First Market Study Finds Fantasy Sports a Booming Business

Article ID: 500913

Released: 16-Sep-2003 10:00 AM EDT

Source Newsroom: University of Mississippi

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Newswise — Scott Caradine, 34, has played fantasy football for nine years, spending an estimated $450 annually in entry fees, online services, magazine subscriptions and television football packages."Fantasy football is addictive," said the Oxford, Miss., restaurant owner. "Several of my employees play in the same league as I do, so there's lots of fantasy football talk."

"People are fanatics about fantasy leagues," said Kim Beason, a University of Mississippi health, exercise science and recreation management professor who has completed a Fantasy Sports Trade Association consumer behavior study.

"They get addicted, and it's a phenomenon that nobody understands."

The Proud Larry's Fantasy Football League, created by a former employee of Caradine's, held its draft selection after the pre-season football games were complete, and each representative of the 12-team league received a receipt for their $150 entry fee. Across the nation, similar drafts and business transactions have occurred, some prior to pre-season, in preparation for the 2003-2004 National Football League season.

According to the FSTA study, the industry's first, the average entry fee for people paying to play in fantasy leagues last year ranged from $32 for college sports up to $100 for Major League Baseball. The study indicates that up to 15 million people participated in fantasy league play last year, and fantasy sports today, with the advent of the Internet, averages an approximate 10 percent annual growth rate. Fantasy sports was developed in 1979 by Daniel Okrent, a New York baseball fan. Spanning the gamut of sports, fantasy leaguers tackle the NCAA Basketball Tournament, National Football League, National Basketball Association, National Hockey League, Professional Golfer's Association and NASCAR. There's even a Fantasy Cricket Club and Franky's Tour ToTo for die-hard Tour de France followers.

Although fantasy leagues vary, a fantasy sports player assembles and manages a team like a real sports team owner. Teams draft squads of real players and tabulate points based on the statistics players compile. Some games are true-to-life, involving factors such as salary caps and trading deadlines.

Due in large part to technology, fantasy players no longer have to wait for player statistics to run in the newspaper after a game. They can be downloaded instantly on the Internet, creating a worldwide, multi-million-dollar cyber phenomenon. Of the estimated $198 billion spent in 2002 on sports " ranging from advertising to gambling " approximately $3 billion was generated by fantasy sport leagues.

"The bottom line is that fantasy sports comprise approximately 1.5 percent of the total sports market," said Beason, a team owner in the Murff's Fantasy Football League. "The market growth has been remarkable, and it continues to be in a heavy growth stage."

According to the study, the average fantasy leaguer is 37 years old with a bachelor's degree and a household income of $75,000. Most fantasy leaguers spend more than two hours a week managing teams using online statistic services to monitor their games, and spend more than 30 minutes daily daydreaming about fantasy leagues.

Sean Haynes, a Nashville businessman, exhausts up to three hours a week examining his two fantasy football teams. Haynes created his own league, Black Dog Fantasy Football League, in 1996 with eight teams paying a $50 entry fee. The league has expanded to 12 teams, each paying $150 in entry fees. "This year we had about 10 other players who wanted to join the league," said Haynes, a UM alumnus. "It's getting pretty big."

And where there is sports and money, rest assured Las Vegas is watching. Last year, a Las Vegas casino held an NFL fantasy league. With an entry fee of $1,500, more than 1,800 people arrived to play.

"When Vegas gets involved it can get sketchy, but fantasy sports is not a game of chance," said Beason, who spends $500 annually playing fantasy sports. "It's a game of skill. It's all based on how well you've studied."

Caradine agreed, tagging fantasy sports as an alternative to gambling: "Gamblers take a chance on a team covering the point spread, but a fantasy player wins or loses based on the performance of an individual player."

Providing fantasy leaguers with player statistics has created new ventures for media conglomerates, as well as the professional leagues themselves. Statistics and points for Haynes' Black Dog Fantasy Football League is just one of the many leagues maintained by CBS SportsLine.com. Last year, the online fantasy league manager generated more than $11 million in revenue on fantasy games and services.

Fantasy players have placed more responsibility on media outlets as well, demanding increased coverage. Instead of reporting only scores, media outlets report on a barrage of statistics. "These stats you see rolling across the television screen are geared directly toward fantasy players," Beason said. "It allows fantasy leaguers to keep up with their players."

Tracking players' success is also key to fantasy leaguers' success. First place in the Proud Larry's and Black Dog leagues receives $1,500, and the Murff's league offers $900 for first place. CDM Fantasy Sports, one of the first companies to create fantasy sport leagues, gives away approximately $5 million annually in prizes, according to Brian Matthews, co-founder and chief executive officer. A few individuals, he said, have received up to $250,000 playing CDM games.

Fantasy sports is also rekindling fan enthusiasm, especially among Major League Baseball fans, perhaps bringing America's old favorite pastime back to life. Due to free agency and the threat of strikes, many Major League Baseball fans turned their backs on the game, but with the advent of fantasy sports, fans are returning to track the success of their favorite players.

"Fantasy sports fits well with free agency because fans don't follow teams today " they follow the players," Beason said.

Caradine, a die-hard New Orleans Saints fan, now watches football games that he never would have cared about before. "I find myself pulling for teams outside of the Saints," he said. "I'm a big fan of Detroit now simply because of the players I drafted for fantasy football. It's a whole different game now."

A research analyst for the FSTA, Beason hopes to continue his study by examining the psychological reasons why people play fantasy sports, as well as monitor the social and economic impact of the industry.

"Fantasy sports hasn't evolved as far as it can," Beason said. "This is an activity that will be around for a while."

For more stories from The University of Mississippi, visit www.olemiss.edu/newsdesk.


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