Multiple media outlets reported that DraftKings has secured a $300 million round of funding, with about half of the investment coming from Fox Sports, according to media reports
The details of the DraftKings round and Fox advertising
According to the New York Times, Fox Sports will pay about $150 million of the Series D round, for 11 percent of the company. Fox had been a rumored and reported investor for more than a month.
The deal also includes $250 million that DraftKings will spend “over a few years on advertising across a wide range of Fox’s networks,” according to the NYT report. The report went on to note that the deal is not exclusive, meaning Fox can take money from FanDuel.
The deal is similar to one that had been on the table with Disney and ESPN. In April, it had been reported that Disney would invest $250mm in DraftKings, with half a billion dollars guaranteed in ad spend on ESPN; that deal never happened.
Instead, ESPN and DraftKings settled on an exclusive deal in which DraftKings would pay for ad spend and integration with ESPN and would become the “official daily fantasy sports offering” of the ABC/ESPN family of networks.
According to the Sports Business Journal’s Eric Fisher, that ads up to a huge commitment of spending by DraftKings:
And yes, that means DraftKings has committed half a billion in ad spend combined to Fox and ESPN.
— Eric Fisher (@EricFisherSBJ) July 27, 2015
What will the money be used for? According to a press release from DraftKings on Monday morning, it will “continue building out its industry-leading web and mobile products, launch its product internationally, and explore new opportunities for vertical expansion.
Investors in this round
In addition to Fox Sports, here is a listing of known investors, per a press release from DraftKings:
- Major League Baseball
- National Hockey League
- Major League Soccer
- “Leading sports organizations”
- Madison Square Garden Company
- Legends Hospitality
- Atlas Venture
- DST Global
- GGV Capital
- The Kraft Group
- The Raine Group
- Wellington Management Company LLP
Many of those are previous investors. MLB, NHL and MLS have existing partnership deals with DraftKings, as does Madison Square Garden. New England Patriots owner Robert Kraft continues to be a backer of Boston-based DraftKings via the Kraft Group. The Dallas Cowboys of the NFL and the New York Yankees of MLB are part of the ownership group of Legends.
“To receive this type of support from such an outstanding group of organizations, including three major sports leagues, is an incredible milestone for us and reaffirms our leadership position in Daily Fantasy Sports,” DraftKings CEO Jason Robins said after the announcement. “We intend to leverage these resources to develop even more innovative daily fantasy sports contests and provide new exclusive once-in-a-lifetime experiences for our players.”
Deal surpasses FanDuel’s round
The DraftKings deal comes just two weeks after FanDuel closed its $275mm round of funding. The total amount of funds raised by DraftKings is $426mm, according to Robins via the NYT. FanDuel has $362.5mm in known investments. The deal officially creates the second unicorn in the DFS space:
The new DraftKings funding, like that for rival FanDuel, values the company “meaningfully north” of $1 billion, say industry sources
— Eric Fisher (@EricFisherSBJ) July 27, 2015
The Wall Street Journal reported that FanDuel’s valuation now stands at $1.275 billion.
The total known amount of investments in DFS sites now sits at $858mm.
Of note from the two rounds of funding: FanDuel said it would award $2 billion in prizes this year, while DraftKings said it expected to award $1 billion in prizes, in its press release.
The Fox tie-in
The biggest portion of this deal, besides the money DraftKings will receive, could be the tie-in with Fox Sports.
Clearly the ESPN partnership was important for DraftKings, although the Fox ad deal could be even bigger, depending on how much DraftKings is integrated and played up across the Fox platforms.
For football alone, the Fox deal could be huge. While ESPN shows one NFL game a week — in addition to a lot of shows with a lot of football-related content — Fox is one of the two biggest players in football, along with CBS. Fox shows multiple games on Sunday across in the early (1 p.m. Eastern) and late (4 p.m. Eastern) time slots. Fox NFL Sunday is also the most watched pregame show (before 1 p.m.) on television.
If DraftKings is heavily promoted on Fox during NFL broadcasts, that could mean huge numbers for DraftKings in customer acquisition. The details of how DraftKings will appear on the Fox platform are unknown at this time. Reading comments from Eric Shanks, President and COO of FOX Sports, it sounds like ESPN-style integration for DraftKings may take place on Fox properties.
“Partnering with DraftKings, a clear leader in this field, is a great opportunity for us to capitalize on the growth of daily fantasy sports for the benefit of our viewers,” Shanks said. “We’ll work with DraftKings to develop ideas and create content to drive deeper engagement with sports fans across multiple platforms, including our national, local, and digital properties.”
Fox also broadcasts several of the sports that DraftKings is heavily invested in, including:
- Major League Baseball. Fox broadcasts games, and DraftKings is a partner of MLB.
- NASCAR. Fox has a long-term contract to show some of NASCAR’s schedule of races. DraftKings recently entered into a partnership with NASCAR.
- Mixed martial arts. Fox and Fox Sports 1 regularly broadcast UFC cards. DraftKings has a partnership with the UFC.
- Golf. Fox broadcast the men’s U.S. Open for the first time this year. DraftKings has been committed to growing the golf vertical.
- Major League Soccer. Some games are shown on Fox Sports 1. On Friday, DraftKings and MLS announced a partnership.
- Fox and/or Fox Sports 1 also shows college football and college basketball, both sports DraftKings offers contests for.
Also of note: Fox Sports runs 18 regional networks that broadcast games of a variety of teams in a specific area.