Reach, relationships, money, tech, team, and experience — many of the big boxes are already checked for SportsHub Technologies. The new holding company formed and operated by legendary local entrepreneur Rob Phythian includes the resurrection of Fanball, an earlier career win with partner Paul Charchian.
“This is our coming out party,” he begins by saying.
SportsHub was conceived in the fall of 2015 after Phythian had departed from SportsData, his previous venture which sold to Swiss firm SportRadar in 2013, transferring his ownership while also keeping a strong stateside presence in Minneapolis.
But even before SportsData’s start and exit, Phythian was part of an earlier success story called Fanball, which operated one of the world’s first pure play online fantasy sports websites at the time — a virtual intersection of skill, sports and money.
Together with partner and famed fantasy promoter Paul Charchian, Fanball was first formed in 2000 and subsequently sold in 2005 to FUN Technologies, where Phythian remained as President until 2007.
It was after Phythian left FUN Technologies that Fanball would essentially disappear through a series of further asset mergers and divestitures — winding up in the portfolio of a St. Louis, MO entity called RG Ventures, LLC. Fast forward 10+ years and it just so happens to be that Fanball’s IP/trademark would be back on the market and part of a deal that SportsHub made with RG Ventures aka “CDM Sports” in early 2016.
Fanball is just one piece of the new puzzle SportsHub Technologies is assembling and their first big play; if ‘to buy it or build it’ is the perennial dilemma, then SportsHub’s plan wasn’t to start again from scratch, but to rollup multiple unique and siloed sportstech companies already operating in the market from across the US.
With both personal and private backing, there’s four acquisitions including Fanball already under the belt, with two more in mind for this year, he says. In addition to Fanball, one of those four pickups just so happened to be LeagueSafe, a payment and escrow specific company launched by Charchian in 2007.
“Paul and I are back together and we’re riding another daily fantasy sports (DFS) wave right now, it’s a second for us together in what’s become a $5 billion dollar industry fueled by 57 million players,” he says of their space and present industry scope.
“DraftKings and FanDuel have a combined ~$3 billion, and we’re after a billion ourselves.”
A key part of the strategy behind ‘Fanball 2.0’ is actually to capitalize on some unintended consequences of a failed merger last month between those two giants. Freshly scrapped, the deal scrutiny put on the duopoly has resulted in some across the board increases of two big entrepreneurial pressures: taxation and regulation.
“There’s still a lot of room in a big market that has so much static right now, regulatory pressures and other aspects of compliance have become a major side effect and huge hit to so many of the smaller guys. It’s very challenging across the board and new capital investment is actually pulling back,” he explains.
“This will continue to open the window for more acquisitions, I believe.”
Second, is what many daily fantasy sports players have come to realize: the sharks have taken over. According to a McKinsey & Co. study, the top one percent of DFS players account for 91 percent of total net profit in the industry. The fantasy game is rigged to the degree that too many are losing and too few are winning, as its become an unsustainable, yet reversible, trend.
“We’re making it level again with Fanball and we’ll do that by providing each player with their own number, which reflects their skill level ‘handicap’ and matches them with players of similar skill, helping to encourage fair and transparent match-ups.”
Phythian says that a player’s Fanball number will ebb and flow over time, with the goal of creating as close to 50/50 win/loss ratio as possible, making Fanball not only funner, but more sustainable.
With Charchian back on board, SportsHub Technologies already employs ~25 in Minneapolis and just the doors on a fresh new office inside the T3 Building in downtown Minneapolis. Via acquisition, they also now maintain additional offices in Connecticut, Missouri, Wisconsin, and Washington D.C. where a network of separate “healthy cashflowing businesses” are based. Taking a step back and viewing SportsHub as more than Fanball for the moment, rather the startup conglomerate that it is, there are early signs of this one quickly becoming Minnesota’s next big sportstech company.
“Opportunity number one was and is to consolidate in the industry…we’re going to build responsibly, but if we hit the gas pedal, just might need a hundred more people before we know it.”
For a coming out party, you can’t help but leave thinking there’s still so much more left to the story…