In April, DraftKings announced that Disney, the parent company of ESPN, would invest $250 million into the daily fantasy site. In return, DraftKings agreed to spend half of a billion dollars in advertising on Disney networks over a three-year period. Now, according to media reports, Disney is backing away from the investment aspect of the agreement, forcing DraftKings to look elsewhere for the cash.
Journalist James Andrew Miller was the first to break the story, posting a somewhat cryptic message on Twitter. “Fantasy no more? Wouldn’t go long on potential ESPN investment in DraftKings. That pile of money in real jeopardy,” he wrote.
The investment would have given DraftKings an evaluation of $900 million, while contributing plenty of capital to keep up with its chief rival, FanDuel. At the time, DraftKings CEO Jason Robins expected that the Disney deal would propel the site “into the leader position.”
But the setback aside, the Boston-based site isn’t lacking for investors. The company recently closed a round of funding, raising $41 million from venture capital firms like the Raine Group, Atlas Ventures and Red Point Ventures. Since 2012, the site has raised $75 million from investors, rivaling the $86 million in total investments pumped into FanDuel by companies like Comcast and NBC Sports group.
While the $250 million might not materialize, not all of the Disney deal is dead. Today, DraftKings announced that it had officially reached an exclusive deal with ESPN to become the network’s official daily fantasy sports offering.
That agreement will deal a significant blow to competing sites, who will no longer be able to advertise on the popular ESPN network. ESPN commands a huge following amongst the DFS target demographic, and boasts that 12 million fans currently play the company’s fantasy games.
“We are thrilled to be working closely with ESPN,” said Robins in a press release. “Together we will provide fans with the most robust, diverse and comprehensive fantasy sports experience.”