NFL's Next Gen Stats and Sportradar US deal explained: An exclusive interview with Ulrich Harmuth - Episode 27

In this podcast, we have an exclusive interview with Ulrich Harmuth, President of Sportradar US. Recently, Sportradar US agreed to a deal with the NFL to be the exclusive worldwide distributor of comprehensive NFL statistics to a range of media companies, digital platforms as well as fantasy sport providers.

In this interview, we discuss the business model of Sportradar, the sports data analytics market, the daily fantasy sports market, and the opening up of the US sports betting market.

SEAN: Ulrich, to start off, could you give us a brief overview of your role, tell us a little bit about Sportradar US and what you guys are up to as a business; you seem to be at the forefront of data and sport, so it would be good I think for our listeners and readers to understand what it is you’re doing and how you fit into the wider sports business picture.

"It’s very important for us to address our very strong footprint in the US market"

ULRICH: Absolutely. Maybe just by starting at the very top, Sportradar AG, our global company, is actually the global leader with regards to sports data and sports content. We are operating on a truly global basis and with operations ranging from North America to South America. We are very strong in Europe and also very strong in Asia. We have more than thirty offices in more than twenty countries, so we really try to be very close to where the sports events happen, and on the other side, where our customers are.

About one and a half years ago, we acquired a company in the US, in Minneapolis. The company was called SportsData and at the time, the company really represented what our operations and our business credo is actually all about: that we are very strong in terms of technology and very strong with regards to the quality and speed of the data we are providing to our customers. The US operations in Minneapolis actually mirrored that quite well.

Over the last eighteen months, we integrated, on the one side, the US company, enabling us to distribute all of our global content within one interface to our customers. On the other side, we also invested into the infrastructure. We moved to new offices in Minneapolis - we now have a new 20,000 square foot office, which is naturally well-lit and transparent, with lots of glass, and also reflecting our business credo.

On the other side, it was also part of our plan in the US, which is one of the most important sports markets globally, that we actually become one of the leading players in this market. Therefore, doing our homework, by making sure that the infrastructure is truly top-notch, and ensuring things are coordinated with our international operations was the first step. The next step was always that we are moving closer to the leagues and also to strike deals with the leagues. That’s what we did at the end of last year with the first deal with NASCAR, where we provide all the tracking data from all the cars that are chipped. We basically get a lot of detailed data out of the cars and we are distributing this data to our customers.

The second step now has been entering into an agreement with the NFL, where we also get that tracking data, but also the traditional data, and to distribute both to customers.

That’s a little bit about what our US operations are all about. It’s very important for us to address our very strong footprint in the US market. To go back to my role, I’m actually running the business development and M&A department on a global level for our group. Since I led the acquisition of SportsData at the time, and have also been very heavily involved in the business development and development of the US market, I’m still the president of the company, but I’m not in an operational role; I have a more strategic, board-level role for the US market.

SEAN: This is a fascinating business. Can you talk about some of the services you offer and how they interplay, and what you see as the future of data in sport? Then, we can come on to discuss the legal issues you face on a day-to-day basis, or when you’re striking such agreements as you have with the NFL or NASCAR?

"I think the NFL chose us as a partner, as we are not just a data distribution partner, we are also development partner"

ULRICH: Absolutely. So we have different business verticals across all of our regions. One of our business verticals is what we call content solutions: that is solutions that we provide for media companies, online companies, also fantasy gaming providers. Then we have our gaming vertical, which basically provides odds services and trading products to bookmakers.

We also have several smaller verticals, like a streaming vertical, where we provide streaming services to online and retail customers; and also our Security Services, where we monitor global betting markets and notify, in cooperation with the federations, if there’s any indication match manipulation is going on.

But the two biggest ones are actually the content producing vertical and the betting vertical. In Europe and in Asia, we have both verticals and in the US market, we only have the content vertical since gaming is obviously illegal in the US market.  We are actually very strict that our US operations are not somehow involved in delivering gaming services to any customers. On the other side also when we struck the deal with the NFL, obviously the NFL content can’t be distributed on a global basis to any gaming customer.

As a last point, I think the NFL chose us as a partner, as we are not just a data distribution partner, we are also development partner. I think in particular for them, data category tracking data, “Next Generation Stats” as they call it, is actually quite important. Neither the customers nor the NFL nor us 100% know exactly what the applications of the product coming out of this new data category will look like. Therefore it’s also quite important that we’re moving downstream and that’s what we already did in Europe and now we are doing it in the US as well. We are also moving downstream in the value chain to create products out of our core data, or raw material data.

SEAN: There’s a couple of points there that you raise that are really interesting. One is the discussion around daily fantasy sport in the US and the sport betting market. We’ve seen Adam Silver from the NBA basically say that it’s time that, given the rise in daily fantasy sport and questions marks over whether or not that is betting, whether the US market should be opened up.

I presume that you recognise the existing laws that are in place, but you must have one eye to think maybe this an opportunity in the future to provide solutions for the leagues and for the betting market.

"...betting is not an option for us in the US market"

ULRICH: Absolutely. Like you said, on the one side, we truly respect the regulatory framework and therefore at the moment, gaming and betting is not an option for us in the US market. It might change in the future, but for the time being, daily fantasy, even though it’s probably very close to gaming, is legal in the US market and that’s where we are providing our services: to those customers.

Obviously, given our heritage we would also be in a very strong position to very quickly ramp up a product for the gaming market, but that’s not part of our plans. Basically, we are following the daily press communication of the different legal officials as other stakeholders interested in these discussions probably do.

SEAN: I wonder if you could tell us, or give us some insight into some of the legal considerations when you’re striking such a deal, particularly for non-US sports fans, who may not be so aware with what goes on with the NFL analytics and Next Generation Stats. It’s really market leading stuff they’re doing there on live broadcasts. I wonder if you’d get into that.

And then, if you could give us a glimpse of some of the legal considerations you have to consider when striking a deal in terms of who owns the data, who owns it when its captured, who owns it when its parcelled, who owns it when its distributed through the licensing agreements you have.

"The deal itself is a global one, not only restricted to the US market"

ULRICH: Absolutely. I’ll describe a deal with the league. The league has a very clear understanding of how the data should be used. It is displayed quite clearly in the agreement. We have different customer groups which are addressed in the agreements and we also sell the data in different tiers. On the one side, we have traditional play by play data, which is one tier, and there are different categories of what type of information from the tracking system you can actually add to data feeds through our products, and that’s basically how we can sell such data.

The deal itself is a global one, not only restricted to the US market. I think part of the reason why the NFL chose us is because we have a very strong international footprint. As you know, the NFL has moved a few games to London now and it’s probably one of their targets to become more interesting on an international basis.

So the deal is basically exclusive. We are the only ones who have the rights to the data, it’s international, and it’s going through the coming four seasons.

SEAN: Great. Does that present any problems for you? I know you’re very experienced working in the international market, but as in transferring data, does that create issues with different jurisdictions? Say for example, Europe has different data protection laws than across Asia and the Middle East, etc. Does that create any difficulties for you or is it something that you’re looking at? Technology moves faster than regulation, and sometimes without meaning to, can inhibit good commercial practices and make it a bit difficult. Is that something you’ve encountered?

ULRICH: We’re not dealing with consumer data. We’re dealing with sports statistics. I’m not sure how many data protection laws there are around sports data. We only distribute the data that we have the official rights to distribute on a global basis.

Therefore, we are working with international IT infrastructures. We serve customers in eighty different countries globally and therefore I don’t foresee that this should pose any legal issues on us, as we are in a position to distribute the NFL data on an international basis.

SEAN: How do you see the global daily fantasy sports and Sportradar US fitting in? So, you've got these deals with the NFL and NASCAR. Are other deals in the pipeline? As you said the US market is such a big market for sports and sports data. How do you see this evolving over the next year and over the next five or ten years? What do you see as the trends and opportunities?

"We are distributing the data to: to media companies, to online agencies, to ad providers, to mobile providers, to technology companies..."

ULRICH: We are in discussions with other leagues, and if commercially it makes sense, we are prepared to strike deals with other leagues. So, we extend our product portfolio. But I think we generally want to stay in the B2B space. We have different customer verticals we are distributing the data to: to media companies, to online agencies, to ad providers, to mobile providers, to technology companies like Samsung who are powering Smart TV with such a solution; obviously one of these categories is daily or season-long fantasy, but we don’t want to become a product provider who is actually in direct contact with the end consumer. We always want to try to be in the B2B profession so we’re not competing with our own customers.

SEAN: Am I right that with the technology, you provide the actual chip to the NFL?

ULRICH: The NFL actually chose to split the value chain in half. On the one side, there is the data collection and that is taken care of by Zebra. They equip the stadium with the technology, they also connect the shoulder pads of the players to the chip. Then, they compile the data and forward the data to us. Then normalising the data, indexing it, compiling it also with play by play information and distribution to customers: that is the services we are providing to the NFL.

SEAN: Just to give the business model a bit of a sports fan perspective now. Just give me an example if you can, to finish off; if the game’s taking place, what’s happening in that chain? You’ve got Zebra putting the chip in place, you’ve go in the stadia the data’s being captured, you’re taking it, normalising it. How quickly is that process done and delivered out?

"...in the US the broadcast is quite delayed - between twenty to twenty-five seconds - and therefore, our data services shall be significantly faster"

ULRICH: As you know, in the US the broadcast is quite delayed - between twenty to twenty-five seconds - and therefore, our data services shall be significantly faster. We expect to have the data available (probably dependent on the play-by-play information, which is entered in a more human way),  but significantly faster than the twenty-five seconds. Applications could be for instance could be the exact distance between players on the defensive line, the acceleration a wide receiver has if he starts running for the ball, or the top speed of players. That’s probably really crucial information, but it’s really interesting if you can provide it very soon after a play or also maybe as a statistic just prior to an action of the NFL.

SEAN: It really is amazing and fascinating to see the opportunities this creates for leagues, teams, brands and improving the user experience. I look forward to seeing how the data market continues to grow at rapid pace in the US and internationally. Thank you for your time and speaking with us today.

ULRICH: Sean thank you for also for your time. I can only mirror what you are saying: that the data market in the US but also globally is developing quite quickly. We are also looking forward to see what is happening on the product side, the visualization side and we hope to be a driving force in that process.

A special thank you to Jake Cohen for his help with the transcription of this interview.

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