The Deal
Earlier this week, SURJ Sports Investments, the sports arm of Saudi Arabia’s Public Investment Fund (PIF), acquired a minority stake in international sports-focused streaming service DAZN.
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The agreement is reported to be worth $1 billion in exchange for a 10% stake in the business.
The partnership “aims to strengthen Saudi Arabia as a leading market for sports investments, while capitalizing on the significant growth in demand for high-quality sports broadcasting.”
DAZN CEO Shay Segev described the agreement as “a milestone partnership for the group, which is bound to transform the sports entertainment landscape in Saudi Arabia and the wider region.”
Why it matters
This partnership was much needed for DAZN, which in the calendar year 2023 posted another hefty loss despite the continued investment of owner Len Blavatnik.
Over that year, DAZN posted a pre-tax loss of $1.43 billion (up from the loss of $1.2 billion in 2022) despite a growth in revenue year-on-year from $2.19 billion to $2.86 billion.
DAZN’s user base grew in the year, as did its paid subscription tier, but that was still not enough to offset its operational costs, mostly composed of spiraling accumulated rights fees.
Rights costs for DAZN in 2023 amounted to $3.1 billion, up by 32% ($757 million) on the $2.4 billion it paid across 2022.
The service still has $9.4 billion in sports rights fees it has committed to pay across the coming years and will likely still add more as it looks to compete with the likes of Amazon Prime Video and new sports rights entrant Netflix.
DAZN’s struggle, however, is competing against diversified media businesses that offer entertainment such as film and TV along with other benefits alongside their sports programming whereas the streamer, solely sports-focused with a heavy priority in boxing (globally) and soccer (in certain markets), charges a similar if not larger fee for what is a less expansive offering.
Conrad Wiacek, head of analysis at GlobalData Sport, commented: “DAZN has long relied on the deep pockets of Len Blavatnik to keep going, with the idea of a sport-only streaming service proving to be a tougher challenge to establish despite the popularity of sport in general.
“With the need to provide programming 24/7 and without any additional content with which to fill gaps in programming around live sport, the question has long been whether DAZN is viable long term. With the backing of the Saudi state via SURJ, it seems that DAZN is in a position where it can look at developing a greater footprint in strategic markets.
“The investment from SURJ removes the pressure on Blavatnik to keep supplying funds and gives DAZN some breathing room to look at becoming more strategic in terms of the rights and markets it wants to target to make good on its early promise of becoming the 'Netflix of Sport'”
The detail
SURJ’s investment will see the creation of a media joint venture, DAZN MENA, centered around the Middle East and North Africa region.
The joint venture will be an official streaming and broadcast partner for Saudi sports events broadcast both live and on-demand.
Rumors had been circling regarding the PIF’s interest in DAZN since October 2024 – although the fund publicly stated it had no interest in the company.
The streaming heavyweight is understood to have spoken to at least three investment funds over recent months in its much-needed search for funding before eventually concluding a deal with SURJ.
DAZN has a good relationship with authorities in Saudi Arabia and in October 2024 agreed a major multi-year broadcast partnership with the Riyadh Season brand of sporting and entertainment events from the Saudi capital, becoming the exclusive global broadcaster of its events (excluding MENA).
The broadcaster is also a significant rights-holder for the Saudi Pro League soccer competition, while earlier this year it provided coverage of the Esports World Cup from Riyadh.
In addition, the ties between the country and DAZN were strengthened in September when the streaming platform announced the signing of a memorandum of understanding with Saudi soccer side Al-Hilal for the establishment of a new global channel – backed by Riyadh Season – on the service.
Founded in 2007, DAZN was launched in 2015 and now serves over 200 countries and territories.
The OTT platform is a major broadcast partner for some of the world’s top sporting properties, across soccer, American football, basketball, baseball, cricket, darts, and boxing.
The stake in DAZN represents the PIF’s first investment in a broadcaster.
