Rights Bought on Credit

Rights Bought on Credit

A sports data licence is bought once and sold many times. Sportradar signs a multi-year exclusive with a league, capitalises the contracted minimum payments as an intangible asset, amortises them straight-line over the seasons the deal covers, and then resells the same feed to every bookmaker that wants it. The cost of the licence does not rise with the number of customers attached to it. That is the arbitrage, and it is why the shape of this company's profit and loss is governed by two lines: what the leagues charge, and everything else.

The financing of that arbitrage is the part that does not appear where an investor would look for it. At December 31, 2025 Sportradar owed rightsholders €1,529.2 million in licence fee payables — an interest-bearing, mostly dollar-denominated obligation recorded inside trade payables [1]. Its loans and borrowings on the same date were €62.9 million, all of it lease liabilities [2].

Sources: FY2025 Annual Report (Form 20-F), Note 22 Trade and other payables [3]; Note 20 Loans and borrowings [4]; consolidated statements of financial position [5]; Note 10 Finance costs [6].

One purchase, many resales

The revenue side of the arbitrage is contractual and mostly time-based. Client contracts take one of two forms — fixed-fee recurring or variable revenue share (Rights and Data Layer). Recurring contracts run one to five years, and the minimum guarantee is recognised straight-line across the life of the contract while the variable fees are recognised as earned [7].

The split between the two is disclosed, and it has drifted one way for three years.

Sources: FY2025 Annual Report (Form 20-F), Costs and expenses — revenue arrangements [8]; FY2023 Annual Report (Form 20-F), Our Customers and Business Model — the 69.4% fixed-fee share [9].

The mechanics inside each form matter more than the ratio. Stand-ready services — the data feed itself, the betting entertainment tools, the audiovisual product — are billed in advance, monthly or quarterly. Managed betting services, virtual gaming, media and advertising are billed in arrears. Payment terms across the book are typically net 10 days [10]. A supplier that collects in ten days and pays its own suppliers over years has a working capital profile that runs in its favour before anything else happens.

On the variable third, the accounting is asymmetric in a way that flatters reported revenue and understates the risk carried. Revenue share on live betting is variable consideration that is constrained — not recognised at all until the client has itself generated gaming revenue from the individual bet [11]. But the exposure runs both ways in managed trading. Sportradar's Managed Trading Services fee is the higher of an agreed minimum and a share of the client's gaming revenue, and most MTS contracts also carry a loss participation clause: where the client's gross or net gaming revenue is negative, Sportradar absorbs a share of that loss at the same percentage it would have earned [12].

That clause is not theoretical. In the first quarter of 2026, Managed Betting Services revenue fell 2% year on year: trading turnover was higher, and unfavourable sporting outcomes took the difference back [13]. A third of this revenue base is, in the end, a position on how favourites perform.

The take-rate ladder

Management's stated price mechanism is not a list price. It is take rate — Sportradar's revenue expressed as a percentage of the client's gross gaming revenue — and it rises as the client buys further up the product stack.

Source: Investor Day 2025 presentation, illustrative GGR mix across the Sportradar betting value chain [14]. These are illustrative investor-day figures, not disclosed metrics reconciled to reported revenue.

The arithmetic the company puts behind that ladder is worth walking, because it is the clearest available statement of how the same customer becomes worth more without spending more. Holding a client's gross gaming revenue constant at $100 million while its mix shifts from pre-match toward in-play and outsourced trading roughly doubles Sportradar's revenue from that client.

Source: Investor Day 2025 presentation, illustrative GGR mix across the Sportradar betting value chain; revenue columns are the presentation's take rates applied to its GGR mix [15].

Total revenue on the same $100 million of client gross gaming revenue moves from $2.0 million to $4.1 million. The volume driver underneath it is the migration to in-play betting, which the company put at 33% of United States gross gaming revenue in 2024, rising to 44% by 2027 and 47% by 2029; by 2029, on its own estimate, each additional percentage point of in-play share is worth about €6 million a year of revenue to Sportradar [16]. Neither figure is restated in any filing, and neither is reconciled to reported revenue — they are the company's framework for its own growth, not an audited measure.

The cost architecture

The margin question in this business is narrower than it looks, because only one cost line is genuinely fixed against the revenue it supports, and it is the one nobody controls. Laid out as a share of revenue, the cost base shows an unambiguous pattern.

Source: Q4 and FY2025 earnings presentation, cost profile and drivers of operating leverage [17]; the FY2023 to FY2025 columns reconcile to the adjusted expense tables in the FY2025 Annual Report (Form 20-F) [18].

Everything that is not sport rights fell from 57% of revenue in FY2022 and FY2023 to 48% and then 46% [19]. The company's own adjusted expense reconciliation confirms it: adjusted personnel expenses of €310.8 million, adjusted purchased services of €173.7 million and adjusted other operating expenses of €104.3 million sum to €588.9 million, or 45.6% of the €1,290.0 million of FY2025 revenue [20]. Sport rights went the other way — 26%, 24%, 32%, 31% — as the current licence cycle was signed [21]. Adjusted EBITDA margin moved from 19.0% in FY2023 to 20.1% in FY2024 to 23.0% in FY2025 [22].

In absolute terms the two largest costs are now within €2.1 million of each other. Sport rights expense was €404.3 million in FY2025 and personnel expenses €402.2 million, against purchased services of €190.9 million and other operating expenses of €146.0 million [23]. The rights line splits into €270.2 million of amortisation of capitalised licences and €134.2 million of non-capitalised rights expensed as incurred; two years earlier those two figures were €160.0 million and €54.2 million [24].

The consequence is specific. Margin expansion here is not a cost line falling; it is a rights bill contracted years ago being spread over a revenue base that has grown faster than it. That works while revenue outruns the bill and stops working when it does not — which is the arithmetic the next act sets against the FY2025 growth step-down.

Capital intensity as rights

What Sportradar calls capital expenditure is not servers and offices. FY2025 capital expenditure was €228.3 million, essentially flat on FY2024's €227.7 million [25]. Against revenue it has fallen from 23.3% in FY2021, when capital expenditure was €130.8 million [26], to 17.7% in FY2025 — not because the company spends less, but because revenue grew faster than the cash outlay did.

Inside the intangible additions, the mix is stark: €353.8 million of licences against €46.7 million of internally-developed software [27]. Licences carry a net book value of €1,466.7 million, 72% of the €2,033.7 million of intangible assets and goodwill on the balance sheet [28]. And within that licence balance the deployment is concentrated in six decisions: Major League Baseball, the Deutsche Fußball Liga, the NBA, the NHL, UTR Sports and the ATP together carry €1,020 million of net book value, 70% of the total, with a weighted-average remaining useful life of 5.6 years against 3.7 years for everything else [29].

Reinvestment in this business is therefore not incremental. It is a handful of league renewals, negotiated years apart, each large enough to move the cost base of the whole company for half a decade. What that renewal clock implies for the next negotiating round belongs to the chapter that follows.

The obligation outside borrowings

The licences are bought on the leagues' credit. At initial recognition, the licence asset is measured at the present value of the contractually agreed and in-substance fixed minimum payments over the non-cancellable term, discounted at the company's incremental borrowing rate plus a country risk premium [30]. The offsetting liability is a licence fee payable, and it is presented inside trade payables.

Sources: FY2025 Annual Report (Form 20-F), Note 22 Trade and other payables [31]; FY2023 Annual Report (Form 20-F), Note 23 Trade payables [32]; interest from Note 10 Finance costs [33].

The balance was €413.2 million at the end of 2022. It reached €1,110.5 million a year later as the current rights cycle was signed [34], eased to €1,074.0 million through 2024, and rose to €1,529.2 million at December 31, 2025 — €319.4 million current and €1,209.9 million non-current [35]. Total equity on that date was €978.3 million [36].

It carries interest. Accrued interest on licence fee payables was €80.6 million in FY2025, up from €71.9 million in FY2024 and €27.4 million in FY2023 — 93% of the €86.5 million total finance cost, with lease interest of €5.7 million making up almost all the rest [37]. Cash interest paid was €85.6 million, against €76.4 million in FY2024 and €30.5 million in FY2023, and it is deducted inside net cash from operating activities [38].

The discount rate itself is not disclosed. An implied average rate can be computed from the two figures that are.

Source: derived from reported figures — accrued interest on licence fee payables divided by the average of opening and closing payable balances, FY2023 and FY2025 Annual Reports (Form 20-F) [39] [40].

Interest accrued over the average balance implies roughly 6.2% in FY2025 and 6.6% in FY2024. That is a corporate borrowing rate, and it is paid to sports leagues rather than to lenders.

The maturity table supplies the other half of the picture. Undiscounted contractual cash flows on trade payables total €1,902.0 million — €437.2 million due within a year, €1,264.3 million in one to five years, €200.5 million after five [41]. Against the €1,636.7 million of trade and other payables carried on the balance sheet [42], that is €265.3 million more cash to be handed over than is currently recognised as a liability — the discount that will unwind through finance cost over the remaining licence terms. A year earlier the same gap was €196.1 million [43].

None of this appears in the leverage line. Every quarterly results release from the third quarter of 2024 onward has described the balance sheet the same way: total liquidity, an undrawn credit facility, "and no debt outstanding" [44]. On the conventional definition that is accurate: loans and borrowings are €62.9 million of lease liabilities, the €220.0 million revolving credit facility is undrawn, and net debt in the reported financials is minus €313.5 million. The company also discloses, in the same document, that its liquidity is required "to service the above license payment commitments" [45]. Both statements are in the record; they simply do not sit in the same part of it.

An unhedged dollar bill

Licence payments are made primarily in United States dollars [46]. The company reports in euros, and it did not use derivative financial instruments to hedge exposures arising from its non-euro obligations in 2023, 2024 or 2025 [47].

The result is that the euro carrying value of a dollar-denominated liability of roughly €1.5 billion is revalued through the income statement every period, and by FY2025 that revaluation had become the largest single component of reported profit. Foreign currency gains of €184.1 million against losses of €105.3 million produced a net gain of €78.8 million, which management attributes to the depreciation of the dollar against the euro on trade payables related to sport rights licences [48] [49]. The comparable line in FY2024 was a €38.2 million loss. The €117.0 million swing between the two years is larger than the €66.7 million by which profit for the year increased [50].

The first quarter of 2026 shows the same mechanism running the other way, which is the cleanest available evidence that the line is a revaluation and not earnings.

Source: Q1 FY2026 results release, condensed consolidated statements of profit or loss [51].

Revenue rose 11% to €346.5 million and adjusted EBITDA rose to €66.0 million at a 19.0% margin against 18.9% a year earlier [52]. The foreign currency line went from a €27.5 million gain to a €9.3 million loss, and the €24.3 million profit of the prior-year quarter became a €6.3 million loss [53]. The company describes the driver as unrealised currency movements, principally on dollar-denominated sports rights [54].

The record does not disclose how much of the FY2025 gain was realised and how much was a translation of a balance not yet settled, so the cash content of the largest single component of that year's profit cannot be isolated from the filings.

The distance between the two profit numbers

Sportradar reports two measures of profitability and the gap between them was 15.2 points of margin in FY2025: adjusted EBITDA of €296.8 million, 23.0% of revenue, against profit for the year of €100.3 million, 7.8% [55].

Source: FY2025 Annual Report (Form 20-F), reconciliation of Adjusted EBITDA to profit for the year from continuing operations; the non-recurring row aggregates the separately presented restructuring, non-routine litigation, transaction-related, secondary offering, impairment, equity-accounted investee and professional-fee add-backs [56].

Three features of that bridge are worth stating plainly. The €196.5 million of reconciling items includes €78.8 million that is a gain being removed rather than a cost being added back — so the adjusted measure is, in this respect, more conservative than the statutory one. Share-based compensation of €56.1 million is 4.4% of revenue and the largest of the three years presented, up by half on the €37.8 million of FY2024. And the €57.7 million of items presented as non-recurring — restructuring, non-routine litigation, transaction and secondary offering costs, impairments — has a counterpart in each of the three years disclosed: €5.2 million in FY2024 and €35.9 million in FY2023 [57]. A category that appears every year is a cost with a variable amount, not an absence of cost.

One choice runs the other way, and it is the more important one. Adjusted EBITDA does not add back the €270.2 million of amortisation of capitalised sport rights. Management states the reason explicitly: whether a licence is capitalised at all turns mainly on its contracted length, so excluding the amortisation would make the metric depend on contract structure rather than on economics [58]. On the most consequential presentational choice available to it, the company took the harder option.

Cash, and the gap between signing and paying

Net cash from operating activities was €403.0 million in FY2025 against adjusted EBITDA of €296.8 million — an operating cash flow larger than the earnings measure it is meant to convert from [59]. The mechanism is structural rather than exceptional. The €270.2 million of rights amortisation that depresses statutory earnings is non-cash in the year it is charged; the cash for those rights left, or will leave, in a different period and through a different statement. Rights interest of €85.6 million is deducted inside operating cash flow. Rights principal is settled through investing activities, where "acquisition of intangible assets" of €223.4 million is described in each quarterly release as payments related to sport rights licences [60] [61].

Two free cash flow figures are in circulation and both are disclosed. The company's own measure is €167.2 million, which deducts €7.6 million of lease principal on top of capital expenditure; a conventional operating-cash-flow-less-capex basis gives €174.7 million, or 13.5% of revenue.

The more revealing comparison is between the rights acquired in a year and the rights paid for in that year.

Sources: FY2025 Annual Report (Form 20-F), Note 13 Intangible assets and goodwill cost roll-forward [62]; FY2023 Annual Report (Form 20-F), Note 13 Intangible assets and goodwill [63]; consolidated statements of cash flows [64].

The pattern is visible across three years. FY2023 was the signing year: €1,023.5 million of licences were added to the balance sheet against €185.5 million of cash paid for intangible assets [65] [66]. That is the transaction that took the licence payable from €413.2 million to €1,110.5 million in a single year, and it is the reason accrued interest on the payable went from €27.4 million to €71.9 million the year after.

FY2025 repeated the shape at smaller scale. Sportradar added €353.8 million of licences by purchase and a further €302.4 million through the IMG ARENA acquisition — €656.2 million of licence intangibles in one year — while paying €223.4 million of cash for intangible assets [67] [68]. Of the purchased additions, €259.1 million was unpaid and recognised as a liability at year end, against €73.0 million a year earlier, and a further €34.2 million was settled not in cash but by granting equity instruments to a licensor [69]. During the same year the company settled €134.5 million of prior years' licence liabilities, against €161.4 million in FY2024 and €143.1 million in FY2023 [70].

So free cash flow rose to its highest reported level in a year when the share of rights acquired without cash rose sharply. That is a timing relationship, not an accounting irregularity — the obligations are on the balance sheet, disclosed, and interest-bearing. But the timing has a maturity. The current portion of licence fee payables rose from €178.3 million to €319.4 million, an increase of €141.1 million in cash falling due inside twelve months [71].

One further line moved during the year and is easy to miss. Commitments held outside the balance sheet fell from €301.0 million to €233.5 million, and within that, commitments for licences not yet capitalised went from €142.2 million to nil [72]. That block did not disappear; it moved onto the balance sheet, and it is part of why the payable grew.

The price of IMG ARENA

The acquisition that narrowed this layer was settled with no financial consideration paid at closing, on the terms set out in Rights and Data Layer; the seller's prepayments to rightsholders reduced the liabilities Sportradar assumed and are therefore not recognised anywhere in its accounts [73].

What Sportradar did assume was €472.5 million of trade payables — €122.4 million current and €350.1 million non-current — against €305.2 million of intangible assets acquired [74]. The true price of the transaction is that obligation. It does not appear in the cash flow statement, where the acquisition produced a €4.7 million net inflow [75]. It will appear over the next several years as amortisation of the €302.4 million of acquired licences and as interest unwinding on the assumed payable.

The filings do not provide a roll-forward of the licence fee payable, so the €455.2 million increase during FY2025 cannot be decomposed exactly. The disclosed components point the same way: €259.1 million of unpaid new additions and €472.5 million of trade payables assumed with IMG ARENA, less €134.5 million of prior-year settlements and the translation effect of a weaker dollar on a dollar-denominated balance. The purchase price allocation is stated to be preliminary and subject to revision within a year of closing [76].

What the arbitrage now requires

The business buys long-dated exclusivity from counterparties that face no competing seller, pays for it over years at an implied rate above 6%, in a currency it does not hedge, and records the obligation among the payables a reader would associate with unpaid invoices. Against that it collects from customers in ten days, spreads a fixed rights bill across a growing revenue base, and converts more than half of its adjusted earnings into free cash. Both halves of that description are drawn from the same set of audited statements.

The arbitrage holds while revenue grows faster than the rights bill. In FY2025 it did: revenue up 16.6% on the reported financials against sport rights expense up 15%, and adjusted EBITDA margin up 2.9 points [77] [78]. It held by a narrower margin than before: 16.6% is the slowest annual revenue growth since 2020, on a rights book whose six largest licences have 5.6 years left to run before they must be bought again. What that exclusivity actually purchased — measured in growth delivered, customers retained and obligations incurred — is the next question.