Fantasy sports are as ingrained in American culture as baseball and apple pie, and have spread all over the world. But most of the millions of players don't know about the people and events that created the phenomenon. In his new book, Fantasy Sports: The History of Fantasy Sports and the People Who Made It Happen, Amazon bestselling author Larry Schechter details how the game went from a spontaneous idea born many years ago to the multi-billion-dollar industry it is today.
Scheckter spent 18 months researching and interviewing dozens of key players to uncover their stories. This easy-to-read book deserves to stand alongside the greatest books in sports history. Readers will be entertained and inspired by these stories of businesses that grew from humble beginnings into multi-million dollar enterprises. Scheckter expertly captures the passion, obsession and love of the sport behind these businesses.
The book is available on Amazon and Barnes & Noble (paperback and e-book) The following excerpt is from Chapter 10, on the early commissioner service.
Commissioner.com
Peter Pezalis, Michael Gersh, James Price, and Scott Harger were fraternity buddies who graduated from Carnegie Mellon University and later got jobs in Manhattan. One night in August 1995, they were at a local bar talking about what they would do if they had as much money as Bill Gates. They realized they needed to do more than just talk. So that night, they decided to start a business while still working their day jobs. They called their company Daedalus Worldwide Corporation.
They created an online restaurant guide, but that didn't work. They then created a Java-based billing system, but that didn't work either. They had been there for over a year. A fifth partner, Matt Fortnow, a lawyer, joined them. That year they also consulted and built websites for people who wanted to have an online presence. A fantasy baseball player contacted them to build a website to help him share his league standings with his fellow players. He said he would do the calculations himself.
Pezalis played fantasy football for a year and asked the commissioner how long it would take to do all that work. The commissioner replied that it would take about eight hours a week. So Pezalis and his team thought, “What if we did all that work for the commissioner? Owners could draw their own lineups without having to call the commissioner. We could calculate stats and run standings. And we could do all of this online.”
The five partners planned this all in one night, November 25th, 1996. After a year of failures, they were pretty sure this would work. It would be a valuable product to offer fantasy players. At the time, there were already fantasy stats services out there that were costing about $300 per season. The partners decided to charge $300 per season, but to make it a much better service than current services and to be the first online service.
They thought they had months to prepare for baseball season, but two days later Fantasy Sports The .NET magazine is the largest fantasy magazine by circulation. I just had an idea and I hadn't written a single line of code, but they were so confident that they accepted it. Not only that, but the ad had to be submitted within 24 hours. I had to create the company name, artwork, and copy. They designed an ad that stated they would update the stats daily, they accepted American Express, Visa, and MasterCard, and promised other things that we hadn't set up yet.
They each put in $2,000 for a total budget of $10,000. The ad cost $5,400. Then they ran an ad on Yahoo, the leading search engine at the time. For $1,500, their ad would appear whenever someone typed in “fantasy baseball.” They got it. But it started on January 1, so they only had a month to build it all.
They launched Commissioner.COM the moment the ball dropped in Times Square to usher in 1997. To accomplish this in just one month, Pezalis slept just one hour a day while working his day job at Banker's Trust. “That might sound like an exaggeration, but it's not. I was working about 23 hours a day, all day, every day. After we launched, I only got three hours of sleep a day because I had to prepare for baseball season,” Pezalis said.
In the first week the Yahoo ad ran, the website got just two visitors. But one day in late February, five leagues were sold and Pezalis knew he had a shot. Soon after, he was walking to his desk at Bankers Trust and collapsed from exhaustion. “I had a hard time getting up and walking back to my desk and I knew I couldn't do this anymore,” he said.
Working long hours, Gersh suggested Pezalis go to the office bathroom and take a nap. Pezalis tried it. He sat in the stall, his head resting on the toilet paper holder. After a 20-minute nap, he felt great. He went to the sink to wash his hands and saw the words “When the roll is empty, slide the cover to the right” inscribed on his forehead in the mirror. Realizing he couldn't keep doing this, and emboldened by having made five sales in one day, Pezalis gave his boss two weeks notice to quit.
Many people tried to convince him. His mother couldn't believe his “reckless decision” to leave a high-paying job for a startup with no money or investors. And was It was too risky. Pezalis couldn't afford the rent if he quit his job. The partners made a deal: James Price would keep his job and pay the rent for the office; Gersh and Pezalis would quit their jobs, give up their apartments, and move into the office; and Price would give them each $1,000 a month for living expenses.
Pezalis was a software developer, and Gersh handled vendors, marketing, and other business aspects. The office was in a building that was probably abandoned. There was no heat or hot water. Every day, they each took a 30-second cold shower. They slept next to their computers, the only source of heat, but were sometimes woken by the sound of rats scurrying across their faces. They ate 99-cent Whoppers to earn their $1,000-a-month salaries.
But the efforts paid off. The first baseball season, they had 200 paying customers at $300 each. Then they got 100 more football subscribers. The next year, the baseball leagues grew to 800 leagues. Whatever their customers asked for, they built it. This set them apart from competitors like ESPN and SportsLine, who only had one rule to play by. They were able to move into new offices that were smaller but in better condition.
Pezaris quit his day job to get more sleep, but it didn't work out: “For the first three years at Commissioner.COM, I got only three hours of sleep a night and no weekends off,” he says. He had no social life and only one day off at Christmas.
In the second year, Harger left the company, but was joined by David Hirsch, a friend from Carnegie Mellon University. In the second year, they realized that big companies like ESPN and SportsLine were dominating the industry because they were able to get tons of advertising, despite using inferior software. They decided to partner with a big company. They reached out to all the major networks and sports sites. The only one that was interested was CBS SportsLine.
Rick Wolf, SportsLine's GM of fantasy sports at the time, explained, “One day, Gersh sent me a letter telling me how terrible our commissioner was and how much we needed his commissioner. We read it and realized he was right.”
Commissioner.COM allows users to create a new league with its own website, chat room and news ticker in just minutes. The program automatically updates each team's statistics, emails them to each owner and posts them on the league's own website. Leagues can be customized to any league rule set and can also incorporate unique features such as a scrolling news ticker. Leagues can also run the entire draft live online.
Wolf came into their offices for a meeting. SportsLine.com was relaunching its website with a new look and feel. Wolf gave them a sneak peek at what it would look like. As Wolf and Gersh walked into the conference room to talk, Pezalis redesigned Commissioner.COM to give it the new SportsLine look. When Wolf came back, Pezalis showed it to him, and Wolf asked, “How did you get to SportsLine?” Pezalis said, “No, this is Commissioner.COM. Once we get a deal, this is what it's going to look like. This is how it's going to be.” Wolf was impressed.
They formed a partnership, and starting with the 1998 fantasy football season, CBS SportsLine Commissioner.COM was born. They used the Commissioner.COM software on the SportsLine infrastructure. The deal reduced the price per league from $300 to $100, and there was also revenue sharing on subscriptions and advertising revenue (Commissioner.COM never ran ads on their website). The added exposure from SportsLine drew about 1,000 league viewers in their second year of football.
The next year they did away with the $100 commission, made it free, and growth exploded. They owned 10,000 football leagues, which became CBSSportsline.com's primary business. One month they had a check written for $500,000, at which point SportsLine wanted to buy them. On December 7, 1999, CBSSportsline.com acquired Commissioner.COM for $46 million. It was a life-changing moment. “When I checked my bank balance that day, I half expected to have $12 or something in my checking account, but there were a bunch of zeros. It was just surreal,” Pezalis said.
(Anda Chew/Bay Area News Group/Tribune News Service via Getty Images)
