SVG Analysis: Supreme Court Ruling To Spur Fantasy Growth From The Bottom Up

By Carolyn Braff

Earlier this week, the fantasy sports industry shocked Major League Baseball back to reality when the Supreme Court upheld a decision giving fantasy leagues the right to use baseball statistics without a license. The Court ruled that free speech outweighs the “right of publicity,” MLB’s argument that players’ names and statistics cannot be used commercially without permission, effectively throwing the weight of government support behind the rapidly-growing fantasy industry. Already the decision has loosened the reigns on a fantasy industry that has become a national force among sports fans and marketing execs.

“This was a very strong ruling and it represented probably one of the worst PR moves that MLB has ever made in its history,” says Jeff Thomas, president of the 150-member Fantasy Sports Trade Association. “PR-wise, the consumer has looked at this and said ‘What kind of greed are we talking about here?’”

That greed is in the ballpark of $500 million, the global revenues that fantasy sports generate annually across sports ranging from pro and college football to golf and bass fishing, according to a recent study commissioned by the FSTA. As of Monday, that revenue is officially off-limits to the players’ associations.

“The ones who lose directly on this are not the leagues themselves, although they would rather have had the market protected so they could control fantasy just on the league sites, but the players’ associations,” explains Steve Byrd, Stats Inc., executive vice president. “They were the ones who had been licensing the rights to fantasy games and they will no longer have that as one of their revenue streams.”

That revenue stream, however, is more like a trickle. According to Byrd, the majority of players’ association licensing revenue comes from apparel and video games, not fantasy leagues.

So who began popping the champagne after Monday’s decision was announced? The entire fantasy market – starting with the newcomers.

“I think that this will largely impact smaller companies,” Byrd says. “The larger media companies purchase licenses that are not just for fantasy, but include video highlights and such. I think you’ll see a flood of startups entering the market, and we feel that first.”

As the court case worked its way through the system, Byrd started to see an increase in the number of startups coming to Stats Inc. to purchase data or hire them as a fantasy game operator.

“All of these passionate fantasy players think they have a better idea of a way to play the game because it’s something that anybody can make up rules to,” Byrd says. “You get an amazing number of people who think they should start their own fantasy company, and now you’ll see even more of that because they won’t be worried that they’re going to have a license problem or a players’ association chasing them down.”

From a revenue standpoint, this decision is great news for the fantasy market. Not only do fantasy companies no longer have to shell out expensive licensing fees, but this ruling tells prospective investors that the fantasy market is worth a second look.

“This is a positive message for people that don’t know the industry by living it,” Thomas says. “It sends a note to brands and sports marketers and ad agencies that fantasy sports is as good as we’ve been hearing. If you had investors that were sitting on the fence, now they’re sure and from that perspective, the dollars are going to loosen up. We will absolutely see more innovation and more new products.”

But even the most innovative fantasy companies will not be able to grow the market without some league support.

“There is no question that we need the leagues involved to promote the space,” says Greg Ambrosius, president of the Fantasy Sports Association, a fantasy sports advocacy group. “We need the players’ associations involved as well and we need all the big companies working together to grow the market size.”

Should the leagues decide to get litigious, fantasy companies must make sure that they are extremely careful about their use of graphics, as in that realm, the leagues have plenty of room to get picky.

“Leagues have protection on logos and trademarks, so if a fantasy company doesn’t do it the right way, they could still have issues,” Byrd says. “But if you’re just using player names and statistics, which is all you need to run a fantasy game, it seems to me like that’s settled now.”

Even though the Supreme Court threw out MLB’s appeal without comment, there is still room for other leagues and players’ associations to re-open this matter.

“This was a district decision, so it’s totally up to the leagues to do anything,” Ambrosius says. “I don’t see lawsuits popping up in the future, but again, that would be in the hands of baseball, football and the other sports leagues to decide.”

“If they’re smart, this is the last we’ll hear of this both from a marketing and PR perspective and from a legal perspective,” Thomas says. “I think they’d be wasting their money to go after this again.”

The MLB Players’ Association has said only that “we are reviewing our options at this time.”

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