Better Collective has a vision to become the leading digital sports media group in the world and, with that vision, it is aware that it needs to build on its brand. One way to do that is by acquiring businesses that have elements your business does not. To that end, Better Collective acquired Playmaker HQ for up to $54m in July 2023. We spoke to Senior Director Mikel Munch-Jacobsgaard on that deal.
He told Trafficology: “One of those capabilities that we need to expand into is social media. We haven’t had a big presence in YouTube shows, podcasts, Snapchat shows - anything of the like - and this is specifically where Playmaker HQ is exceptionally strong. Historically, we have been more focused on the sports betting fan and, in our vision, we need to broaden our scope towards the more generalist sports fan.”
Playmaker HQ CEO Brand Harris told Trafficology: “Our social audience definitely played a role in the acquisition, but there were many synergies beyond our network as well. Joining the Better Collective family is a better option for myself, our shareholders and our team at large. Our shared goal is to become the world’s largest sports media group and we have a much better chance to accomplish that together.”
Speaking of Better Collective’s qualities, the Playmaker HQ CEO said: “They provide resources, team, access and stability that we wouldn’t have been able to acquire by ourselves for many years. Ultimately, it was clear that we are stronger and better off with Better Collective.”
Let’s talk money
With regards to the finances, Better Collective bought Playmaker HQ on the basis that it would pay $15m up front, $1m in deferred payments and up to $38m in performance-based payments over three years; totalling $54m overall. Speaking of the larger earn-out component, Jacobsgaard stated:
“That’s something we did because it’s a very high growth asset and obviously we want to continue to see that growth. We don’t want them to know something that we don’t - so to speak. So we naturally made it an earn-out to ensure that for them to get paid the full amount they really need to deliver in the coming three years and then specifically on the price; that’s always a negotiation, but we think it’s a price that, if we achieve what we want together, everyone will win.”
When asked if it was a good financial deal, Jacobsgaard responded: “We won’t acquire something that we don’t believe is a very important strategic fit and also a great financial deal for us; we believe this one is a great financial deal. So, I think it’s a lucrative deal for everyone involved.”
Living up to expectations
In respect to how Playmaker HQ plans to deliver and live up to the earn-out, Harris admitted: "We plan to keep our foot on the gas and continue growing the brand aggressively. We will be investing in developing new prestige IP and creator talent, as well as growing our distribution channels and expanding our capabilities and footprint in the sports betting world. We have been able to bring the whole team over to Better Collective, so there will be no excuses on our end. For us, it’s just as important to achieve the mission of building a juggernaut together and if we’re successful, we will hit the performance metrics naturally.”
When discussing the importance of social media and how that can chain on to make a casual bettor into a more serious bettor, the Playmaker HQ CEO clarified: "The pool of sophisticated bettors is somewhat limited, and Playmaker HQ specialises in reaching and engaging with sports fans en masse. Our fanbase today mostly consists of the sports fan that bets casually or is betting curious.
“We believe that the future bettors of the world engage with us now and, if they’re properly educated and treated well, a portion of the audience may naturally evolve into sophisticated bettors in the future. Today, the best place to build those relationships is on social media.”
Shareholder impact As to how the acquisition may affect shareholders, Harris said: “Our shareholders have each received a return on their investments in a challenging economic environment and the deal structure provides for significant upside for everyone. We couldn’t be happier to have found a perfect home for us.”
Meanwhile, the Better Collective Senior Director revealed how the majority of its shareholders are on the Board, leaving them somewhat unaffected: “We have a very natural focus on our shareholders, given our Founders are still on board as CEO and COO. They sit on 40% of the shares and if you include other insiders, more than 50% of our shareholders are insiders. So we are very dilution focused, so to speak. Luckily, this one wasn’t dilutive.”
Adding value
So other than social media knowledge, what else will Playmaker HQ be able to add to the Better Collective brand? Harris expands: “Playmaker HQ’s team of social and content experts will be able to help drive growth for many of Better Collective’s brands. Playmaker HQ’s talent team and roster will be able to do really cool things with the action team. Our assets and expertise are highly complementary to theirs and we will be able to bring in new revenue streams as well as aggressive organic growth to Better Collective.”
With this acquisition, Better Collective hopes to expand beyond sports betting and continue building its brand: “Something that we have to improve on is selling brand advertising to, what we call, non-endemic partners. Meaning none sports betting companies. For example, it could be the likes of Google, Red Bull, Nike or companies like that; and that is something that Playmaker HQ has.
“They have built their model around being able to build sponsorships and close relations to brands like this. And it’s not something we have done a lot of, but it’s something that we want to be able to do more.“
Branching out to Latin America
When previously speaking the GI Huddle, Better Collective CEO Jesper Søgaard stated that, in its Q1 report it wanted to do more in LatAm. So, has this acquisition got anything to do with Better Collective’s LatAm motives? Jacobsgaard confirmed:
“Yes, definitely. South America as a whole is a very social media-driven region. It’s obviously different from country to country, but in general, they are spending a lot of time on social media and following all of their favourite news outlets or favourite athletes and so on. So it’s natural to scale this business to South America as well. Also, because the more North you go in South America, specifically in Mexico, they follow US sports quite a lot. So it’s definitely one of the things we’ll be looking at in the near future.”
We plan to keep our foot on the gas and continue growing the brand aggressively. We will be investing in developing new prestige IP and creator talent - Mikkel Munch-Jacobsgaard
Something that we have to improve on is selling brand advertising to, what we call, non-endemic partners - Brandon Harris
