Q&A: Kelly Perdew
How a former military intelligence officer and a winner of Donald Trump's The Apprentice became a key player in the $2 billion fantasy sports category
By Barry Janoff, Executive Editor, NYSportsJournalism.com
(Posted March 26, 2009)
In case you missed the memo, fantasy sports, which used to be the hideaway of nerdy guys with too much time on their hands (aka no dates), is a burgeoning $2 billion dollar industry. According to the Fantasy Sports Assn., some 30 million people 12 and older in the U.S. and Canada participated in fantasy sports in 2007, up from 19.9 million in 2006. RotoHog, based in Los Angeles, is a leading independent software developer and operator that connects brands, sports leagues, media companies, Web portals and personalities with fans and consumers through fantasy sports. Among its clients: NBA.com, Turner Digital, Fox Sports en Espanol, LG Electronics, GoDaddy.com, Pro Football Weekly and the Association of Volleyball Professionals (AVP). Its investors: Allen & Co, DFJ DragonFund, Mission Ventures and Sports Capital Partners. Kelly Perdew, who has been RotoHog's CEO since 2006, joined the company with an intriguing resume, including serving in the U.S. Army as a military intelligence officer and winning the second season of NBC's The Apprentice, after which he spent 2005 as an executive vice president working for Donald Trump. Perdew, who earned a Juris Doctor degree from the UCLA School of Law and authored the book, Take Command: 10 Leadership Principles I Learned in the Military and Put to Work for Donald Trump, shared his intelligence about generating revenue through fantasy sports with NYSportsJournalism.com.
NYSportsJournalism: Where does the name RotoHog come from? Something from your military intelligence background or Donald Trump?
Kelly Perdew: Roto is from Rotisserre League Baseball, which preceded fantasy sports, and hog just means taking over the category. So there's no hidden meanings there.
NYSJ: The numbers I've seen are that football fantasy has the most participants and baseball is second.
Perdew: That is true. This is all about numbers, so with [NFL] teams playing one game a week, so you can get the numbers, update them and have time to figure out what players have done. In baseball, there can be five or six games a week [per team] so there are a lot more stats coming out at a faster rate. That does not deter people from playing, but it makes football a bit easier to digest.
NYSJ: As far as total participants, the most recent numbers from the Fantasy Sports Assn. are that 29.9 million people 12 and older in the U.S. and Canada participated in fantasy sports in 2007, up from 19.9 million in 2006. So this is just more than football and baseball.
Perdew: I believe the numbers are that high if you incorporate a lot of things that are related to fantasy sports. But if you are looking at true fantasy sports participants in the U.S. and Canada, the number is between 12-15 million. Which is a major market. And, yes, it goes beyond football and baseball. We are launching a fantasy game with the Association of Volleyball Professionals (AVP), we have a deal with NBA.com, and we work with GoDaddy, Fathead and LG Electronics to create fantasy games. Every sport has a fantasy community, so it has not been limited to the major sports leagues for some time.
NYSJ: A lot of the athletes themselves are also into it, which seems to have helped drive interest from consumers and marketers.
Perdew: Absolutely. When I joined RotoHog in 2006, the big emphasis was B-to-C, bringing in star athletes so that people could play against them. But one of my main goals since I've been here is to clarify the vision of the company. We still have RotoHog.com, where people can come to play. But we really are a B-to-B and our real emphasis is to provide a fantasy gaming platform for our media partners. And we have three channels to do that. There are the leagues, such as the NBA and AVP. There are media portals, such as Fox Sports en Espanol, where we can provide innovative games that, in this case, target the Hispanic community. And there are large media companies that have a significant sports content but that have not built their own sports fantasy games, such as GateHouse Media. One of their publications is Pro Football Weekly, and we power their fantasy football and baseball games. We are really focused on having a turnkey platform so that media companies that want to engage their users and generate revenue look to us to provide that.
"We are really focused on having a turnkey platform so that media companies that want to engage their users and generate revenue look to us to provide that."
NYSJ: Considering the economy, fantasy sports still seems to be a growth category.
Perdew: Our investors want to know how the economy is going to impact the business. If you look at teenagers on up to people in their 50s and older, do they have enough money to go to a [pro football] game, where it can be more than $400 if you count tickets, parking, food and everything else. Or can they get a significant amount of entertainment and user engagement on a cost-efficient level while still tapping into that passion you have for your favorite athlete, team or sport. And that's fantasy sports.
NYSJ: The Fox Sports En Español 2009 “Liga Fantástica de Béisbol” powered by RotoHog just launched. How well represented is the Hispanic community among fantasy players?
Perdew: It's very strong. All of the leagues have strong support from Hispanic fans and that translates into strong numbers for fantasy sports. So it includes soccer but is far from limited to soccer, as our new baseball game with Fox Sports En Español shows. Internationally there has not been a lot of attention given to fantasy sports. Baseball and basketball are significant in terms of U.S. sports translating well internationally. Soccer and rugby lend themselves to very engaging and entertaining fantasy games. But there hasn't been a real player that has provided a sophisticated game like our Stock Exchange. It has been a lot more casual. So we can provide the media companies who want to reach those passionate fans a platform they can activate around.
NYSJ: Is Donald Trump into fantasy sports?
Perdew: He is friends with George Steinbrenner and is a big Yankees fan. I'm not sure if he's into fantasy sports. He definitely is realty show-driven.