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Lingering NFL lockout hurting fantasy football companies

The NFL lockout has led Bruce Taylor to take some painful steps...

LAS VEGAS --The NFL lockout has led Bruce Taylor to take some painful steps: He scrapped publication of a fantasy football magazine that sold 161,000 copies last year, laid off an employee and took out a home equity loan.

Although NFL players and owners are still trying to figure out how to divide $9.3 billion in revenue and save the regular season, it's already too late for some people who make their living from the widely popular fantasy football industry.

Usually by now, thousands of the estimated 24 million people who play fantasy football each year already have begun preparing for their leagues of made-up teams, with fortunes resting on real-life individual performances of their favorite NFL stars.

But as NFL franchises and players skip offseason workouts and free agents go unsigned amid the labor unrest, companies that depend on fans poring over statistics and incremental personnel moves to form their fantasy teams have coped with the reality of lost revenue.

The fantasy football industry brings in about $800 million per year. While everyone involved hopes that most of that money still will be there if the NFL resolves its labor dispute, some -- including magazines that help fantasy players select their teams -- already are declaring 2011 a lost year.

"We'll be lucky if we make one-third of what we make in a normal year," said Taylor, the 46-year-old co-owner of Seattle-based Fantasy Index Magazine, Inc., which isn't publishing its Fantasy Football Index magazine for the first time in 25 years.

"It's tough because we've had to lay somebody off -- I've got another employee that I should lay off, but I don't have the heart. We're a small company," Taylor said. "I try and be philosophical about it because when you hitch your wagon to somebody else's horse, you're going to take your lumps."

"It's a lot of money -- they should fight over it -- but I wish they'd fight over it faster," he said.

About 32 million people in the United States and Canada play fantasy sports each year, a number that has grown 60 percent in the last four years, according to an Ipsos Public Affairs poll commissioned by the Fantasy Sports Trade Association, the industry's largest trade group.

In fantasy sports, participants assemble teams made up of real players and gauge success on how well those players perform in actual games, sometimes putting money on the line against their opponents. Football is by far the most popular fantasy sport, though players participate in leagues year-round for many sports.

The pastime's popularity has become far more visible recently, with high profile players such as Jacksonville Jaguars running back Maurice Jones-Drew bragging about drafting themselves, a cable sitcom called "The League" that follows friends playing together and an entire pregame show dedicated to fantasy roster decisions.

Paul Charchian, the trade group's president, said companies aren't as jittery now as they will be in August without a resolution (although the NFL and its players are working this week to come to an agreement). Even now, Charchian says, they're already starting to see lost business.

"It's still June, but normally right now, revenue is already starting for the football season," he said. "Once hockey and basketball end, a lot of people start turning their attention to football."

Charchian said his company, LeagueSafe, which lets fantasy owners pay league fees online, has seen less than half the revenue so far this year than it had collected at the same point last year.

Taylor said his company is down to the equivalent of four full-time employees from six last year, with one layoff and another unfilled vacancy.

To keep Fantasy Index operating, Taylor and his business partner took out home equity loans a few weeks ago, he said.

"If we crash the ship into the rocks, we can at least have lines of credit to get it afloat again," Taylor said.

Charchian said the industry has about 150 companies, including 15 publishers printing 25 magazines. Most aren't printing this year, including those run by larger companies, he said.

One possible result of the lockout is that the NFL could play a shortened season. That would throw off fantasy leagues, which usually schedule playoffs that coincide with the final games of the NFL's regular season.

Chris Fargis, a 31-year-old options trader from New York who plays in about four fantasy leagues each year, said he's not worried about the NFL lockout in terms of picking up fantasy winnings, but he'd hate to miss out on the games that bring him together with friends.

"Football season, and a big part of that being fantasy football, is a really fun thing that we all enjoy," Fargis said. "The social element of it is so big for me."

Taylor said Fantasy Index plans to release versions of its information through the company's website, and he believes most armchair players will come back to the magazine next year.

"I don't care who wins or who loses (the lockout)," he said. "As long as they get it resolved by next year -- and hopefully by this year. Everybody wants football."
Copyright 2011 by The Associated Press*

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