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Billion Dollar Draft

Some 27 million Americans play fantasy football—and media companies are cashing in on their obsession

Nick Iluzada

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The 5-foot-7-inch Jacksonville Jaguars running back Maurice Jones-Drew earned the nickname "Pocket Hercules" for his bruising running style, but the diminutive chatterbox can't seem to take a verbal hit.

Addressing listeners on his Sirius XM fantasy football program, Runnin' With MJD, just before the NFL season began, he groused about his middling fantasy draft prospects. "A lot of people are out there saying, 'Can he come back on that knee? Can he do what he did in '09?'" Jones-Drew said. "A lot of fantasy football gurus who've never stepped on the field before or been in a locker room, they seem to know best."

How far the game has come. Once a cultish pursuit of stat nerds, over the past decade fantasy football has grown into a sport with some 27 million players, including athletes themselves. Along with the office drones who consider themselves devotees are A-list actors, politicians, and captains of industry. (One exclusive league populated by a number of hedge fund titans competes for a $1 million cash prize.)

Americans spend an estimated $800 million per year on all fantasy sports media products and services, according to the market research firm Ipsos. (Out of that, football gets a majority of the money, as 71 percent of fantasy players follow that sport.) Add subscriptions to platforms indirectly related--such as DirecTV's NFL Sunday Ticket, NFL's RedZone, and Sirius XM's MLB packages--and the total market impact, says the Fantasy Sports Trade Association, is now nearly $5 billion per year.

Indeed, the big winners are not so much the players, but online media companies. They're generating revenue not only through league fees, online paywalls, and, of course, "traditional" ad buys--some 80 percent of the portals are ad-supported--but through new and creative ad opportunities that are helping point the way for websites feeling hemmed in by banners and video pre-rolls.

For the uninitiated, fantasy football is a game of stat sheets and schadenfreude. Participants join leagues, of which there are countless nationwide (some informal among friends; others formalized and often costing minimal fees). Exact rules vary, but, in general, each person drafts position players, as well as a defensive unit and placekicker. Points are generated by the stats put up every week by the selected NFL players, and the teams that end the regular season with the best records advance to the postseason.

The rise of the Internet has helped fantasy football expand exponentially from its start as a sort of cabalistic exercise in mathematics and obsessive fandom in the late '90s, when Yahoo Sports and CBS SportsLine.com launched their first fantasy products. "The growth of fantasy football aligned very nicely with the growth in broadband," says David Geller, head of Yahoo Fantasy Sports.

"The Internet is responsible for three pandemics," adds one digital buyer. "Porn, gambling, and fantasy. And there's honest money to be made in the latter."

A great deal of real-time, statistical minutia is needed to staff and maintain a competitive roster, which is why many of the dollars generated by fantasy football accrue to online sites that offer complimentary access to live scoring, updates, injury reports, and projections. Advertisers looking to stake their claim in the arena can spread their marketing dollars across a host of less-trafficked sites like Fantasy Sports Ventures' KFFL.com and TheBigLead.com, or belly up with the big boys at CBSSports.com, Yahoo Sports, ESPN.com, and NFL.com. At these bigger websites, according to media buyers, fantasy buys can range from $750,000 for real estate on high-traffic data and news pages to $3 million for a full-season presenting sponsorship.

Some sites let players dabble for free, but make them spend for expert advice and specialized tools, like draft analyzers. ESPN.com, for instance, locks much of its advice behind its Insider paywall, which offers exclusive content at prices ranging from $30 to more than $70 per year. And to ensure there's a bundle, online subscribers also get ESPN The Magazine, a biweekly print publication. It also offers a mobile app for $4.99.

Dave Coletti, vp of digital media research and analytics at ESPN, says certain in-house usage patterns led to Bristol taking a closer look at the correlation between mobile and fantasy usage. (Coletti is active in three leagues, one of which is made up of his fellow ESPN researchers.) "That's one of our platforms that benefits from the explosion in fantasy sports," he notes. "People don't go anywhere without their phones, and it's become almost the default option for news and data. The last two Sundays in September, we had 10 million people using our ESPN mobile service, and much of that traffic was fantasy driven."

The uptick in mobile usage has had a concomitant lift on the digital side of the ledger. Season to date, ESPN's fantasy football users are up 19 percent from the prior-year period, says Coletti. The site garnered more than 100 million page views in the first month of the season, accounting for nearly half of all traffic.

Coletti has other numbers to tout as well. As a sidelight of Bristol's ongoing ESPN XP (cross-platform) initiative, the network has begun layering digital research over Nielsen's ratings data, and found that "our fantasy football players watch 25 percent more Monday Night Football than the typical viewer," says Coletti. "These are loyal and engaged fans, two words advertisers really like to hear."

CBSSports.com makes most of its money by charging for its fantasy football modules. A league pass on CBSSports costs $179.99 per season, while individual player subscriptions vary based on the potential final payout. But despite the cost of entry, business is booming. Ten years ago, the site--then known as CBS SportsLine--took in $4.3 million in fantasy subscription revenue; this year, analysts expect it to surpass the $50 million mark.

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