Interview: Leagues and federations try to cut out the middlemen – the broadcasters – and Sportradar want to help
13 April 2021
Sports data behemoth investing heavily in innovative video production to “help rights holders understand the fans, fans’ behaviour and also how to monetise the fans in a smart way.”
Innovations include adapting pitch perimeter advertising to target individual markets.
Football will continue with a hybrid model with broadcasters combining clubs and leagues selling to fans until mid-decade, but there has been a “real rethinking about alternative monetisation models.”
Sportradar’s value has quadrupled in just three years to $10-12 billion, with IPO in the offing.
Sportradar is a peculiar company. Omnipresent in the sports industry, its array of services – which extend into data provision, OTT, sports integrity and even technological solutions into online abuse – seems at times so bewilderingly extensive, that it’s hard to pinpoint to its raison d’etre.
Established in 2001, Sportradar currently employs around 2,000 people in more than 30 locations and has in excess of 1,000 partners in more than 80 countries. It provides data and operational support on some 400,000 live sporting events each year.
Data and operations, says its chief product officer of its sport entertainment division, Rainer Geier, remain its core business, but it is rapidly expanding into new areas. Anything that falls outside the core business, Geier has oversight over technological developments.
As the sports industry moves away from traditional broadcast models, towards a digitally led future or what has been termed “the third age of sport”, such a role is hugely important and at the forefront of change across the sports industry.
Rethinking the broadcast model
In a wideranging interview last month, Geier reflected on 22 years in the rights industry as a time of unprecedented growth. For most that time, he says, “It was always believed that the top tier rights holders can generate more money within the next rights cycle. And the reality was, of course, that over years the rights and the earnings increased.”
While there were lots of examples of rightsholders preparing different ways and “hybrid models” of cashing in on broadcast rights “there wasn't really need to think about alternative monetisation models in a sustainable way because they had the broadcast earnings.”
Yet the past two years have seen unprecedented change to this way of thinking. The collapse of French football’s broadcast deal, the struggles of Italian football to get its deal over the line, the stagnation of Bundesliga rights has seen a “real rethinking about alternative monetisation models.”
Geier points to UEFA and Bundesliga as previously leading the way in this area. They had created OTT platforms to enable them to go “direct to consumer in certain international markets” if they didn’t reach their desired revenue target, but he says that the rethinking now goes much further than that.
“And that's exactly also where we want to fit in with all of the products and services we are preparing specifically for top tier rights holders.”
While Sportradar’s principal business remains, what he terms, “data collection and monetisation of data” the company is rapidly expanding in the direction of video and OTT platforms.
Aren’t they just another player in an already crowded market?
He gives me the example of video production, an area where, he says, SportRadar are “really investigating and also investing a lot of money.”
This is about more than putting cameras in stadiums, it is “ the full end to end technology platform not only to provide the service, but really also help the rights holders to understand the fans, the fans behaviour and also how to monetise the fans in a smart way.”
“Our offerings are very customised. So if somebody wants to set up some kind of subscription model, it's possible. If other ones want to go with advertising models, that's possible. But then also going the next step in order to monetise the fans in the direction of merchandising, ticketing and, of course, betting - in case it's allowed and also the rightsholder wants to go in this direction.”
Role for broadcasters
The logical consequence of this is for leagues and federations to cut out the middlemen – namely traditional broadcasters – and seek a greater cut of revenues themselves by selling matches direct to customers.
“I think until 2026, it still will be a hybrid model where of course there's still a place for the traditional broadcast model. But for sure rightsholders will prepare themselves in order to also set up their own relationship to the fans.”
And then last Sunday, for the first time he consumed a Formula One race. For two hours! He never did it before, but he was teased via his mobile and via social media
Nor does this need to involve leagues “competing against their biggest clients.” There are examples, he says, of leagues setting up their own OTT platforms and then selling their service on to fans via traditional broadcast partners. This middle ground also allows the league bodies to better understand their consumer base.
Reach a specific target audience
Geier says that OTT technologies also provide a better provision of what sponsors want. He tells me about a technology Sportradar has developed that allows them to “really easily” replace the advertising perimeter around pitches to reach a specific target audience.
For example, they can replace a local bookmaker displaying on the perimeter at an EPL match and make targeted advertising for specific betting portals aimed at, say, the Asian market, depending on where the game is being shown. Equally, if betting advertising is restricted in a particular market – such as Spain – they can replace that advertising with something else.
“Technology will definitely help new ways of monetising,” he says, while OTT provides the sort of data that traditional broadcast methods never could, enabling them to “understand the fans and definitely accelerate these trends.”
Too much data?
I ask if there is a danger of sport approaching market saturation in terms of data providers, but Geier says to the contrary, there is not enough data.
Sportradar provides sports data from 400,000 live events each year, and he says they collect and refine the raw material and “package it into a range of innovative products and services” that help drive fan engagement.
Traditional broadcasters, he says, are going to have to change. A younger, more digitally savvy generation is emerging, who are interested in sport but not according to the current subscription model
The user data they collect, he suggests, is only at the start of a journey of technological development. There has traditionally been a “lack of experience” at leagues and federations when they have considered why they should collect data about their fanbases or what data they should collect, but now that OTT technology allows them to collect information about their fanbases “this is the sweet spot every rights holder should think about.”
User data acquired from OTT, he says, is “the key for the alternative monetisation models.”
Need for change
Traditional broadcasters, he says, are going to have to change. A younger, more digitally savvy generation is emerging, who are interested in sport but not according to the current subscription model.
He gives the example of his own 17-year-old son “who will never need a [Pay TV] subscription”, but who has become interested in F1, having been hooked by “cool promotional videos on Tik-Tok and Instagram”. This interest developed by Netflix’s Drive to Survive series, “And then last Sunday, for the first time he consumed a Formula One race. For two hours! He never did it before, but he was teased via his mobile and via social media.”
These new customers, he says, won’t cannibalise existing subscription packages, rather they are a new audience that the rights owners – F1 in his son’s case – can acquire by talking direct to customers. “This is definitely a trend which will exist going forward.”
Towards an IPO
Being on the cusp of a rapidly evolving industry has made Sportsradar an attractive option for investors, which include Michael Jordan.
In February Sportico reported that it was in talks about going public, with a valuation of $10-12 billion. Just three years ago the company was valued at $2.4 billion when the Canada Pension Plan Investment Board and private equity firm TCV bought a minority stake. Understandably Geier is not able to discuss or speculate on any IPO.