PE targets fragmented sports services market as M&A activity doubles

Private equity and other financial sponsors are increasing their focus on the global sports services industry, with more than 246,000 privately owned companies identified as potential acquisition targets, according to data from Grata.

The firm’s research indicates that across a fragmented market, M&A activity has more than doubled over the past decade.

Grata examined six areas of the sports services market: athlete performance and training; sponsorship and agency services; event management and logistics; media, broadcasting and streaming; leagues and teams; and sports betting.

Private companies account for 76% of the overall sports services industry, creating a broad pool of potential targets for financial sponsors and strategic acquirers.

The US represents the largest individual market, with approximately 88,000 privately owned sports services companies, followed by Germany and the UK.

Sports betting is showing the fastest private-market growth among the segments analysed, with companies in the sector expanding at an average annual rate of 51%. It remains the smallest segment by number of companies, however.

Growth patterns also differ significantly by region. Among public comparable companies, athlete performance and training has recorded the strongest growth in the US, while leagues and teams lead in EMEA and media, broadcasting and streaming is the fastest-growing segment in APAC.

The research also points to a substantial pool of potential sellers. More than 21,600 sports services businesses have been identified as showing signs of an intention to sell, including 932 classified as having high seller intent.

Grata said its seller-intent analysis uses market indicators associated with a company’s readiness for a potential transaction. The platform has also identified 128 actionable companies that had not previously been discovered by its users.

PE’s growing presence in the sector comes as the sports industry undergoes structural changes that are opening new avenues for investment. These include greater opportunities for private capital to participate in team and league ownership, changes to the economics of college athletics through revenue-sharing and name, image and likeness arrangements, the continued expansion of legal sports betting and the fragmentation of media rights across broadcasters and streaming platforms.

Strategic buyers have accounted for the majority of sports services transactions in every year since 2017, according to Grata, although financial sponsors have steadily increased their share of deal activity since 2021.

Recent transactions have demonstrated investor interest across areas including college sports media, commercial distribution and mass-participation fitness.