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Draft Ops Sponsors Islanders And Signs 3-Year Deal With Barclays Center

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FanDuel and DraftKings have a competitor looking to take away their stronghold on partnerships with professional sports teams and leagues in the U.S.  The new daily fantasy sports operator at the table is Draft Ops, and it is making a splash with a forthcoming announcement that it has signed a 3-year, mid-7 figure deal with Barclays Center in Brooklyn, New York, which includes sponsorship of the New York Islanders for the franchise's upcoming inaugural season in Brooklyn.

The deal between Draft Ops and Barclays Center provides the daily fantasy operator with a considerable amount of Islanders' on-and-off ice assets.   It also creates a Fantasy Sports Book within Barclays Center for all events  -- Islanders and Brooklyn Nets games, as well as boxing matches and concerts.  Draft Ops will be able to activate and educate customers at the Fantasy Sports Book, which will begin to be built out in September and launched in conjunction with Opening Day for the Islanders.

Draft Ops will have extensive reach with its Barclays Center deal, but it does not come saddled with a sponsorship of the Nets.  Yesterday, FanDuel revealed that it has signed a multi-year partnership with the Nets along with 12 other NBA teams.  Knowing that the Nets franchise was out of reach, Draft Ops insisted that its deal with Barclays Center includes exclusivity for the arena.  Thus, FanDuel is limited to court-visible signage during Nets games, while Draft Ops will have the right to engage with fans face-to-face within its lounge in the main concourse and the plaza outside the arena.

Despite not sponsoring the Nets, Draft Ops remains determined to capture a share of the basketball marketplace by engaging NBA teams that have yet to agree to terms with a daily fantasy sports provider.

A Draft Ops representative has advised that Draft Ops is currently negotiating with unsigned NBA teams and bidding strongly against FanDuel and DraftKings.  "We will continue to increase our exposure and continue to bid on opportunities with the two giants," said the Draft Ops representative.  Draft Ops is purportedly talking to the Oklahoma City Thunder, received a proposal from the San Antonio Spurs and is in discussions with the NHL's Anaheim Ducks as well as the New Jersey Devils.

The lack of supply has caused sponsorship prices commanded by NBA teams to escalate rapidly.  Several NBA teams are seeking deals in excess of $1 million per year from daily fantasy operators.  Many of those teams are located in smaller markets and would have been thrilled with sponsorship deals in the $200,000 to $400,000 range a year ago, but now believe they are due what major market teams were recently receiving in similar types of arrangements.

Fantasy sports operators must pay to play in this hotly contested climate for professional sports league and team partnerships.   Draft Ops has raised over $7 million in a friends and family round and is rapidly moving toward its first Series A round to increase its war chest for future marketing opportunities.  The operator is seeking to raise $10 to $20 million.  It also wants to avoid losing bidding wars against FanDuel and DraftKings.

Draft Ops has already suffered a high profile bidding war loss.  It was outbid at the last minute by DraftKings in a negotiation to own all fantasy-related assets at Madison Square Garden.  Draft Ops aggressively sought out MSG, including a proposal to sponsor the New York Knicks, New York Rangers, New York Liberty and NBA Development League's Westchester Knicks.  MSG ultimately chose DraftKings.

The final offer presented by Draft Ops to MSG was the following:

  • Year 1 - $2.5 million
  • Year 2 - $3.6 million
  • Year 3 - $3.775 million
  • Year 4 - $4 million
  • Year 5 - $4.15 million

Draft Ops was allegedly outbid by DraftKings in the realm of 20-30% above Draft Ops' final offer.

"Our ballpark guess for MSG is a 5-year, $25 million deal," explained the Draft Ops representative.  "With respect to importance, MSG does more revenue than Barclays, but Barclays is second nationally.  Also, Barclays does a better job with additional events - for example - they have two rounds of the NCAA Basketball Tournament in 2016, more major concerts than MSG, a substantial amount of major boxing cards and we expect the hype around the Islanders inaugural season to be huge.  In addition, the MSG deal required a substantial spend on the WNBA asset, since it included jersey logos.  Further, by receiving arena exclusivity without having to spend the additional capital on the Nets made it a more cost effective deal."

Draft Ops has had a busy week outside of the forthcoming announcement of a multi-year deal with Barclays Center.  It earlier inked a deal to sponsor "The Rich Eisen Show" on DirecTV and NFL Now.  The deal is for 3-years and is in the low 7-figure range.

In January, Draft Ops entered into a marketing partnership with Bellator MMA, which is owned by Viacom .  It is a promotional agreement that gives Draft Ops exposure through social media promotions, digital campaigns and live in-show broadcast integration.  The deal also made Draft Ops the Official Fantasy Gaming Partner of Bellator.

The hope for Draft Ops is that a deal with Barclays Center kicks off a campaign to grow the brand among the more traditional American sports and assist Draft Ops with a future raise of capital.

"We have been handling all financial matters in-house up to this point, but are seeking to engage a banker over the next 30-60 days," said the Draft Ops representative.  "We are committed to becoming the first profitable fantasy site as we believe the financial models set in place by FanDuel and DraftKings create long-term risks for both.  The amount of marketing arrangements they have committed to is extremely aggressive and will be a challenge to meet the financial obligations especially in light of casual fans steadily abandoning these sites as they are unable to compete with professional players."

Darren Heitner is a lawyer and the Founder of South Florida-based HEITNER LEGAL, P.L.L.C., which has a focus on Sports Law and Entertainment Law.