Genius Sports Expects NFL Data Rights Deal To Be Profitable By 2022

September 9, 2021
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Genius Sports executives have said the company’s exclusive partnership with the National Football League will be profitable by next year after questions from analysts regarding the company’s most significant North American sports partnership.

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Genius Sports executives have said the company’s exclusive partnership with the National Football League (NFL) will be profitable by next year after questions from analysts regarding the company’s most significant North American sports partnership.

The partnership was the biggest area of focus for Wall Street analysts during the New York-listed company’s second-quarter earnings call on Wednesday, with questions from most participants probing how exactly Genius Sports expected to profit from the massive six-year deal, reportedly worth $120m a year in cash and equity.

Although Genius executives stayed away from specific details about how the company would profit from offering NFL league data, the company said it would break even this year and begin profiting from the deal next year and would turn a profit over the lifespan of the six-year tie-up.

The plan, the company said, is packaging other data rights and Genius products with official NFL betting data as part of the deals it reaches.

“It’s very difficult to break out the ROI of the NFL or any sport on its own basis because of the way we sell it,” Genius CEO Mark Locke told analysts during an hour-long conference call.

“As a business we tend to look to add services on a much broader basis to our customers, that will include NFL data, but it will also include other official data that we have, other rights partnerships, provision of odds services and marketing services.”

Locke said the “combination of all of those things is the basis on which the deals we’re doing, and renewals of contracts are being done, and they’re going very well.”

“We’re seeing large proportions of our customers taking more than one or two products,” he added.

“Our business is about value-added services to our sportsbook partners but there’s also a fair amount of this that’s about leverage, and having the NFL allows us to increase the amount of products and services we’re able to provide to our sportsbook partners and help drive their growth.”

Since announcing the exclusive deal with the NFL, the company has announced wide-ranging partnerships with DraftKings, Caesars Entertainment, WynnBet and the 888-backed SI Sportsbook to use the league’s official betting data.

Locke said the company has seen the results of its strategy of pushing operators to use official data in Europe after ramping up enforcement of its rights on European sports, most notably Premier League soccer games.

“What we've seen throughout the deal with the NFL, again and you'll see through the announcements that we've been making is a continued embracement of that official rights strategy, the contracts that we're doing obligate sportsbooks to work with us on official data where we hold the rights,” Locke said. “And the rights portfolio has grown very, very nicely.”

“So overall, the official data strategy is working exactly as we expect it to, exactly as planned and we're incredibly pleased with how well and that's dropping through in terms of the contracts, the revenues that we're seeing in the business.”

Genius on Wednesday posted a second-quarter loss, but CFO Nicholas Taylor told analysts that revenue increased across the company’s business segments.

Revenue grew to $55.8m from $26.8m in the second quarter of 2020. The company’s total net loss was $464.2m, compared with $7.5m in the year-ago period, as operating expenses increased.

The company also raised its full-year revenue guidance from $255m to $260m. Previously, its guidance range was for $250m to $260m. Genius also reaffirmed its guidance for full-year EBITDA, estimating $10m to $20m.

“Momentum for the first six months of the year give us confidence that we will deliver on the high-end of our previous revenue guidance,” Locke said.

Sportradar Sets Terms For U.S. IPO

In a separate development, Genius’ main rival Sportradar Group is looking to raise as much as $532m in a U.S. initial public offering (IPO) announced on Tuesday some three weeks after the company ended merger talks with Horizon Acquisition Corp. II, a special purpose acquisition company (SPAC).

The company plans to sell 19m Class A ordinary shares, priced between $25 and $28 apiece, according to a regulatory filing with the U.S. Securities and Exchange Commission. Sportradar said it estimates net proceeds from the offering to be about $639m, assuming an IPO price of $26.50 per share.

It also confirmed that entities affiliated with Eldridge and Radcliff Management and some other investors would buy $159m of its Class A ordinary shares at the IPO price.

At the midpoint of the proposed range, Sportradar would command a market value of $7.8bn, Renaissance Capital said in a report.

“I see numerous opportunities for growth, especially as new sports betting markets such as the U.S. accelerate, and our customers turn to us for new products and continued innovation. We are living in a transformational time,” Carsten Koerl, founder and CEO of Sportradar, wrote in a letter to investors.

Sportradar said it plans to list on the Nasdaq under the ticker symbol “SRAD.”

Additional reporting by Chris Sieroty.

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