Sport

Apollo plans to merge Yahoo Sports with betting companies: sources

Apollo plans to merge Yahoo Sports with betting companies: sources

James Maloney of Panthers looks on during the NRL Round 6 Rugby League match between Sharks and Panthers at PointsBet Stadium on April 18, 2019 in Sydney, Australia.

Jason McCawley | Getty Images

Apollo Global Management, the private equity firm that acquired Yahoo from Verizon for $5 billion last year, is in preliminary talks with sports betting firms to merge their assets with Yahoo Sports, according to people familiar with the case.

One of the companies Yahoo spoke to is Australian-based PointsBet Holdings, which has a market valuation of around $760 million, said the people, who asked not to be named as the discussions are private. .

Any talks at this stage are early and no deal is imminent, the people said. Yahoo hasn’t set a target and may not strike a deal, the people said. Spokespersons for Yahoo, Apollo and PointsBet declined to comment.

Apollo and Yahoo are considering merging Yahoo Sports with an existing sports betting company, a move that could create a possible spinoff from Yahoo Sports, two of the interviewees said. If a deal is reached, the new company will likely retain the Yahoo brand, the people said.

Yahoo was an early provider of fantasy sports tools and has millions of players who would likely be cross candidates for legalized sports betting. Legalized mobile sports games are slowly spreading across the country and is currently operational in 19 states.

The sports betting industry has collapsed in recent months as a large number of companies have made it increasingly expensive to acquire customers due to high marketing costs and promotional offers. Last month, DraftKings forecast its earnings before interest, taxes, depreciation and amortization for 2022 to be a loss of $825 million to $925 million, higher than consensus estimates of around $570 million. Short seller Jim Chanos told CNBC in December that he took a short position in DraftKings because of its “insane” marketing spend.

“You can believe in sports betting…but that business model is flawed,” Chanos said.

Smaller, publicly traded sports game companies such as PointsBet and Rush Street Interactive have slumped over the past year as they battle to compete with DraftKings, FanDuel and BetMGM, market leaders in the industry. Caesars and its owned asset William Hill, Fox Bet and Rust Street’s BetRivers are among other competitors battling for users in the low-margin sports betting space.

PointsBet, based in Australia, has partnered with former New Orleans Saints quarterback Drew Brees for a number of television commercials that aired on networks including the NBC broadcast network. Comcast’s NBCUniversal entered into a multi-year partnership with PointsBet in 2020. yahoo also has an existing betting partnership with BetMGM. It is unclear how existing partnership agreements would be affected by future mergers.

“Everyone is talking to everyone right now,” said an executive who asked not to be named. “There has to be consolidation.”

Intense competition has led companies to offer hundreds or even thousands of dollars in free money to new users to sign up for their apps.

While Yahoo aspires to operate its own sports betting site, Disney’s ESPN is not interested in running a gambling operation, according to people familiar with the matter. disney held licensing talks whereby a sportsbook could be branded with the name ESPN, but it did not pursue the purchase of a gaming company, the people said. A spokesperson for ESPN declined to comment.

Apollo acquired Yahoo last year with plans to expand and streamline the business after Verizon acquired it in 2017 and merged it with AOL. Former Tinder CEO Jim Lanzone was named chief executive of Yahoo in September. Apollo is now looking for executives from its Yahoo Sports and Yahoo Finance units, who will report to Lanzone, according to people familiar with the matter.

Apollo too completed an acquisition to operate The Venetian Resort Las Vegas and The Venetian Expo in Las Vegas for $2.25 billion last month, which could theoretically cross-promote a Yahoo-branded sports betting product.

Disclosure: Comcast’s NBCUniversal is CNBC’s parent company.

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