Analysis

Sports SPACs not in favor anymore

, Yahoo sports

Sports SPACs are defined broadly as blank checks that state a sports-related business as a potential target in their prospectus or ones that have a sports figure—team owner, athlete, executive—as a participant. There are 39 sports SPACs trying to price their IPO and 49 actively seeking a target, in addition to the 26 SPACs trying to close mergers, according to Sportico’s Sports SPAC Tracker.

There are 26 sports-related SPACs with merger deals in place, and every one has fallen from the price spike they enjoyed on the news. Even more telling of the lack of market support: 19 of the SPACs are below the share price they enjoyed before news of their acquisition came out. It’s a far cry from last year, when SPACs often would jump on enthusiasm for deals and keep rising. DraftKings, for instance, quadrupled from news of its SPAC merger last April through the end of 2020.

The slump for existing SPACs comes as the market for new IPOs hit a wall. There were just two filings for SPAC IPOs last week, compared to an average of 40 a week in 2021. The halt came as blank check accountants and attorneys looked to adjust to an SEC staff opinion saying some SPAC warrants may need to be reclassified as an expense on the balance sheet, depending on the legalese of how they are constructed.

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