NFL Lands Genius Sports Stock Worth Almost $450 Million Tied to Data Agreement

Posted on: April 9, 2021, 10:48h. 

Last updated on: July 5, 2021, 01:17h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

The NFL is getting a plumb deal on Genius Sports stock related to the parties’ recently announced six-year data agreement.

Genius Sports
NFL Commissioner Roger Goodell, seen here in 2018. The league could make big money on Genius Sports stock. (Image: LA Times)

The sports betting data provider is granting the most popular domestic sports league 22.5 million equity warrants at a penny apiece. Based on where shares closed on April 5 of dMY Technology Group, Inc. II (NYSE:DMYD) — the special purpose acquisition company (SPAC) Genius is merging with — the NFL’s stake in the company is worth $446.6 million.

The Warrants will be subject to vesting over the six-year Term, with the first 11,250,000 of such Warrants to be vested immediately upon issuance promptly following the closing of the pending Business Combination transaction and the balance of the Warrants vesting over the remaining Term or upon certain limited specified events and on customary terms,” according to a filing with the Securities and Exchange Commission (SEC).

The blank-check company is holding a special shareholders meeting on April 16, likely paving the way for Genius Sports to debut as a standalone public company on April 20.

Could Be Even Better Deal for NFL

The agreement between the league and Genius — announced last week — is rumored to be worth $1 billion. It’s also a coup for the data provider because it beat rival Sportradar for the deal.

Investors are applauding it, too, as shares of dMY are up 35 percent just this week. The NFL is certainly benefiting as well, because the aforementioned $446.6 million value of the league’s investment in Genius could be more floor than ceiling.

Earlier this week, Craig-Hallum analyst Ryan Sigdahl called Genius “a clear winner” in the New York legislation to authorize mobile sports wagering. He says the bill the includes “a preference for the use of official league data,” which is a boon for Genius. The analyst has a $30 price target on dMY, which will apply to Genius when it officially goes public. Assuming that forecast proves accurate, the NFL’s position in the data provider would be worth $675 million.

If the merger with dMY falls apart, “Genius has agreed to use its reasonable best efforts to renegotiate the terms of the Warrants described above to reflect warrants in a privately held company, which will include customary terms and conditions, including liquidity and put rights for the NFL, and the NFL will have the right to terminate the partnership until such revised terms have been agreed,” according to the regulatory document.

NFL Racking Up Valuable Investments

In addition to the stake in Genius, the NFL owns equity in Sportradar, Skillz Inc. (NYSE:SKLZ), Fanatics and On Location Experiences — the latter two privately held — according to Sportico.

The league generally approaches investments such as these with a long-term view, and usually doesn’t take interests north of five percent in any company due to the regulatory obligations associated with ownership exceeding that percentage.