The Athletic, a sports media platform has been up for grabs for a couple of months now but no one has shown interest in adopting it yet. Earlier on in the year, there were rumors flying around that AXios management was considering an acquisition. In view of the caliber of the Axios brand, the acquisition deal would have meant that the shares of The Athletic would be listed. This definitely never happened and the media operator is out in the market again searching for a possible buyer.
The latest industry news indicates that the New York Times have an interest in acquiring Axios but there is nothing concrete to indicate that there is a definite direction in the life of the media platform. With the NYT out of the potentials, the focus is now on two new possible buyers that have expressed interest in the company. The two prospects have since been revealed to be FanDuel and DraftKings; although they are both capable of buying the entire operation, it has been reported that the
delay in moving forward has been occasioned by valuation of the company. It is nearly impossible to quote the value of a company without taking into consideration factors that dictate its worth in the market; that is the current huddle that the management of the two buyer companies must find a way to overcome.
What we cover
A sneak-peak into Athletic’s journey to the top of the sports industry
The Athletic brand has been in existence in the NJ gambling market for about five years now. Although quite young, the company has not had any major challenge as far as grounding itself in the industry is concerned. By leveraging popular names that their customer base would already be familiar with such as Jeopardy! Champion James Holzhauer, the company has been able to make some major leaps to the top.
At the same time, the company has also explored the avenues available for international expansion in an effort to curve a niche in the global sports family. With an excellent marketing strategy, the company’s current valuation of about $750 million should not be too far off the mark. This present value indicates that the company’s value has grown by 50% from the previous year.
It is this impressive growth curve that has caught the eyes of different players in the industry who are out to partake of this success. While there has been expressed interest from various corners to buy Athletic, nothing so far has been conclusive.
Even though Athletic currently has a subscriber base of more than a 1 million users, no deal that has been floated for its acquisition has shown any sign of survival. According to credible sources, the deal involving FanDuel and DraftKings might be a solid one if only the many lingering questions will be addressed.
New partnerships targeting media industry
When a sports betting company gets integrated with a media and information brand, it goes without saying that half of its publicity challenges will be addressed. A large proportion of customers attracted this way are organic and likely to be active on the sportsbook. This is especially true because promotional messages often run simultaneously with partner information.
Judging from the gradual opening up of multiple states to gambling following the Supreme Court ruling legalizing sports betting, the US is a fierce market ecosystem for a betting services provider. While there are companies that still leverage their performance and imminent survival on their good name, times are changing and strategies must change. Having a media partnership is just one way of ensuring that the offerings of a certain sportsbook are ever before the eyes of a potential clientele.
A visit to most of the jurisdiction’s betting scene and one discovers that FanDuel and DraftKings are quite established throughout the United States. It is however true that other betting players such as WynnBet and BetMGM that have invested in massive collaborations are a threat to the market-leader position of these two brands.
The cost of the acquisition deal is not really an issue to these two gambling industry giants; DraftKings proved this with their bid of $22 billion to purchase Entain. The issue at hand is that the value of the company be as accurate as possible; the smart move for Athletic now would be to employ the services of a well experienced valuation team to draw for them an accurate figure. For now, the $750 million valuation sits like a lucky guess that both prospects are unwilling to take a gamble on.
At this point, the next move for the management of Athletic would be to communicate to the industry of plans to enlist the services of a professional valuation service. Making the market aware of what is happening behind the scenes is going to put the interested parties on high alert and even get them to show commitment.
It is not yet clear what the New York Times and Axios discovered about the acquisition deal for athletics that caused them to step away but it is obvious that two separate entities cannot act in tandem for no cause at all. This is however not enough reason for future prospects to lose hope because that which turned away the first two could be an asset to another.
Final Thoughts
For the investor who will take the leap into acquiring Athletic, the first assignment must be modeled around making the business profitable. Reports indicate that Athletic has been receiving huge funding facilities from renowned firms but it still records losses when its accounts are audited. One of the names of people who have individually funded Athletic without getting back their money is actor Matthew McConaughey. If these allegations are true, it means that the company is in heavy debt and has no practical ways of paying back. Without official communication from the company representatives, all these are mere rumors; the reaction of FanDuel and/or DraftKings in regards to pursuance of this deal will shed light into the issue of failed acquisitions for Athletic.
