAZN purchased Foxtel at a value of $2.2bn. 

• 18 M&A deals over $1bn, including landmark transactions like Silver Lake's $13bn take-private of Endeavour and Skydance's $8.4bn acquisition of Paramount. 

The Investment Landscape: Following the Money

• Fan engagement and experience accounted for 33% of M&A deal value in 2024, overtaking Esports/Fantasy/Betting (which dominated in 2023 with 32%).

• Media & Broadcasting remained steady at 31% of deal value, showing the continued importance of content distribution rights.

• North America accounted for 65% of disclosed deal value, maintaining its position as the centre of sports tech investment. 

While private placements showed a slight decline (8.3% fewer deals than in 2023), some segments are gathering momentum:

• Wearables & Performance Enhancement led with 41% of private placement value in 2024, compared to 40% in 2023. 

• $6bn+ in new capital raised for sports-focused funds, with Arctos ($4.1bn) and Shamrock ($1.6bn) leading the way. 

Public Market Performance: The Winners and Losers

• Athlete Performance companies dominated with a remarkable 52% stock price return in 2024.

• Fantasy/Esports/Betting companies returned 10.4%, underperforming the S&P 500's 23.3% return.

• Digital Media/OTT/Content and Sports Franchises delivered modest returns of 5.4% and 2.8%, respectively.

What's Next: Market Outlook for 2025

• 2025 has already started strong with deals like TKO acquiring On Location and IMG Worldwide.

• Private equity firms are increasingly active with new sports-focused funds and platform acquisitions. Keep reading to find out why Rory McIlroy is important in this story. 

• AI, predictive analytics, fan engagement, and immersive tech are key segments to watch.

• Several IPO-ready sports tech companies are exploring public listings for 2025/2026. 

PE firms are no longer just writing checks and waiting for returns in sports tech. The Rory McIlroy/TPG partnership that we will discuss at the end of today’s edition demonstrates the new model: combining deep industry expertise (McIlroy and Symphony Ventures) with institutional investment capabilities (TPG). This signifies a shift from pure financial engineering to building integrated technology ecosystems that can transform entire sports industry sectors. 

With fan engagement accounting for 33% of M&A deal value (overtaking betting/fantasy), we're seeing PE firms prioritise technologies that directly connect with fans and generate first-party data. This reflects the growing recognition we discussed in the 5th edition of The Sports Stack - the value of owning fan relationships directly rather than relying on traditional media rights models.

🏎️F1's AI Pit Stop: Perplexity's Game-Changing Racing Experience.

Perplexity continues to expand its sports offerings, launching its F1 experience just in time for the Miami Grand Prix this past weekend. This marks its sixth sport on the platform, joining its existing coverage of the NFL, NBA, cricket (ICC and IPL), college basketball, and football (Champions League). They aim to become the primary hub for sports information, bringing together real-time data, scores, standings, and trending news within a single searchable interface. Where will they go next? 👀 

The F1 rollout is extensive, incorporating dedicated F1 and Miami Grand Prix hubs, live-updating standings, schedule widgets that appear contextually with relevant queries, and even live-updating odds through their partnership with Kalshi. The experience is accessible on desktop and iOS, with Android support expected before the Imola Grand Prix, starting May 18th. 

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Perhaps the most impactful release is their iOS Live Activity feature, which delivers real-time leaderboard positions directly to users' lock screens. It is ideal for checking race standings without needing to open another app. We’ve seen this feature added in other sports like the PGA Tour, but as far as I know, the official F1 app does not provide live activities during the race. This creates an excellent differentiator for Perplexity to drive new users and adoption. 

I spoke with Jeff Grimes, Perplexity's Head of Live Events Product, about the launch. He told me that due to F1's strong international fanbase, Perplexity experienced a 3x increase in queries seeking real-time sports information on Sunday, 4th May (the day of the Grand Prix), compared to its daily average. 

What is the implication for rights holders and IP owners? 

In previous editions, I've explored how AI platforms like Perplexity and OpenAI are positioning themselves as central hubs for sports information, creating both challenges and opportunities for traditional rights holders. While these platforms bring expanded coverage and awareness to sporting events, rights holders must consider how to capture value from this new ecosystem, whether through data licensing agreements or content syndication partnerships.

Accessing their data through Kalshi, Sportradar, and other official data providers gives Perplexity legitimate access to comprehensive data, a crucial differentiator as regulatory bodies increasingly scrutinise how AI companies use licensed content. Unlike generative AI tools that might scrape sports data without consent, Perplexity is building a sustainable model through proper partnerships.

💡 During conversations with industry leaders at SportsPro last week, I discovered many rights holders are shifting their perspective, viewing these AI platforms as potential distribution channels rather than competitive threats. The most promising approach involves strategic partnerships with platforms that respect intellectual property, provide proper attribution, and establish clear conversion paths back to owned properties. 💡 

👕 Circular Innovation: Where Sustainability Meets Sports Heritage

• Under Armour has partnered with London-based Slow Projects on a limited collection that merges football heritage with sustainability. The collection transforms deadstock materials into unique one-of-one football shirts, bucket hats, and drawstring bags.

• You may be curious how it links to technology. While it’s true that the main focus here is not cutting-edge manufacturing technology, there's a fascinating crossover of old and new; traditional craftsmanship meets modern design and eco-friendly heat-press materials to create products that celebrate both circular practices and aesthetics.

• The collection takes inspiration from 90s football culture. It reimagines Under Armour's Terrace96 collection (named for UA's founding year) with vintage-style details like lace-up collars, while maintaining a bold, modern aesthetic that reflects the increasingly inclusive nature of today's game.

• This circular approach represents an interesting counterpoint to how we typically view sports innovation. We often focus on creating entirely new concepts, yet sometimes recreating products, ideas, or elements from what already exists can be equally impactful. 

What’s next? 

According to Slow Projects, they have some exciting projects launching soon, with brands collaborating at the grassroots level all the way up to the Premier League, so stay tuned. You can follow their journey on Instagram: https://www.instagram.com/slow__projects/

🗞️ Quick Hits: This Week’s Stories & Updates.

🏃‍♂️ Pace Predictions: Strava's ML-Powered Race Forecasting. 

With marathon season in full swing, Strava's launch of its Performance Predictions feature for subscribers is perfectly timed. The feature uses machine learning to analyse your running history (minimum 20 runs in the past 24 weeks) and predict finish times for 5K, 10K, half marathon, and marathon distances.

• The ML model uses over 100 data points from your running history, including your best performances and recent training trends. 

• This launch represents the first tangible integration from Strava's acquisition of Runna, which I covered in Edition 12. While the initial Performance Predictions offering focuses on finish times, the real opportunity lies in combining prediction capabilities with Runna's training plan expertise. The logical next step would be AI-generated training plans calibrated to help users achieve their predicted times, creating a closed-loop system of prediction, training, and performance.

🤑 Green Fairways: TPG & McIlroy's New Sports Investment Playbook

• TPG, a leading global alternative asset management firm, announced the launch of TPG Sports, a dedicated investing business focused on partnering with companies, teams, and leagues shaping the future of sports. 

• TPG is launching the strategy in partnership with career Grand Slam golfer Rory McIlroy, his business partner Sean O'Flaherty, and their team at Symphony Ventures.  

• The partnership combines TPG's $218 billion of assets with McIlroy's insider perspective as both an elite athlete and successful investor through Symphony Ventures (which has backed companies like Whoop, Golf+, and Puttery).

• The strategy will bring a private equity approach to sports investing, providing business-building capabilities and strategic primary capital to help sports IP and operating businesses grow and scale. 

My thoughts: 

• Listening to Rory’s interview on CNBC, it was clear that we won’t see what he described as a lot of the ‘sexy’ NFL, NBA team or trophy asset type investments; instead, the focus will be on the businesses in the sports ecosystem and those who are more sport-adjacent. 

• Rory and TPG President Todd Sisitsky described the sports investment market as being on the 2nd or 3rd hole and shared their deep excitement for the future of TPG Sports. They focused heavily on secular growth and believe that the sports industry is primed for this due to long-term structural and behavioural changes. 

📹️ In-Game Broadcasting: EA Sports FC's MLS Streaming Integration

• EA SPORTS FC™ MOBILE is bringing players live MLS action through a new collaboration between the MLS, Apple TV, and the home of the MLS Season Pass.

• FC Mobile players can enjoy two full MLS games LIVE on the in-game video platform, FCM TV. For those who can’t get enough football action, players will also receive a complimentary one-month trial of the MLS Season Pass.

Why does it matter? 

• This is a great opportunity for MLS to tap into a new audience. EA Sports FC has over 500 million downloads alone on the Google Play Store. By creating an entry point into their funnel through a one-month free subscription for app users, they will generate a considerable amount of new first-party data, aiming to retain a percentage of those new subscribers to create additional revenue. 

🏴‍☠️ Digital Defence: La Liga's AI-Powered Anti-Piracy Tactics

La Liga is intensifying its battle against piracy through a comprehensive strategy combining cutting-edge technology, legal action, and strategic partnerships. With estimated annual losses of €600-700 million due to illegal streaming, the league has made anti-piracy efforts a top priority under President Javier Tebas.

Key Technologies and Strategies

• Dynamic IP Blocking: Real-time blocking of pirate stream IP addresses during live matches, with Spanish courts empowering ISPs to act immediately without repeated approvals

• AI-Powered Monitoring: Advanced Content Protection system using machine learning and artificial intelligence to detect and remove illegal streams across websites, apps, and social media

• Dedicated Anti-Piracy Lab: Specialised teams operating from Madrid to trace, analyse and build detailed profiles of illegal content providers

Thanks for reading,
Mark