Sports operating system Teamworks just raised $235m…
They’ve already acquired dozens of companies (and this will only accelerate further).
Today, I take a look at M&A across sports and where it’s likely going.
This is important info for anyone building in the space, as this is exit liquidity.
Let’s Dive In 👇
*Quick Refresher:
M&A stands for Mergers and Acquisitions. It refers to the consolidation of companies or their assets through various transactions, such as mergers, acquisitions, and takeovers. Essentially, it’s how companies grow by combining with or buying out other companies.
Teamworks Raise
First things first…
It’s AWESOME to have another $1B+ valued company in sports.
Following the Series F funding, here’s where Teamworks is going next…
- Lots of acquisitions, I would suppose.
- Enhance AI capabilities, grow data science team, & upgrade platform features.
The end goal for Teamworks?
To be the operating system powering all sports teams.
Some other things to note:
- Dragoneer led the last round, so this is an internal way to mark up your book as well.
- Traditional Silicon Valley investment firms are starting to show more interest in the sports industry.
This deal interests me deeply on something else…
Bigger groups entering sports with large minimum check sizes.
Sports Investment Getting Top Heavy
We’ve now entered a super interesting time in the sports world.
There is a lot of capital ready to be deployed across sports at the $30 million-$200 million check size range…but only so many opportunities.
What I’m watching is how this impacts M&A.
- For founders, I believe there is an incredible opportunity to build niche solutions that can be acquired.
Especially with all the AI tools that can now streamline building.
I ALWAYS encourage founders to shoot BIG…but there will likely be a lot of acquisitions in the $3 million-$20 million range.
Why?
To reach the ideal check sizes, many of these investors will have a hard time finding one-off deals like Teamworks, so they will have to roll multiple things up.
I foresee them finding a base asset they take a position in, and then acquiring smaller solutions around it.
Acquirers To Watch
I based this on those with a history of acquisition and/or flush with cash.
I didn’t include media companies, sovereign wealth funds, or private equity firms on this list, but I would expect them to be among the most active in the near term.
Where Else for M&A
The next wave of M&A is wider than ever.
Again, this will touch sports and adjacent categories:
- Tech: AI-enablers, betting solutions, fan engagement, etc
- Media: regional networks, streaming solutions, podcast and documentary rollups, niche streamers
- Events: local tournaments, entertainment merged with sports, festivals, etc
- Emerging Leagues: volleyball, padel, and other small but fast-growing leagues are prime for consolidation
- Minority Stakes: expect many more fractional deals
- League-Level Capital Raising: watch more leagues copy UEFA & CVC’s model by selling slices of broadcast rights to finance global growth
- Multi-Club Models/Franchises: aggregate, scale, and then flip – we’ll see these across teams, leagues, and sportainment concepts
What we’re seeing is the financialization of sports in real-time.
I expect M&A to ramp up drastically over the next few years!
M&A in Youth Sports
We’ve already to started to see a lot of what I’m talking about taking place in youth sports.
- TeamSnap has scooped up multiple assets.
- Following their funding from Accel-KKR, LeagueApps acquired Mod11 and RecTimes.
- Dick’s Sporting Goods and Unriavled Sports are now on the same team with lots of cash willing to roll.
- GenStar/Bluestar through Stack Sports have been active for many years.
- FastBreak AI has entered the space blazing and put a few acquisitions under their belt already.
- IMG Academy made their first acquisition recently and I could see them scooping up more strategic assets in the near future.
- Rocket Youth raised $100m and has been involved in a few acquisitions with more coming down the line.
- There are many other PE groups looking to get in the game here.
Reiterating what I said above…
Following large funding or a shift in controlling stakes, you see how capital flows into a base asset and then that asset scoops up the smaller ones around it.
There will be lots of founders who bootstrap or raise small amounts of capital at reasonable valuations that make life-changing money as this accelerates.
Looking Ahead
The next wave will be smart buyers grabbing not just teams, but the entire fan experience stack: tech, media, events, and community.
How you structure your company is super important.
Really think about these things as a founder:
- What is my ultimate goal with the company I’m building?
- Am I building a layer 1, 2, or 3 solution?
- What is the least amount of capital I can get by with?
- Who are the strategic angels and investors that I want on the journey?
My one prediction…
There will be a handful of entrepreneurs who make more money building small, buyable plug-and-play assets than those swinging for the fences.
Don’t sell yourself short…BUT….
Really think about the questions above and what your goal is, and how what you’re building fits into the ecosystem. Then go take action.
