Sportico: Spectrum Equity, Bucks’ Lasry Back Sponsorship Market Platform

SponsorUnited, a sponsorship information platform, recently closed on a $35 million Series A round led by Spectrum Equity. Milwaukee Bucks owner Marc Lasry and San Diego Padres co-owner Ron Fowler have also invested in the company. The money raised will be spent on data automation, talent recruitment and tech development (think: morecustomized user interface).

Spectrum Equity estimates that brands spent $25 billion on sports sponsorships across North American properties in 2021. With so much money in play, there is a growing desire amongst stakeholders for information that can aid in the decision-making process.

“The [SponsorUnited] platform has become a go-to resource for everything from competitive analysis, best practices and asset audits to deep dive custom research on specific strategic questions we need to analyze,” Justin Toman (head of sportsmarketing, PepsiCo) said. It “has given us a much more holistic picture of the sponsorship landscape, which has in turn enabled us to make more informed and efficient decisions when it comes to our sports investments and how we structure our partnerships.”

Investors are betting on the continued growth of the category and SponsorUnited’s ability to become the dominant player within the vertical. The opportunity for value creation is tremendous if the company can successfully establish itself as “the single source of truth on sponsorship market intelligence,” Chris Mitchell (managing director,Spectrum Equity) said. Fellow portfolio company Definitive Healthcare Corp., another information industry investment, has a $1.3 billion market cap. SponsorUnited has said it raised its Series A round at north of $100 million.

JWS’ Take: Sports sponsorship has long been a multi-billion-dollar category, but until 2018, when SponsorUnited launched, there wasn’t a central source of information onthe participants. “If you were a property or rights holder and wanted to know what everyone else is
doing in the ecosystem, there was nowhere to go,” Mitchell said.

The multitude of channels and formats in which sponsor ads run made it difficult forbrands to compete with one another and for IP holders to maximize the value of their assets. Few companies have the internal resources needed to compile and synthesize all of the available information.

SponsorUnited’s platform has consolidated the fragmented market intelligence landscape. The company’s online portal has information on 1.1 million sponsorship and media partnerships across 250,000 brands and properties. “It’s a bit like the Bloomberg Terminal for marketing partnerships in that we have all of the data in one place,” Bob Lynch (founder and CEO, SponsorUnited) said.

The platform enables sports organizations to make better, more informed decisions. It also allows them to use personnel more efficiently. “Roughly 20% of a team’s time can be spent on research and reporting,” Lynch said.

Rights owners lean on the SponsorUnited platform to grow their sponsorship business too. “It’s become fairly common for our clients to tell us that they’ve secured six- andseven-figure deals as a result of not only discovering partners on our platform, but relying on our data through the entire process of pre-pitch, ideation, close to performance measurement,” Lynch said.

SponsorUnited is not trying to replace traditional ad agencies. “If you’re doing a stadium naming rights deal, you’re still going to work with the most reputable agencies in the world,” Mitchell said. “But [the platform] is very valuable as an information source that can complement that activity.”

The anticipated growth in sports sponsorship spending and growing demand for dataand analytics are strong macro tailwinds. “The more brands that are out cutting deals and the more properties that are monetizing their assets, the better it is for industry awareness and only increases the number of users,” Mitchell said.

SponsorUnited currently has 2,900 brands and IP holders across 25 countries using the platform. The proven product-market fit was among the factors that convincedSpectrum Equity to back the company.

The growth equity firm was also impressed with SponsorUnited’s ability to bootstrap its way to a market leading position. “Capital efficiency is a good leading indicator for whatwe think are fundamentally attractive business economics,” Mitchell said.

Spectrum Equity has long found success investing in data or information services businesses, albeit in other industry verticals. In addition to Definitive Healthcare (healthcare), Ancestry.com (genealogy) and World Check (banking) are among the firm’s current and prior portfolio companies.

However, the value proposition has changed over time. The old business model was to “get some proprietary access to data and then charge aggressively for people to consume it,” Mitchell said (think: Kelley Blue Book). But when the proliferation of the internet made much of that information free, data businesses added the analytics, according to Mitchell.

Because much of the information appearing on the SponsorUnited’s platform is publicly available, such as the names and contact information of sponsorship executives, one might assume the barrier for competition is low. But the sheer amount of data collected, ingested and normalized over the last five years, and the volume of client relationships established, creates a significant moat around the business. “When [Lynch] goes into ameeting and says he has all 30 NBA teams [as clients], that makes his job a lot easier,” Lasry said.

It also creates a powerful flywheel effect moving forward. “If you buy SponsorUnited because it is the most complete database available, then [the company] gets more customers and even more [sales] activity,” Mitchell said.

Having access to SponsorUnited intelligence has helped the Bucks grow its sponsorship business. Lasry declined to state exactly how many more sponsors it has signed up orhow much more revenue the franchise has made. However, he said the information has been “worth multiples” of what the club has paid for it.

Depending on the scope of the organization and size of the team, access ranges from the low-five–figures to the low-six-figures.

There are numerous category-leading information companies, built on the backs ofopen-source data, worth more than a billion dollars in other verticals. While Mitchell was hesitant to make predictions on how valuable SponsorUnited can become, he sees a similar opportunity in the sports sponsorship segment. “We’ve seen with so many companies, there are often one or two information sources in vertical markets that become very large market share players.”

Considering the company already counts nearly every major pro sports rights owner as a client, it is fair to wonder where future growth will come from. Mitchell said there is“plenty of runway” in getting more of the current participants to use the platform. “The market for brands is [also] very large and [SponsorUnited] has low penetration today.”

Mitchell believes the company will also hold pricing power as it continues to establish itself as the market leader and that it can charge clients more if delivers deeper, proprietary intelligence.

Most of the deal-specific information currently in the database is qualitative in nature.“Who is advertising, where are they advertising and with what frequency, and what assets property holders are monetizing,” Mitchell said. “But terms of the deals is an area where they are beginning to move.”