Koerl talks with Boardroom about the makings of the company that has partnerships with the NBA, MLB, and NHL, among other professional entities.
Carsten Koerl’s schedule was detailed down to the minute.
In New York for a very limited period earlier this month, the Sportradar founder and CEO held meetings with two major sports commissioners as he tends to his worldwide sports data, content, and media empire. The company boasts 3,500 employees in 20 countries and partnerships with the NBA, MLB, NHL, NASCAR, UEFA, Serie A, CONMEBOL, FanDuel, DraftKings, William Hill, and several other top sports leagues and betting operators around the world.
An IPO for the Swiss-based company last year reportedly made Koerl’s stake in Sportradar worth $2.4 billion after an initial $150,000 investment in 2001. Back then, the company was known as Market Monitor AS.
“Since then, I never invested money into Sportradar,” the 57-year-old Koerl told Boardroom over Zoom. “It was always self-sustaining and it was always growing.”
Though the company’s stock price slumped since the IPO, second-quarter 2022 revenues of $186 million are up 23% year-over-year globally and up 66% in the US. Building a company to the point of an $8 billion valuation when it went public takes, according to Koerl, making the right decisions at the right time and having a lot of luck that you hit the right timing.
“The rest is then hard work and having a spirit to be competitive and to win,” he said. “I’m very competitive. Of course, I want to win if I’m doing things, and that’s driving all my decisions on every point.”
The German native built his empire around sports real-time data and content that all these leagues, betting operators, and media companies heavily rely on. Koerl said that 80% of Sportradar’s profits are related to live products. Its live odds products distributed globally allow Sportradar to collect up to 2% of profits from bookmakers as part of a revenue-sharing agreement. Its SAS machine learning models are what 70% of its business is based on.
The strategy starts with content distribution, going into value-added products by using its technology to come up with predictions and managing various risks through its Managed Trading Service product.
“Sports betting is not a lottery business,” Koerl said. “You actively need to manage risk because it can happen that an underdog is winning, and it’s not good if you don’t have the right risk distribution on it. And you’re gonna need to manage this. For that, we have full platform products that give our clients the opportunity to fully focus on the operational business.”
Sportradar also has cross-selling products like video streams as a marketing tool and various programmatic advertising products to further drive fan engagement, which is what media, leagues, and betting operators all crave.
The company’s strength in the European market during the first decade of the 21st century enabled it to anticipate the spectacular growth of the sports betting market in the US. Koerl started actively exploring the US market in 2014, moving to New York City near West 64th St. and the Hudson River, and lived there for six months.
“It was a very interesting exercise for me,” Koerl said. “I moved over to understand sports and what was driving this ecosystem. I very quickly got the deep level of passion from the US for sports and for data.”
Sportradar reached an agreement with the NFL in 2014 that marked its entry into the US market. The deal included an equity stake for the NFL as part of a since-discontinued partnership. Now, Sportradar is fully immersed in America and as of last year’s IPO counts Michael Jordan, Mark Cuban, Chelsea owner and Los Angeles Dodgers co-owner Todd Boehly, and Monumental Sports Group chairman Ted Leonsis as stakeholders.
At the beginning of its US overtures, Sportradar was only focused on sports leagues and media companies. But as a data company, it knew the size of the legal betting market overseas and how large the illegal market was in America. It was only a matter of time, Koerl believed, before sports betting would be controlled and regulated stateside, the process which began when PASPA was repealed by the Supreme Court in 2018, giving individual states the right to legalize sports betting.
“We believe the only way to monetize on sports betting is by working in a regulated environment following the rules of the government. It’s totally irresponsible to operate in gray or black markets,” Koerl said. “You’re going to need to have clear rules on how to protect underage players, how to protect problem gamblers and, of course, how to work on the integrity.”
Betting integrity first came to the forefront for Koerl and Sportradar in 2004 and 2005 during the German Bundesliga’s match-fixing scandal. A referee in the country’s second and third divisions as well as in the DFB-Pokal cup tournament named Robert Hoyzer pled guilty to a €2 million fixing and betting scheme that landed him a two-and-a-half-year jail sentence.
Sportradar was monitoring all the Bundesliga matches at the time for the bookmakers and noticed some peculiar irregularities in Hoyzer’s matches. When the risk became too large for one bookmaker, one match was removed from the book, and betting was halted.
“This is how I first found out that we have so much value for the information to detect potential manipulations,” Koerl said.
Since then, Sportradar has invested in and provided game integrity solutions to top leagues worldwide despite, per Koerl, not being a profitable unit for the company. If the integrity isn’t guaranteed, he said, there isn’t a fair opportunity to bet on sports, making the integrity unit a worthwhile endeavor.
Asked why many of sports’ biggest power players trust Sportradar, Koerl said maintaining that trust while rewarding it by creating value and high-quality product are the keys to retaining and growing the company’s massive client base.
“The value is in the product,” he said. “Having sports as content, always going deeper with technology to get more of this content, and getting it faster with lower latency is the basis for products like prediction models or risk management platforms or cross-selling opportunities. That’s the ecosystem which we have.”
That ecosystem expanded last year when Sportradar acquired three companies to form its Sports Solution Group. Synergy Sports provides database computer vision and deep qualified content based on technology to offer its clients. Fresh8, a personalized messaging platform in the sports betting and casino space, gives Sportradar an AI-based frontend technology by which it can sketch out a sports fan’s potential revenue profile and how to incentivize that fan to convert real-time decisions to generate more revenue. And Vaix, a Pioneer in Developing AI Solutions for the iGaming Industry, is analyzing user behavior on the backend, allowing companies to cater marketing campaigns to VIP users way faster than the normal 2-4 weeks.
Over the next 12-18 months, Koerl is most excited about the possibilities that Web3 can bring to Sportradar. The blockchain has the ability to enrich the company’s data and make it more unique, he said. Integrating AR or VR would provide interactivity and gamification for future products. That would dispel a growing notion that Web3 is a fad.
“I fundamentally disagree with that,” Koerl said. “Sports is pure emotion and passion, and if you can visualize it better and enrich the information, the virtual environment creates so much stickiness and integration. Does sports betting go in the same direction? I think it is very relevant for the industry.”
There have been plenty of challenges facing every industry of late, including an economic recession, record inflation, and the war in Ukraine, where a good amount of Sportradar content is produced. Like COVID, these challenges are out of Koerl’s control. Yet despite sports around the world going dark for four months in 2020, Sportradar managed to grow 7% that year and improve profitability by more than 20%, he said.
At the moment, Koerl’s main challenge as the founder and CEO of a public company is managing everything in a responsible way. He has to look towards stakeholders, working with challenging public markets, where he’s facing larger trends as a CEO and entrepreneur. But if anyone is well suited to continue mastering the market, it’s Koerl and Sportradar, with a tremendous foothold in the biggest leagues and betting companies worldwide and in a strong position to grow with the US sports betting market over the coming months and years.
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