Paddy Power acquires sports company Draft2017-05-11 13:00:00
Paddy Power recently announced their acquisition of Draft, a fantasy sports company. This cost Paddy Power a cool €17 million to finalise the deal. It is a significant acquisition for the powerhouse bookmaker as it is the company’s first venture into the fantasy sports market in America.
Depending on how the business performs, Paddy Power plans to pump in a further €26 million over the next four years. The company forecasts an earnings loss of around €18 million before interest, depreciations, and taxes come into play.
A bold step into the American market
“Draft has a differentiated product and we believe the business, with the support of our marketing and technology expertise, can take share in the fast-growing daily fantasy sports market,” said Breon Corcoran, chief executive of Paddy Power Betfair.
In a note to investors, analysts at Davy said: “We see this acquisition as a relatively modest bet on the future of the daily fantasy sports market in the US. It provides the group with optionality around the future of this tangential product space in the US and elsewhere and could add to the diversification of the group over time.” This investment may cause a dip in earnings for the company by around 3 per cent. Davy also stated that “However, the market opportunity is such that this dilution could represent a small price to pay for longer-term returns”.
A little bit about Draft
Draft is a company based in New York and through its nifty little app it offers daily fantasy sports drafts for cash prizes on a range of popular American sports including basketball, football, baseball, golf, and hockey. The main appeal of this app is that players have a 200% chance of winning when compared to other fantasy sports websites.
It is one of the simplest ways of playing daily fantasy sports as players can play for pride or profit with real money at stake. To date, Draft has over 250,000 players who have made over a staggering 1,500,000 drafts. The drafts are easy to make and take a maximum of 5 minutes to complete. Another reason many fantasy sports fans use this app is because it is the only app available that uses Snake Drafts. These are special drafts where a player can do the same type of draft that you’re used to but just for one day or week. Players can choose from a plethora of different draft sizes and entry amounts. It is worth noting that drafts on the app only last for one week for golf and football and for only one day for basketball, baseball, and hockey. The app is really easy to use and extra fun when you play it with friends and family.
The takeover of Draft will not really impact on the company as it will continue to be run by its current CEOs Jeremy Levine and Jordan Fliegel. With this acquisition, Paddy Power is planning on making some big waves in the lucrative fantasy sports market in America.
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