According to a press article, the proposed investment agreement Between DraftKings and Disney value $ 250 million is off. At the same time, DraftKings will become the only fancy supplier allowed to advertise on ESPN Networks, the report to Re / code hinted.
A dead deal
Rumors about difficulty with the DraftKings-Disney deal swirled for some time; after all, it’s been over 2 1/2 months since the first media reports of the the Wall Street newspaper and the Sports business journal came out that a deal was imminent.
The original deal, as it was reported at the time, called for a $ 250 million investment in DraftKings by ESPN’s parent company, in return for 500mm of ad spend by DraftKings through the ABC / ESPN family of media networks and platforms over a three-year period.
This is what the new agreement consists of, according to the Re / coding report:
DraftKings CEO Jason Robins said his advertising deal with ESPN calls for “deep integration” with the media company, which he says will give him an advantage over his fantastic rival, FanDuel. “ESPN is the strongest brand in sports,” he said. “This is something that will definitely catapult us into the leadership position.”
Sources familiar with DraftKing’s plans say it is in advanced talks to raise a big round from other strategic investors.
The amount of advertising spend in this reported deal has not been released.
The part on Fantastic ESPN integration is particularly interesting when coupled with material from the Fantasy Sports Trade Association Summer Conference. There, the main coordinating producer of ESPN Seth Markman spoke at length about his network’s plan to increase and more seamlessly integrate fantasy content into its football shows and shows.
So why is the case called off?
The history of Re / code did not go into the “why”Behind the cancellation of the investment part of the deal, so some of the news is left to speculation. Some possibilities:
- DraftKings may get a better investment offer. With the momentum behind DraftKings right now they probably have their choice of contenders for their next round of funding. Getting 250mm while sending 500mm might not have been the most logical deal, even with ESPN exclusivity. The latest investment in DraftKings – 41 mm – arrived in August of last year.
- Disney was afraid to invest in a daily fantasy sports site. Since the release of the first DraftKings-Disney report, people have questioned Disney’s willingness to enter the DFS space; the company has historically been against gambling. Even if the industry doesn’t see itself as a gaming business, it’s certainly possible that some at Disney might disagree. If this is true, it would not affect the ability of companies to do business together, it would simply prevent Disney from owning part of a DFS site.
- Something more serious is happening. The case was reported as concluded. As a DFS industry insider told Legal Sports Report, it’s rare for an investment deal to reach the stage that DraftKings and Disney have reached and it doesn’t. When Disney did its due diligence, could it have stumbled upon a red flag?
Of course, this is all speculation; It is not clear whether we will hear anything from both sides about a deal that has never been made public, other than leaked information. It could be as good as it gets:
ESPN declined to comment on the reasons for abandoning DK’s equity investments. Network source: it was the best strategic decision
– Eric Fisher (@EricFisherSBJ) June 24, 2015
Wait, Fox too?
At the recent Fantasy Sports Trade Association summer conference in New York City, multiple sources said they heard that Fox was also involved in a possible investment in DraftKings. This information was confirmed by famous journalist and ESPN expert Jim Miller, who tweeted this Thursday.
– James Andrew Miller (@JimMiller) June 26, 2015
If this is also true, this obviously raises even more questions about DraftKings and its next round of table, which went from a quarter of a billion dollars in April to a pair of deals that apparently won’t go through. Miller also reported on Twitter that the The Disney deal was not happening, before it is reported elsewhere.
Obviously, DraftKings is going to get some money from somewhere, unless there is something serious behind the scenes that hasn’t been revealed yet. Who and how much is still pending.
Even without the investment, the ESPN deal appears to be a blow for DraftKings – at least without knowing the terms of the agreement. But all that takes away FanDuel’s ability to acquire customers – and ESPN is the world’s biggest sports platform – is good for DraftKings. According to Fisher, DraftKings will be one of the Top 10 ESPN Advertisers After Deal.
An ESPN press release confirmed the deal, but didn’t really offer many details about the deal:
ESPN, the leader in fantasy sports games and content for more than 20 years, and DraftKings, Inc., a leading destination for everyday fantasy sports, have entered into an exclusive agreement that will make DraftKings the official offering of fantasy sports daily on ESPN platforms.
This exclusive relationship will include branding and promotional opportunities across multiple ESPN and DraftKings platforms, including integration into digital properties and TV programming.
“ESPN and DraftKings share a history of innovation and advancement in fantasy sports serving this passionate fan base,” said John Skipper, president and co-chair of ESPN at Disney Media Networks. “DraftKings is a dynamic company – deeply connected to its fans – and we are delighted to have them on board as our official daily offering of fantastic sports.”
“We are delighted to be working closely with ESPN,” said Jason Robins, CEO of DraftKings. “Together, we will provide fans with the most robust, diverse and comprehensive fantasy sports experience.”
Most of the deal is obviously the football connection, although the reported deal doesn’t start until next year; ESPN currently broadcasts Monday Night Football and offers a host of football-specific content.
There are also some very obvious ways to link DraftKings to Major League Baseball, which owns a stake in DraftKings. ESPN broadcasts select MLB games, including Sunday Night Baseball.
ESPN door NBA games, also, although the league may not like the specific DraftKings brand during broadcasts. The NBA has a participation in the capital of FanDuel.
Then of course there is Sports center and other studio shows that deal specifically with many sports for which DraftKings offers fantasy contests.
How FanDuel deploys its resources in 2016 in marketing will be an interesting story to follow. But for now, it looks like FanDuel’s marketing spend won’t go to the “world leader in sports.”