• About Us / Contact
  • Responsible Gambling
This site contains commercial content
SportsHandle
  • US Sports Betting
    • Arizona
    • Arkansas
    • Colorado
    • Connecticut
    • Delaware
    • Illinois
    • Indiana
    • Iowa
    • Kansas
    • Louisiana
    • Maine
    • Maryland
    • Massachusetts
    • Michigan
    • Mississippi
    • New Jersey
    • New Mexico
    • New York
    • Ohio
    • Oregon
    • Pennsylvania
    • Tennessee
    • Virginia
    • West Virginia
    • Wyoming
  • Pending States
    • California
    • Florida
    • Georgia
    • Missouri
    • North Carolina
  • Canada
    • Ontario
    • British Columbia
    • Alberta
  • Sportsbook Apps
    • FanDuel
    • BetMGM
    • Caesars
    • PointsBet
    • BetRivers
  • Tools
    • Sportsbook Bonuses Explained
    • Sports Betting Revenue Tracker
    • Sports Betting Podcasts
    • Partnership Tracker
    • Expected Value
    • Sports Scores And Odds Apps
    • Sports Betting Twitter
  • News
No Result
View All Result
SportsHandle
  • US Sports Betting
    • Arizona
    • Arkansas
    • Colorado
    • Connecticut
    • Delaware
    • Illinois
    • Indiana
    • Iowa
    • Kansas
    • Louisiana
    • Maine
    • Maryland
    • Massachusetts
    • Michigan
    • Mississippi
    • New Jersey
    • New Mexico
    • New York
    • Ohio
    • Oregon
    • Pennsylvania
    • Tennessee
    • Virginia
    • West Virginia
    • Wyoming
  • Pending States
    • California
    • Florida
    • Georgia
    • Missouri
    • North Carolina
  • Canada
    • Ontario
    • British Columbia
    • Alberta
  • Sportsbook Apps
    • FanDuel
    • BetMGM
    • Caesars
    • PointsBet
    • BetRivers
  • Tools
    • Sportsbook Bonuses Explained
    • Sports Betting Revenue Tracker
    • Sports Betting Podcasts
    • Partnership Tracker
    • Expected Value
    • Sports Scores And Odds Apps
    • Sports Betting Twitter
  • News
No Result
View All Result
SportsHandle
No Result
View All Result

DraftKings Pleased With Improved Pricing On Media Deals, Remains Mum On ESPN Talks

CEO Robins doesn't address possible ESPN discussions; shares tumble 26% to near 52-week lows

Matt Rybaltowski by Matt Rybaltowski
November 4, 2022
in Industry
draftkings logo mls

Matthew Emmons/USA TODAY

Share on FacebookShare on Twitter

As a contingent of Wall Street equities analysts convened for DraftKings‘ 2022 third-quarter earnings call on Friday, one topic remained the elephant in the room: reports on the company’s recent negotiations with ESPN.

More than 30 minutes elapsed on the call before one analyst inquired whether the company’s priorities for assessing major media partnerships have changed dramatically in recent years. Although DraftKings CEO Jason Robins did not address speculation about a possible ESPN partnership, he did indicate that the company typically conducts a comprehensive cost-benefits analysis on such deals before weighing whether to move forward.

Without naming ESPN specifically, Robins discussed certain factors that DraftKings evaluates such as the gross profit payback that can be attained through new customers if a media deal is consummated. A key consideration for sports betting operators in partnering with major media companies surrounds customer acquisition metrics, Robins noted. Consequently, DraftKings evaluates whether a deal will result in gross profit paybacks among new customers in a period of three years or less.

Asked on how #DraftKings views potential media deals, CEO Jason Robins noted that the environment for media partnerships has improved, w those deals priced more rationally than similar ones at this time last year. Robins didn't address any talks with ESPN. #GamblingTwitter $DKNG pic.twitter.com/rhI7u4F8TC

— Matt Rybaltowski (@MattRybaltowski) November 4, 2022

More broadly, Robins believes in the current macroeconomic environment that the cost it should take to complete those type of media deals has come down considerably. When ESPN initially explored a deal to license its sports betting brand in August 2021, the company reportedly sought a minimum price tag of $3 billion. Based on current market dynamics, a deal now would fetch considerably less, several finance experts have told Sports Handle in recent weeks.

Before striking any deal, DraftKings is always very careful in weighing the financial implications of a potential partnership, Robins added, while evaluating historical data from testing on customer acquisition channels.

“The environment has improved dramatically year-over-year. Some of the deals we had to pass on — in today’s environment — would be more rationally priced,” Robins said on the call.

Rumors swirl around ESPN and sports betting

DraftKings’ shares jumped 8% last month to $17.45 on reports that the company was near a deal to land exclusive rights to ESPN’s sports betting brand. While ESPN later confirmed that the company has been in talks with multiple sports betting operators, the network did not mention DraftKings by name.

One analyst, Oppenheimer’s Jed Kelly, predicted last month that the two sides would reach a deal around the start of the NBA regular season, a date that has long since passed. After eclipsing $17 a share on Oct. 7, DraftKings cratered, dropping more than 25% in a span of two weeks. At the time, questions arose on the structure of a potential deal with ESPN.

One scenario previously articulated last month would require DraftKings to pay ESPN an upfront fee of more than $1 billion along with a revenue-sharing fee, according to Susquehanna Financial Group analyst Joe Stauff. In that scenario, DraftKings would need to raise capital to complete the deal. Under another more bullish scenario for DraftKings, no upfront fee would be required and it would not need to raise any capital. DraftKings disclosed Friday that the company has approximately $1.4 billion of cash on its balance sheet.

Disney, the parent company of ESPN, indicated in September that it prefers to partner with a third-party sports betting company rather than establish a sportsbook on its own. Investors may learn more about ESPN’s long-term plans for monetizing its sports betting brand on Disney’s quarterly earnings call next week.

How Disney CEO Bob Chapek Is β€œAggressively” Pursuing Sports Betting
https://t.co/JluN8GIWc6

— Disney Food Blog (@DisneyFoodBlog) October 27, 2022

A DraftKings spokesman did not comment Friday when asked by Sports Handle if the company has re-engaged in negotiations with ESPN since the October reports surfaced.

“We have a great, longstanding relationship with Disney. However, we speak to a variety of companies on a regular basis and don’t comment on the specifics of those conversations,” the spokesman responded by email.

Profitability forecasts by Q4 of 2023

For the three-month period ended Sept. 30, DraftKings had revenue of $501.9 million, up 136% from revenue of $213 million over the same period a year ago. DraftKings also reported adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of negative $264.2 million, compared with adjusted EBITDA of negative $313.6 million from the year-ago quarter. The company reported a net loss of $1.00 per share, compared with a net loss of $1.35 per share in the same period a year ago.

DraftKings was projected to post a quarterly net loss of $1.07 per share, along with revenue of $436.2 million, according to Zacks Consensus Estimate. DraftKings introduced full-year 2023 revenue guidance on Friday in the range of $2.8 billion to $3.0 billion, amounting to 34% year-over-year growth. The company also projects full-year adjusted EBITDA in the range of negative $475 million to $575 million in 2023.

DraftKings projects that adjusted EBITDA will roughly break even on a full-year basis in 2024 under most legalization and state launch scenarios.

In terms of player metrics, DraftKings increased monthly unique payers (MUPs) by 22% to 1.6 million, the company said. During the quarter, another metric known as β€œARPMUPs,” or average revenue per MUP, rose 114% to $100, DraftKings Chief Financial Officer Jason Park noted.

“This balance of player growth and revenue per player growth is very healthy, as promotional intensity nationally declines as states mature,” he said.

Live in 37% of possible US markets compared to 29% Q3 LY. 27% more population yet active users are only up 1.6 MM vs 1.3 MM LY or 23% meaning negative organic user growth.
Follows Grosjean theory, new casinos boom at first until they bust people out. https://t.co/3EDRAa8gMz

— Quantum (@Quantum_Sport) November 4, 2022

Over the quarter, DraftKings realized about $70 million from favorable sports outcomes, specifically from upsets early in the NFL season. Typically, DraftKings sees increased activity for marquee NFL games held in prime time. For a sampling of 11 prime-time games in the third quarter, DraftKings had a hold rate of greater than 10%, according to Park.

DraftKings’ shares plunged on Friday 26% to a session low of $11.55. DraftKings has plummeted more than 60% from levels at last year’s third-quarter earnings release when the company traded around $44 a share.

ShareTweetShare
Matt Rybaltowski

Matt Rybaltowski

Matt is a veteran writer with a specific focus on the emerging sports gambling market. During Matt's two decade career in journalism, he has written for the New York Times, Forbes, The Guardian, Reuters and CBSSports.com among others. In his spare time, Matt is an avid reader, a weekend tennis player and a frequent embarrassment to the sport of running. Contact Matt at [email protected]

Related Posts

Arizona January 2023 revenue report
Analysis

Arizona Puts Bow On Record-Setting January For U.S. Sports Wagering

March 27, 2023
whats on tap
Industry

What’s On Tap: Elite Eight, WBC Finals, And Texas Sports Betting Hearing

March 20, 2023
Load More

Top Stories

taylor mathis

Taylor Mathis Got Sacrificed At The Altar Of Responsible Gambling

March 20, 2023
fanduel baseball wall

Premade Same Game Parlays Are Sucker Bets

March 13, 2023
maginfier-over-small-print

Read The Fine Print: A Proposed Federal Rule Could Change Everything For Indian Gaming

March 6, 2023
roman reigns wwe

Colorado Denies Report Stating That It’s Considering WWE Wagering

March 8, 2023

State Sports Betting Guides

Ohio (U.S. state) flag waving against clear blue sky, close up, isolated with clipping path mask alpha channel transparency, perfect for film, news, composition

Ohio Sports Betting – Where To Play, Bonus Offers And Promo Codes

by Brian Pempus
March 27, 2023

Downtown Detroit at twilight (Shutterstock)

Michigan Sports Betting – Where To Play, Online Sportsbooks, And FAQ

by Brett Smiley
March 27, 2023

VA captial

Virginia Sports Betting – Where To Play, Online Sportsbooks And Bonus Offers

by Brett Smiley
January 17, 2023

nj flag

New Jersey Sports Betting — Where To Play, Online Sportsbooks, And FAQ

by Brett Smiley
March 22, 2023

pa online sportsbooks

Pennsylvania Sports Betting – Where To Play, Online Sportsbooks And Bonuses

by Brett Smiley
October 6, 2022

Canada Sports Betting Guides

Canada Sports Betting – Best Sportsbook Apps & Bonus Offers

British Columbia Sports Betting – Legal Update, Available Sportsbooks, and FAQ

Ontario Sports Betting – Legal Status And Where To Play

SportsHandle

  • Analysis
  • Casino
  • Features
  • Horse Racing
  • Industry
  • Legal
  • Legislation
  • Opinion
  • Podcasts
  • Poker
  • Politics
  • Promotions
  • Regulation
  • Sports
  • Uncategorized

Better Collective

This website is owned and operated by Better Collective USA. Trademarks and copyrights referenced on this website are and shall remain the exclusive property of their respective owners and/or licensors. Please be sure to visit the operator’s website(s) to review their terms & conditions. We advise you to read these carefully as they contain important information. Copyright Β© 2023 USBets.com | Better Collective USA
21 Play Responsibly
Gamble Aware West Virginia
Gambling Problem? Call 1-800-Gambler.
GameSense

Search Sports Handle

No Result
View All Result
  • About Us / Contact
  • Responsible Gambling

No Result
View All Result
  • US Sports Betting
    • Arizona
    • Arkansas
    • Colorado
    • Connecticut
    • Delaware
    • Illinois
    • Indiana
    • Iowa
    • Kansas
    • Louisiana
    • Maine
    • Maryland
    • Massachusetts
    • Michigan
    • Mississippi
    • New Jersey
    • New Mexico
    • New York
    • Ohio
    • Oregon
    • Pennsylvania
    • Tennessee
    • Virginia
    • West Virginia
    • Wyoming
  • Pending States
    • California
    • Florida
    • Georgia
    • Missouri
    • North Carolina
  • Canada
    • Ontario
    • British Columbia
    • Alberta
  • Sportsbook Apps
    • FanDuel
    • BetMGM
    • Caesars
    • PointsBet
    • BetRivers
  • Tools
    • Sportsbook Bonuses Explained
    • Sports Betting Revenue Tracker
    • Sports Betting Podcasts
    • Partnership Tracker
    • Expected Value
    • Sports Scores And Odds Apps
    • Sports Betting Twitter
  • News

loading

Please wait while you are redirected to the right page...