In 25 years chronicling marketing and sports marketing, we’ve never seen any organization leverage its size and strength as well as the NFL. Surely, most of that potency stems from standing atop a tower of strength for so long.
So we’re more than a little intrigued to see what will happen when a wanna-be sponsor starts throwing cash at the NFL that it isn’t readily picking up.
Isn’t that the inevitable equal, or opposite reaction, to Disney’s recent investment of hundreds of millions with daily fantasy site DraftKings? Won’t competitor FanDuel now have to start piling up cash outside the NFL’s Park Avenue offices?
Since the league has a not-for-sale sign up now when it comes to daily fantasy, we have nothing but educated guesses as per a price tag. But several well-connected industry sources, including several who once sold NFL assets, suggested the asking price for an NFL league fantasy deal would start at $50 million a year. The party line from Park Avenue is that the league is not pursuing the category, even as it eases restrictions allowing its teams to, um, pursue their own fantasies with either DraftKings or FanDuel.
We tell those who ask that we write more about politics than sports, and the political facets of this issue are fascinating. One school of thought says that the gaming issue is not one the NFL wants to push the season after a horrific PR year. Another intriguing sidebar: Through an affiliated company, the Kraft family, arguably the NFL’s most influential ownership group, made an early investment in DraftKings. We’re told that now amounts to around 2 percent, though it could change with the next round of financing, which will include Disney/ESPN (SportsBusiness Journal, April 6-12).
Could that be what’s preventing the NFL from pursuing a league deal? We don’t know, but it’s a question worth asking.
An additional complexity: We have a working copy of the new league regulations governing team deals with daily fantasy companies. Certainly they could change before adoption, but as currently drafted, “The ownership by or on behalf of any club of equity in any daily fantasy sports provider” is prohibited.
That issue seems more clear than Deflategate, doesn’t it? Or will the league’s most influential ownership get grandfathered?
To be fair, the league also has stayed on the sidelines in recent years as its teams received permission to cut marketing deals with other emerging categories once verboten, like gambling casinos, lotteries and spirits. Still, we wonder as the pile of cash grows larger, will the league’s reluctance wane when it comes to a daily fantasy sponsorship? The Disney/ESPN investment, along with NBC’s equity in FanDuel, means two NFL broadcast rights holders are invested and more likely to follow. Daily fantasy is classified as a temporary category by the NFL, and generally the league stays away from those.
“The fact that the league is telling teams everything in daily fantasy is open for the next year tells me that is how long the league will wait,” said an involved consultant. “But you do have to wonder if the gravy train will be around in a year.”
“There is enough tension now between teams and leagues over category rules that I believe the league will be hands-off for now,” said a veteran team marketer. “And I would not discount the notion of them doing their own daily fantasy. … That has absolutely been discussed.”
Certainly that wouldn’t be paid daily fantasy, would it?
By the way, other marketing activities off-limits between daily fantasy companies and NFL teams include stadium or practice facility naming rights (though naming areas within the stadium is now permitted) and official sponsor/official game designations.
The money is getting larger in daily fantasy. Whether or not you consider it gambling, the largest question within the developing industry is whether daily paid fantasy withers and dies the moment widespread gambling on sports becomes legalized. Many in the industry believe that day is within sight.
“Certainly each will have a growth curve,” said a principal dealmaker in the recent ESPN/DraftKings marriage. “But the day that happens won’t be a good day for DraftKings, FanDuel or ESPN.”
Terry Lefton can be reached at tlefton@sportsbusinessjournal.com.
