by Glenn Stout
Despite their rousing victory in New York, both companies’ executives continue to spend millions of dollars on multiple legal and regulatory fights. DraftKings has tried to cut costs by renegotiating contracts with vendors while reducing affiliates’ bonuses. Merger talks were renewed this summer, with some investors insisting that a merger would be the best way for the cash-strapped companies to survive (and, not incidentally, the best way for investors to protect their stakes). Several industry insiders say a merger is inevitable—after the upcoming NFL season, if not sooner—because the sites are duplicating so many exorbitant costs.
“I think DraftKings will survive financially,” says Boies, its lawyer. “I do think that the distraction and the expenses have been harmful to the company. I think it’s very unfortunate the way some of this stuff has mushroomed and, in many respects, is unfair.”
Meanwhile, inside their corporate offices, the two companies’ top executives spent the summer devising ways to make the skill games’ ecosystem less challenging and more fun despite the inevitable outcomes.
“How do you make the games less hard? There are ways to do it—share information more broadly to take away edges that some players may have, limit the number of entries, have beginner areas,” says Giancamilli, the FanDuel vice president. “If you want to play $100,000, I’m okay with it if you are doing it in just one part of my playground. There should be places in the playground for players of all skill levels—safe spaces, safe harbors, with single-entry limits, things that make the beginner player feel comfortable and welcome.”
Besides beginners’ games, the sites have introduced a multitude of other safeguards against predatory play. By February, both sites banned all third-party scripting. DraftKings allows players to block others. Both sites’ employees are forbidden from competing on rival sites. Both sites have limited the number of entries to 150. They have created tiered levels in their lobbies so players can avoid tangling with savvier, higher-bankrolled competitors. And they have moved even more aggressively against users’ predatory behavior. (Giancamilli made a point of saying that FanDuel had slapped a one-month suspension on a high-volume, predatory player who failed to heed multiple warnings.)
“Integrity is the issue,” says Peter Jennings, a champion daily fantasy player and former ESPN expert. “How do you balance the ecosystem of these top players, who are really important to the site because it gives them the volume they need, and still make it fair and fun for the other guys?” Another way is to improve transparency: FanDuel introduced “Experienced Player Indicators,” and DraftKings has “Experienced Player Badges,” which are affixed to the more seasoned players.
Robins says the industry is evolving, in the same way any young industry confronts, and tries to solve, its customers’ most pressing concerns. Didn’t Facebook manage to overcome a host of problems, from privacy issues to advertisers spamming users? “To paint all this as an Armageddon for the industry is silly,” Robins says. “It’s common in any emerging technology for there to be a very healthy cycle for product makers to get feedback from their customers.”
Still, executives have had to tamp down the expectations of their restless investors. Some states passing DFS bills will tax the companies’ revenues from their residents. (New York is the highest, at 15 percent.) Boies says the new taxes will probably be passed on to players, meaning the sites’ rakes will likely be increased. While Robins and Eccles insist that they remain optimistic about their companies’ futures and chances for profitability, the sky-high growth projections of a year ago have been shelved.
The gigantic jackpots have not been retired. For the NFL’s opening week, DraftKings is hosting a $5 million guaranteed contest, with the winner getting $1 million. The entry fee is $3. But the messaging is being recast. No longer will the companies emphasize oversized checks and overnight fortunes. This fall there won’t be another endless run of dueling TV ads with backward baseball cap–wearing bros fist-pumping over a sudden $1 million payday.
Robins says his biggest regret is selling daily fantasy mainly as a fast way to win big money. “We’ve done a lot of research, and winning money is maybe, like, reason 4 or 5 why people play,” he says. “The main reasons they play are they enjoy the thrill of competition, they like doing things with their friends.” The first impressions created by all those ads will take patience and money to erase. “I think we did ourselves and did the industry a disservice,” Robins says. “That was a mistake . . . It made us come across more like used-car salesmen and less like we have a great luxury automobile here that you’re really going to enjoy.”
For his part, and perhaps not surprisingly, Eccles isn’t fully signed on to Robins’s mea culpa. “Unfortunately, there have always been negative consequences from it,” he says of the ads, “but I don’t really regret our decision . . . I feel the mistakes we’ve made were errors of overenthusiasm, of feeling we can get further faster . . . Maybe we tried to be too aggressive, but I feel those are . . . the right mistakes to make.”
In a way, fantasy sports have come full circle from the rotisserie baseball league co-invented in late 1979 by editor and author Dan Okrent. That was a season-long league, a chance to pretend to be a big league general manager and win bragging rights among a circle of pals. The money didn’t matter. “Daily fantasy bears no relationship, really, to what those of us who played in our living rooms with our friends were doing 30 years ago,” says Okrent, 68, who lives in the same Upper West Side apartment building as New York’s attorney general. (Okrent says he nods at Schneiderman, his downstairs neighbor, in the elevator, but he insists they’ve never discussed the DFS legal battle.) “It’s become a kind of malignant mutant version of something that began as simple and pure.”
By preaching that daily fantasy, like Okrent’s inaugural league, is an affordable way to have some fun, FanDuel and DraftKings are betting their futures on attracting and keeping players who will buy in to the argument that there’s more than one way to measure a return on investment.
In August, FanDuel redesigned its website, game platform, and marketing strategy. Its new one-word slogan is “SportsRich,” a trademarked term it defines as “the experience of having all the great stuff sports has to offer.”
In block letters in promotional materials, FanDuel says its customers should now expect “excitement, thrills, camaraderie and fantasy. These are all examples of what it is to be SportsRich. NOTE: None of them have anything to do with money.”
GEORGE DOHRMANN
Hooked for Life
from the huffington post
In early 2007, Brandissimo was a fledgling youth marketing agency with a corporate frat house vibe. Its 20 employees worked out of a cramped three-room office in Southern California’s San Fernando Valley; some desks were packed together so tightly that you couldn’t back out of one chair without bumping into another. It was the kind of prank-heavy place where you might walk in one morning to find your computer surrounded by 10 empty water cooler bottles, or where you might be talked into joining a zombie unicorn drawing competition, no matter how busy you were.
And then the National Football League called. For decades, the NFL had funneled most of its advertising dollars to large, New York-based legacy firms. Everyone knew what to expect from that arrangement: commonsense product tie-ins, 30-second ad spots. By tapping Brandissimo, the league made it clear that it wanted a different kind of partner for a different kind of project.
Brandissimo’s founders had previously worked for Disney and had helped produce well-known kids’ television shows like Doug and Thomas the Tank Engine and Friends. But they didn’t bill themselves as just TV guys or mobile guys or video game guys—they sold a more complete vision. They were the experts in grabbing a child’s attention and then holding on to it across the most popular platforms. One of Brandissimo’s mottos was: “Because kids who play with your brand, stay with your brand.”
Shortly after landing the multimillion-dollar NFL account, Brandissimo hire
d a quiet 29-year-old named Allison Guiliotis. Even though Guiliotis grew up in the football-obsessed Southeast, she knew almost nothing about the sport and cared even less. She got her bachelor’s degree in ceramics from the Kansas City Art Institute and moved to L.A. so that she could work at a gallery. She only joined Brandissimo because she got tired of being broke.
The NFL was a demanding client—before long, she was working 60-hour weeks—but unlike many others, it made its objectives clear. It wanted to “get to kids as early as possible,” Guiliotis says. “They talked about creating lifelong customers.” To that end, the league had Brandissimo create a website and a virtual world meant to entice kids.
The league was also aware that nothing had boosted people’s investment in the sport quite like fantasy football, which incentivizes fans to pay attention to several games every week. “It is an incredible mechanism if you are trying to create an addiction to football at a young age,” says Gregg Witt, the executive vice president of youth marketing at Motivate Inc., another Southern California agency. So the NFL asked Brandissimo to help connect kids with NFL Rush Fantasy, the first such game created by a pro league aimed exclusively at young children.
Kids as young as six years old were encouraged to pick a team of NFL players each week and compete for the most fantasy points with other kids across the country. And the prizes were extraordinary. Between 2008 and 2015, weekly winners of NFL Rush Fantasy could receive an Xbox One or a $1,000 scholarship. For several years, the season-long grand prize was a $10,000 scholarship. But, tellingly, the word “scholarship” was surrounded by quotation marks in the fine print of the game’s rules. Kids just got checks in the mail and were free to do with the money as they wished.
In June, I called Kyle Turley, a former NFL player who has become an outspoken critic of the league, particularly its treatment of former players. He isn’t easily shocked by the NFL’s methods, but when I told him about the fantasy game, which he’d never heard of, he let out an exasperated growl. “The NFL is desperate,” he said. “This is the kind of thing you do when you don’t care about anything but making sure the money keeps rolling in.”
From the outside, the NFL looks like one of the jewels of American capitalism. It remains the most profitable sports enterprise in the world, with $12 billion in revenue in 2015. (The NBA generated about $5 billion last year.) The league also has hundred-million-dollar deals with corporate sponsors like Microsoft, Gatorade, and Anheuser-Busch as well as close relationships with several federal agencies, including the military, which uses the sport’s popularity to bring in new recruits. Going into this season, a throwaway matchup between two teams with losing records would often draw more eyeballs than a World Series game, putting to rest any questions about what the national pastime really is.
But a closer look at the trend lines reveals that the NFL’s financial and cultural dominance may be at risk. The damage the sport does to young men’s bodies and brains has simply become too obvious to ignore. A growing number of public figures, from President Obama to LeBron James to Brett Favre, have said that they wouldn’t let their children play the game—and polling shows that 40 to 50 percent of parents agree with them. Between 2009 and 2014, youth participation in the game dipped markedly. What’s more, the number of men between 18 and 24 watching NFL games dropped by 5.3 percent from 2010 to 2013, according to Nielsen data. And one of the main story lines of the first half of this season was the precipitous collapse in ratings. The game is losing athletes and fewer young people seem to be in love with the league, two bright red flags.
In response, the NFL has initiated a campaign to secure the next generation of fans that is unprecedented in the history of professional athletics. And the fantasy game is just a sliver of it. Brandissimo is just a sliver of it. The NFL has infiltrated the school system, it has produced a football-themed animated television show that aired on NickToons, and it is currently executing a multidimensional plan to convince concerned moms to let their kids play. There’s a team of people working out of NFL headquarters in Manhattan whose professional lives revolve around getting kids interested in the game.
And this is all happening at a time when almost no one who is knowledgeable about the sport, including me—a former high school player who’s in two fantasy leagues and still watches NFL games every Sunday (and Monday and Thursday)—feels comfortable with football’s impact on children. How it can alter their brain chemistry, how a handful of young players die each year, how we’re only beginning to understand the extent of the damage that’s being done. That’s why so many of the people I interviewed for this article made a point of saying that the NFL’s youth efforts, while brilliant, are absolutely devious. Over and over, I heard comparisons between the league’s marketing work and that done by the coal industry or Big Tobacco, conjuring images of Joe Camel in a helmet and shoulder pads.
The league believes its efforts are more benign. “We are always looking for new ways to engage the next generation of NFL fans and connect with kids in unique and authentic ways,” a spokesperson told me.
Being a part of the NFL’s apparatus eventually began to eat away at Guiliotis. She dreaded going to work. When she participated in calls with members of the NFL’s Department of Fan Development & Marketing, she said they applied constant pressure on Brandissimo to find new ways to hook kids. “It was a weekly, almost daily thing: how do we increase kids’ time on site,” she said. And she hated that around Brandissimo’s offices, “there was no self-reflection. No pause,” she said. “It was, ‘What can we get kids to do that makes the NFL happy?’ ” (Andy Babb, Brandissimo’s president, declined to comment and referred all questions to the NFL.)
After three years at Brandissimo, and almost as soon as her husband got a job that enabled her to work less, she quit. She teaches ceramics to kids now and says she’s happier than she’s been in years. But every so often, the old anxiety creeps back in.
“I see a game on TV and I just get mad,” she says. “I have seen the NFL’s motivation and what a big corporation like that is willing to do, and it’s scary. I parent differently now because of what I know. But I can only shield my child from it. What about other kids?”
In August 2012, Amanda Rodriguez was unsure if she should let her young son play football. Will, the second of her three children, had a strong interest in the game, but he was only six. Too young, she thought, too fragile, especially considering all that she had heard and read in recent years about head trauma. But Will really wanted to play and “I guess I just got tired of fighting about it,” she told me. Almost as soon as she enrolled Will in a local league in a Maryland suburb of Washington, D.C., she started thinking about ways to take him out.
At around the same time, the NFL was doing some soul-searching of its own. League officials, beset by an endless stream of reports about concussions and player safety, were developing new strategies meant to combat the idea that football was dangerous for kids. They wanted to try out their pitch on some moms. So they contacted managers at two female-centric websites—iVillage and Babble. Both were owned by broadcasting partners of the league (iVillage by NBCUniversal; Babble by Disney/ESPN), so the officials knew they would be presenting to a friendly audience.
That’s how Rodriguez, who contributed videos and blog posts about her parenting adventures to iVillage, found herself in a conference room at NFL headquarters, along with about a dozen other moms. Roger Goodell, the league’s commissioner and a smiling, broad-shouldered charmer when he needs to be, started the event by assuring the moms that the league was implementing programs that would “change the culture” of the game. He then took some photos with everybody before turning the presentation over to a series of speakers who made it clear that they wanted “to learn what our fears were about football,” Rodriguez says.
According to her and Sharon Rowley, another parent who was there, the officials spent a good part of the day telling the moms about a player-safety initiative they were developing called Head
s Up Football. The program would require coaches of kids’ teams to receive a certificate for teaching tackling techniques that reduce helmet-to-helmet contact. Rodriguez and others in the room loved the simplicity of that approach. Heads Up Football would also call for more parental involvement in youth leagues, the officials said. For instance, parents would be encouraged to monitor the tackling drills that coaches used. The moms responded well to this too—they liked feeling as if they had agency over the safety of their children.
The NFL’s messaging in other areas still needed tinkering. When the presenters were asked how concussion concerns in soccer and other sports compared to those in football, they didn’t have a good answer. So at a later gathering with Rodriguez and some of the same moms, they came prepared. They brought speakers from other sports who said that football was not alone in dealing with this issue. The basic argument was: if soccer and lacrosse were just as risky, what justification did moms have for blacklisting football? And it worked. Today, when other moms tell Rodriguez that they can’t believe she lets Will play football, she responds, “I can’t believe you let your child ride a skateboard.”
Its message sufficiently honed, the league started putting together “Moms Football Safety Clinics”—larger, more polished versions of the Manhattan meetings—all across the country. The early clinics, held during the 2013 season, were heavily promoted by the league and covered extensively by the press, but I wanted to know what happened when no one from the league knew the media was present. So I asked Carolina Gazzara, a 22-year-old graduate student in journalism at the University of Alabama, to go to the May 17 clinic in Birmingham. She preregistered online (at no cost) and gathered with about 120 other women—predominantly black, many with kids already playing in local leagues—at 6:00 p.m. in the cafeteria at Spain Park High School.
