Post
by Greg Ambrosius » Thu Jan 20, 2005 7:57 am
Here is my story that I wrote for the Fantasy Sports Trade Association newsletter. Consumers may be interested in it as well and I'll run it in our next Fantasy Sports Magazine, but NFBC members can get an early view of it:
MLBPA AND MLBAM AGREE TO $50 MILLION FANTASY DEAL
By Greg Ambrosius
In a bold move that shows how far the fantasy sports industry has evolved, the Major League Baseball Players Association and MLB Advanced Media announced a five-year, $50 million deal on Wednesday that involves the exclusive rights to the league’s fantasy games. The deal means that MLB Advanced Media will now be in control of deciding who gets licenses and sub-licenses for fantasy baseball during the next five years, rather than the MLBPA.
In a joint teleconference for reporters on Wednesday out of New York, both sides put a positive spin on what this partnership means for the growth of the fantasy sports industry. Bob Bowman, chief executive of MLB Advanced Media, said he will license the league marks and players names to other industry companies in 2005 and that every 2004 licensee will receive an RFP. However, he did not say if the number of licensees would increase or decrease this year and in future years.
“Our goal is to increase the number of people who can play fantasy, increase the number of games we consider fantasy and just get more people spending time on fantasy than we currently have,” Bowman said. “That could mean more licensees. It could mean fewer licensees. It’s really going to depend on what the potential licensees want to do in terms of trying to augment and enhance what is already a great product.”
Bowman was asked if MLB.com would one day have exclusive rights to run all fantasy games and services and he was adamant that it would never happen. “No there is not a possibility that could happen,” he said. “I can say with absolute certainty there will be at least one and probably many, many licensees. It’s going to be up to the potential licensees to control their fate.
“We think this is going to greatly improve the fantasy experience,” he added. “We think we can grow the business tremendously. We think we can get more people interested in fantasy, more people interested in more casual fantasy games (and) we think the wireless platform is an absolutely embryonic but quickly growing platform for us to utilize these combined rights.”
While fantasy sports licensing is the biggest aspect of the deal, it’s not the only area of it. This partnership gives MLBAM the video rights to show player images online. It also allows MLBAM to host the PA’s web site, now called MLBPlayers.com, and to expand text and video on wireless applications.
Still, the value of the deal is staggering as Bowman said that MLBAM is paying in excess of $50 million in cash to the Players Association for these rights and the final figure is not based on a revenue share model. With fantasy baseball being at the forefront of the deal, new revenue generating models will likely be in store for the future.
“We believe that we can create a larger fan base and create a larger economic pie for these general rights by putting them all together and we’ve risked capital to do it,” Bowman said. “Fantasy really is two-dimensional right now. It’s text based and there are some pictures involved. In the last 20 years, the world has changed somewhat, but the fantasy games have not changed. They are still two-dimensional (and) we can make them three-dimensional, we can make them video where we can now combine the video rights and give people what they want in updates, either text based on their cell phone or broadband video on their computers. By combining (the rights), we now have one-stop shopping for the fan and he or she can tell us how they want to enjoy fantasy. Increasingly, it’s going to have a broadband element to it and we weren’t able to combine that in the past.
“One thing we want to do with the licensees is develop the two to three minute fantasy game, where people can play on their cell phones,” Bowman added. “And that has as much upside as retooling and enhancing the existing games to make them more three-dimensional than two-dimensional.”
As of Thursday morning, dozens of FSTA members received RFPs from MLB Advanced Media for the chance to seek a license. No industry company had a license from the MLBPA or MLBAM for 2005 before yesterday’s announcement. Judy Heeter, director of business affairs and licensing for the MLBPA, said that “dozens” of companies were licensed last year and that the MLBPA has been aggressive when it comes to unlicensed fantasy companies in the past. “I believe we’ve been very aggressive and I think over the years the circumstances have changed somewhat because the law has recognized the rights of players associations in this area and it’s been less necessary to be aggressive than perhaps we were back in the early 1990s,” Heeter said. “That’s true generally across the board in every product category, not just the fantasy category.”
While no fantasy company has challenged that position in a court of law, there are some people in the legal field who disagree with that assessment when it comes to statistics of the games. Paul Levy was co-counsel to STATS Inc. in the NBA vs. Motorola case of 1997 when a U.S. Court of Appeals ruled that the federal copyright statute prohibits the ownership of factual data. Levy told ESPN.com’s Darren Rovell, “there are a line of cases that suggest that any personality is protected from an implied endorsement or suggested affiliation without their permission. But that is different from the recitation of a statistic that has no meaning unless that statistic is tied to the name of the player who generated that statistic.”
Greg Ambrosius
Founder, National Fantasy Baseball Championship
General Manager, Consumer Fantasy Games at SportsHub Technologies
Twitter - @GregAmbrosius
