Disney to Invest $250 Million in DraftKings
According to a report from the Wall Street Journal, the Walt Disney Company is planning to invest $250 million dollars in DraftKings. Walt Disney Company is the parent organization over ESPN, who will begin a strategic cooperative effort with the daily fantasy site including heavy advertising on ESPN’s platforms.
The report also states that this investment values DraftKings at around $900 million, an astronomical figure for the startup daily fantasy company based in Boston. Official partnerships with NBA teams and the entirety of Major League Baseball proved that DraftKings was a viable business partner for major brands, and now the “leader in sports entertainment” has joined in with a huge investment in the site.
As a part of the deal, DraftKings has pledged to advertise early and often across ESPN platforms, with planned spending over $500 million according to the report, which secures ESPN with a revenue stream as a part of this agreement. The WSJ notes there is no total exclusivity in this deal, FanDuel can still advertise on ESPN, but DraftKings will be featured more often and be put in “premium positions.” Sports Business Daily suggests that there is some level exclusivity in this partnership, including DraftKings being the only daily brand mentioned on ESPN productions such as Matthew Berry’s podcast and columns.
In thinking about just how big this investment is for DraftKings, consider that FanDuel raised funding from investors just over two years ago, which included money from Comcast Ventures, as Forbes reported at the time. The total money raised from that funding effort was $11 million, which falls well short of what DraftKings has received from Disney.
This speaks to the huge growth in the DFS industry, which we saw earlier this year when talks of a $1 billion valuation for FanDuel were rumored. Obviously those rumors weren’t far off, as FanDuel remains the bigger site in the daily fantasy space according to the WSJ report, and DraftKings is reportedly valued just shy of $1 billion.
Disney’s decision to invest heavily in DraftKings is yet another positive sign for an industry that has grown exponentially over the past two years. Moving forward, it will be interesting to see how ESPN leverages the DraftKings brand across their platform, and if the daily site will be able to leverage this relationship for ESPN-centric prizes or offerings. This may also signal that ESPN has no interest in entering the DFS market itself, choosing to instead invest in an existing site and offer advice and content for those players.
It will also be interesting to see how FanDuel responds. They have been the leader in daily fantasy for quite some time, and as the report above indicates, they have been considering a new round of fundraising. Could this move from Disney inspire other large companies with strong sports brands to invest in FanDuel and compete with the “Worldwide Leader?”
Only time will tell, but with all the partnerships, live finals and huge dollar amounts being tossed around in the world of DFS lately, it’s clear to see that this is an industry on the rise.