Fantasy sports site DraftKings, which had discussed raising money from Disney, is going to get its funding somewhere else instead.
DraftKings Won’t Raise $250 Million From Disney, but Will Still Get ESPN Ad Deal
The deal would have valued the fantasy sports site at $900 million. Instead, it’s going to raise money elsewhere.
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But the two companies will have a relationship anyway: DraftKings will have exclusive rights to advertise fantasy sports on Disney’s ESPN properties starting in 2016.
Earlier reports said Disney and ESPN were planning on investing $250 million in DraftKings in a deal that would value the company at $900 million. The proposed pact also called for DraftKings to spend a reported $500 million on advertising with the sports giant over multiple years.
DraftKings CEO Jason Robins says his ad deal with ESPN calls for a “deep integration” with the media company, which he says will give it an advantage against fantasy rival FanDuel. “ESPN is the strongest brand in sports,” he said. “This is something that will definitely catapult us into the leader position.”
Sources familiar with DraftKing’s plans say it is in advanced talks to raise a large round from other strategic investors.
We’ve asked ESPN for comment. Journalist James Andrew Miller, a longtime ESPN watcher, suggested via Twitter on Tuesday that the Disney investment deal was dead.
DraftKings, which allows players to bet on fantasy sports for a single game instead of a whole season, and collect real money if they win, is a booming business. In Q4 of last year it generated $17 million in revenue, up from $2.5 million a year earlier. But it also spends heavily on marketing, and in January Robins said his company was not profitable.
Last August, DraftKings raised $41 million in a round led by the Raine Group; it has raised a total of $75 million since 2012.
DraftKings spends some of that money competing fiercely with FanDuel; the two companies dominate the “daily fantasy” market and fight over exclusive deals to advertise with sports leagues, teams and on media properties.
FanDuel has raised a reported $86 million from backers including Comcast and its NBC sports group.
This article originally appeared on Recode.net.
