FUN Technologies Acquires CDM Fantasy Sports

[Greg Ambrosius]

Here's a story I wrote today for our industry newsletter. I figured it would be of interest to fantasy players across the country:



FUN TECHNOLOGIES ACQUIRES CDM FANTASY SPORTS

FUN Technologies Inc. announced today that, through a wholly owned subsidiary, it has acquired CDM Fantasy Sports. FUN Technologies paid $5 million in cash and stock, plus an earn-out of up to $5 million based on certain performance targets for the business. The acquisition of CDM makes FUN one of the largest pay-to-play fantasy sports operators in the industry.



Based in St. Louis, Missouri, CDM’s 44 games are played by approximately 200,000 customers in eight sports. Acquiring CDM complements FUN’s existing fantasy products through the addition of CDM’s strengths in baseball and commissioner-style fantasy games. FUN already has a strong presence in the fantasy football market behind Fanball.com’s games, content and commissioner products.



“By acquiring CDM, FUN is now the leading fantasy operator in the US, with strengths in both of the major fantasy sports –baseball and football – and across product type,” said Lorne Abony, CEO of FUN. “CDM is a highly synergistic acquisition for FUN; through consolidation with our existing fantasy business we will create significant operating efficiencies and scale opportunities. Fantasy sports are growing, and we believe that this is the optimal moment to consolidate the sector and create an industry leader.”



For the 12 months ended Dec. 31, 2005, CDM recorded unaudited revenue of $7.9 million, and net income of $800,000. As of June 30, 2006, net assets were $4.1 million.



Gannett Publishing was in acquisition talks with CDM Fantasy Sports and was reportedly close to a deal in January of 2005 before CDM was denied a license by Major League Baseball Advanced Media. CDM then contested the use of the license and received a favorable summary judgement in that dispute 18 months later. Its games were no longer promoted by USA Today Sports Weekly after the loss of the license and the acquisition fell through. Talks with FUN Technologies picked up this spring and the acquisition was finalized shortly after the summary judgement was handed down by U.S. Magistrate Mary Ann Medler on Aug. 8.



“The dismissal is significant as it is seen to protect the use of fantasy companies to use publicly available sports statistics for the operation of their businesses,” today’s FUN Technologies press release said of the CBC vs. MLBAM judgement.