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Fantasy sports sites FanDuel and DraftKings are in a knock ’em down, drag ’em out fight over your favorite sports teams.
The two companies, which specialize in single-day fantasy contests that pay out cash prizes, are laying claim to America’s largest sports leagues and teams in the form of exclusive — and sometimes pricey — partnership deals.
They’re paying big bucks for in-stadium advertising and the brand association that comes with putting your name alongside teams and leagues like the NFL, NBA and MLB. It’s a way to boost their reputation with fans of each respective team while simultaneously blocking out the competition. Plus, most deals include fan experiences that the companies can then offer their users, like the chance to meet players or take a tour of the locker room.
As a result, the deals have become a big part of the business. The partnerships, which all tend to fall in the three- to five-year range, typically cost the companies between $500,000 and $1.5 million per year depending on market size and the sport, according to people familiar with the deals.
Partnering with the NBA’s New York Knicks, for example, probably costs more than a similar partnership with the Memphis Grizzlies. Some of DraftKing’s deals have even been closer to $3 million per year, according to a source.
FanDuel and DraftKings are also partnering with actual leagues, not just the teams that compose them. For example, FanDuel has partnered with the NBA, but it’s not exclusive; DraftKings also has deals in place with specific NBA teams. DraftKings’s deal with Major League Baseball, however, is the opposite. While individual teams don’t have to sign on with DraftKings (although most of them have), they aren’t allowed to partner with FanDuel or anyone else.
The NFL has abstained from picking a partner, and sources say it has no plans to choose one anytime soon. But NFL teams can opt in, and the majority of them have already signed on with one of the two companies.
The race is fierce enough that DraftKings is even shelling out cash for other segments of the sports world, like stadiums and media properties. The company has partnerships with Madison Square Garden in New York and the Staples Center in Los Angeles; both deals include in-stadium, DraftKings-themed lounges. (DraftKings declined to share terms of the deal, but a recent Forbes article reported that another fantasy site, Draft Ops, offered MSG $18.5 million over five years for the same partnership but was outbid.)
DraftKings has also locked up an exclusive advertising deal with ESPN, though it required an ad commitment of hundreds of millions of dollars.
But while the deals are important and likely to keep coming, those following the industry are concerned that the deals are unsustainable at the current rate. Like Uber and Lyft, the two companies are burning through cash to gain market share. It’s why FanDuel raised $275 million in funding earlier this week and DraftKings is in the process of raising a big round of its own.
Where do the two companies stand now? Here’s a look at which companies own which partnerships.
This article originally appeared on Recode.net.
