The Business of Fantasy Football

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Published August 31, 2012

| FOXBusiness

Fantasy football drafts for the 2012 season are underway in offices, college dorms and schools nationwide, as men and women of all ages gear up for this year’s highly-anticipated NFL season.  The intense competition amongst friends, colleagues and strangers has grown into a lucrative business, generating profits in excess of $1 billion through cable deals, advertisements, draft guides, buy-in fees and various endorsements. 

Fantasy football has been around since 1962, becoming more popular in the 1980s and 1990s before booming with the growth of the internet over the last 10 years.  The soaring number of participants and growing profitability of fantasy football is leading some to say the industry is “recession-proof.”

“Our recent survey says we gained another 2 million players from last year,” said Paul Charchian, Fantasy Sports Trade Association President.  “The numbers keep growing and it’s a pace we’ve been keeping up for years.”

A recent report from Fantasy Sports Trade Association estimates 75% of the 34 million fantasy sports participants will be fantasy football owners this year. 

Fantasy football participants draft and manage a team of players throughout the NFL season. Each week, managers can shuffle their starting lineup and shake up rosters in attempt to form the strongest team for the week’s matchup.  Hurt players will be benched and the week’s underperformers can be used as backups. Specific rules vary by league, but generally speaking each participant selects position players, a defensive team and one kicker.

While the average fantasy football participant is in their mid-30s, teenagers are fueling the industry’s recent growth. 

“A lot of fantasy football’s growth is coming from the younger generation,” said Charchian.  “Parents are playing with their kids. The growth is happening organically. We’re not targeting a specific demographic; rather it’s what families want to happen in their living rooms on Sundays.”

And fantasy football is changing the way fans watch the sport, prompting cable-TV providers to strike pricey deals.  Specific programming such as NFL RedZone is significantly benefiting from the booming industry.

“[NFL RedZone] is crack for fantasy players,” said Charchian.  “The NFL RedZone channel is specifically targeting us, the fantasy crowd.  It’s a huge program.”

NFL RedZone airs on Sunday afternoons and alternates between the league’s games, showing plays only when teams go inside the 20-yard line.

Earlier this month, Cablevision reached an agreement to carry the NFL Network. SNL Kagan estimates the NFL Network charges a carriage fee of 81 cents per-subscriber, per-month, making it the fourth most expensive national cable channel.

And cable companies aren’t the only businesses looking to cash in on fantasy fans.  Small businesses nationwide are profiting from participants quests to financially protect their prized rosters.  FantasyDispute.com claims to resolve fantasy sports disagreements for $14.95.  The firm pledges to keep the integrity of each fantasy league at the highest degree.

Other firms like Fantasy Sports Insurance (FSI) provide disability coverage on star players, financially protecting fantasy managers when players suffer “season changing” injuries.  FSI vows to reimburse participants of all expenditures associated with fielding a fantasy team, and calculates its costs at a 10% rate of the insured value plus fees. 

However, not all firms benefit from the hours spent fielding players and analyzing injuries.  A report by Challenger, Gray & Christmas estimates the nation’s more than 22 million employed fantasy football participants may be costing employers up to $6.5 billion this year. The outplacement firm reached its figure by estimating each fantasy football manager will spend one hour at work every week on their teams during a 15-week season. 

The NFL season will kickoff Wednesday, September 5.

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