Action Network Acquisition Provides Clear Definition Of Partnership Value
BY ADAM GROSSMAN
In a recent post, we discussed how betting had impacted sports media in ways predicted by many after the U.S. Supreme Court decision to allow sports betting in 2018. Better Collective’s recent acquisition of The Action Network, however, demonstrates that the sports industry may actually be having a greater impact on betting.
Mark Cuban summarized the thinking at the time of why owners “just basically saw the value of their team double.” Cuban stated, “It’s easy to see how you’ll have fun at the stadium, at the arena or while you’re watching —whether its online or traditional platform.”
Cuban’s thesis is that the increased “fun” would increase fan engagement which would drive increases in teams’ revenues. More specifically, there would be increases in partnerships, media rights, ticket sales, gameday revenues, events, etc. because fans would have financial stakes in games.
Cuban’s thesis appears to have borne out since 2018 in significant ways. For example, recent media rights deals for the NFL, and the NHL have been secured with significant increases in part because of the intersection of fan engagement and betting in ways we have discussed.
However, these media rights deals show what a potentially equal or greater impact the sports industry has on betting operators. More specifically, betting and gambling companies are leveraging sports content as a cost-efficient way to acquire new customers.
One consistent criticism of the sports sponsorship industry is that it is not really partnership marketing in the traditional sense. More specifically, it is clear how sports properties, rights holders, and content creators benefit economically from partnership. However, return on investment can be difficult to calculate for companies making partnership investments because it is not always clear how revenue is being generated from a relationship.
Better Collective’s acquisition of The Action Network is the latest demonstration of how this model operates in practice. Better Collective “is a leading sports betting media group” that also owns betting and daily fantasy sports brands RotoGrinders and Vegas Insider, respectively.
The Action Network provides “original news, premium insights, betting tools, data and odds” to help make its viewers “smarter about betting.” CEO of Better Collective Jesper Søgaard values this acquisition because it “gives us a leading position within affiliation in the US and a strong foundation for profiting from the continuous regulation of the US betting market.”
Sportico’s JohnWallStreet is one of the leading sources highlighting how relatively expensive it is for betting operators to acquire new customers. Søgaard’s thesis appears to be that state-by-state regulation in large part makes acquiring sports betting customers difficult and content providers are one of the most cost-efficient ways to acquire those customers.
Better Collective was not the only reported suitor for The Action Network because of this reasoning. This acquisition is similar to other M&A activity in this space. For example, DraftKings acquisition of VSiN and Penn National Gaming’s investment into its Barstool Sports betting and iCasino partnership also have looked to sports content as a way to acquire customers. It is also one of, if not the primary reason, Apollo Global Management acquired Yahoo from Verizon Communications last week as well.
The logic of these deals is also similar to logic we have discussed in past posts on partnerships that drive the most value. More specifically, companies are looking to work with sports organizations as a way to create differentiation and increase customer engagement in ways that can drive revenue.
Better Collective’s acquisition of The Action Network is one of the clearest examples of how the sports industry accomplishes its goal for its partners. The Action Network has created a sizable audience that is specifically interested in sports content around betting. This content creates unique opportunities for gambling and betting companies to leverage data to target and acquire customers.