The Reality of Fantasy Sports

An inside look at the entrepreneurial all-stars behind a $1 billion business phenomenon.

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“Fantasy sports is here to stay,” says David Dodds, co-founder of Footballguys.com, an information and analysis site closing in on 40,000 paid subscribers. “The NCAA basketball tournament bracket pool is never going away—it’s too enjoyable. The same thing with fantasy football. There are too many people that enjoy playing. Even in a recession, last year was our best year ever. People think, ‘This is my fun. Maybe I can’t afford Disneyland, but I can afford this.’”

Fantasy sports entrepreneurs like Russo and Dodds are not so different from the gaming community their firms serve—most everyone in the industry started as a fantasy player, then parlayed their expertise and rabid enthusiasm into a full-fledged career. “I’m a big proponent of marrying your passion with something you can make money on—it’s not really work anymore if you’re passionate about it,” says Kelly Perdew, CEO of RotoHog.com, a digital platform developer that designs, implements and markets fantasy services for media and advertising partners.

Perdew’s own career is a peculiar mix of fantasy and reality. After graduating from West Point and serving three years as an Army military intelligence officer, Perdew earned a law degree from UCLA and a measure of pop-culture stardom by winning the 2004 season of Donald Trump’s NBC television reality series The Apprentice. His prize: Supervising construction of the Manhattan apartment complex Trump Place, then becoming executive vice president for the Trump Ice bottled water brand. 

Perdew took over RotoHog.com in 2008 after a stint as president of ProElite.com, a social networking site serving the mixed martial arts community. “I had played fantasy football for nine years with two brothers and nine buddies in a 12-man keeper league, so I didn’t need anyone to explain the appeal or nuances,” he says. “I wanted to do something very large, and to capitalize on the factors impacting the growth of fantasy sports.”

Perdew is one of millions who came to the hobby around the turn of the millennium, when the internet transformed fantasy sports from a cult obsession into a mainstream phenomenon. The internet made it easy for fantasy leagues to quickly compile player performance and league results (no more spreadsheets culled from newspaper box scores), and it unleashed a deluge of new statistical data and analytical insight. Websites like Commissioner.com, launched in 1997, offered real-time stats, league message boards, daily updated box scores and other features for $300 per league. The sports news and media site SportsLine.com acquired Commissioner.com in late 1999 for $31 million in cash and stock, a deal many cite as the line of demarcation in fantasy gaming’s evolution from pastime to industry. (Viacom then acquired SportsLine.com for roughly $46.4 million in 2004, and Commissioner.com’s platform now serves as the engine powering CBSSports.com’s fantasy efforts.)

RotoNews.com is another watershed site. Introduced the same month as Commissioner.com, it is regarded as the first fantasy sports information site to track player information beyond their on-field numbers—trades, injuries, benchings and related news—and evaluate that data’s impact on their fantasy value, all in real time and available via searchable database. Within two years of RotoNews.com’s launch, ComScore Media Metrix ranked it among the top 10 most-trafficked sports destinations on the web, outpacing even official league sites like NBA.com. In 1999, founders Peter Schoenke, Herb Ilk and Jeff Erickson sold RotoNews.com to Broadband Sports, which went bankrupt two years later. But the RotoNews.com team soon resurfaced under the RotoWire.com brand and today targets football and baseball as well as professional basketball, hockey and auto racing.

The impact of websites like Commissioner.com and RotoNews.com was not lost on new media giants like Yahoo!, which acquired premium fantasy league provider Sportasy in December 1998 and launched its free Yahoo! Sports Fantasy Baseball service the following spring.