The $70 Billion Fantasy Football Market
I’m a traditionalist when it comes to my football tastes. I still watch NFL games because of an interest in the teams and the outcome of the game. For millions of others, their NFL interest centers in part or in whole on the statistical production of individual players that make up their fantasy teams. Any visitor to websites like Yahoo Sports or ESPN will find an extensive number of articles focusing on fantasy activities, especially at this time of year with NFL fantasy drafts around the corner.
How big is the market? In terms of actual expenditures, the Fantasy Sports Trade Association – yes, there is a trade association – estimates that 32 million Americans spend $467 per person or about $15 billion in total playing. Roughly, 11 billion flows toward football. These figures don’t count ad revenue for fantasy hosting sites. The NFL’s annual revenue falls just under $10 billion currently. So the “derivative” market has grown larger than the foundational market.
My primary interest is on the value of time spent on fantasy football activities, which swamp the direct revenues and expenditures. The FSTA estimates that the average fantasy gamer spends 3 hours per week managing a team(s), translating to 1.2 billion hours for 23 million players over a 17 week season. Of course, all of these numbers are a bit sketchy because of things like drafts addhours along with off-season reading and discussion. Anyway, combining these estimates with a $24 per hour average wage in the U.S. yields a time value of $29 billion per year. Using average income figures from the FSTA for players deconstructed to an hourly wage of $46 increases the estimate up to $55 billion. Added to actual expenditures and ad revenues, the industry amounts to at anywhere from $40 something-billion to over $70 billion per year in tangible and intangible activity.
Sports is unique in culture. There are no “Cereal Fantasy Leagues” with drafts of Wheaties or Grape Nuts. Even in other segments of entertainment, there are no “Movie Fantasy Leagues.” Beyond the fantasy leagues, the amount of time that fantasy leaguers and traditional fans spend talking, writing, and thinking about their times is not trivial.
The size of this market also shows how much the NFL, and other sports leagues, lost in potential royalty revenue when the Supreme Court refused to consider the 8th Circuit’s decision to deny Major League Baseball copyright status for the use of player names and statistics in fantasy leagues. While from a legal standpoint, the decision makes sense in that the data used is publicly available. Nonetheless, from an economic standpoint, the revenues and activities derive from the sporting activities, and even a 10% royalty would have generated a sizable new revenue stream for leagues. In the terminology of economics, this amounts to a “positive externality” – a benefit supplied by sports leagues for which they do not receive (full) monetary compensation. The NFL does run fantasy leagues on its own site and any licensed use of NFL products generates revenue. In addition, there is some evidence that fantasy activities increase viewership on the part of players, which, indirectly, benefits the league.