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The rise and rise of fantasy sports

By James Montague, CNN
  • Fantasy sports experiencing phenomenal growth
  • The industry is worth up to $2 billion in the U.S.
  • Soccer seen as the next big growth area for U.S. companies
  • The English Premier League's official game has over two million players

London, England (CNN) -- When USA Today became the first newspaper to publish detailed baseball stats in the early 1980s, it seemed little more than a fad with appeal to only the most geeky of readers.

However, three decades later, the stats-based fantasy sports industry that has subsequently evolved from this pioneering paper is now a booming, multi-billion dollar business.

The game is simple, pick a team of existing players from any sport. Then compare your team's performance -- based on statistical analysis of real-life games -- with those of your opponent, who, given the same option may have chosen alternative players.

The concept, which rewards the most knowledgeable and passionate of participants, has proved a powerful draw to fans keen to participate in the greater drama of their sport in some small way.

It is estimated that 26 million Americans play some form of fantasy sports league, a fact that has created an industry worth close to $1 billion a year according to the U.S.-based Fantasy Sports Trade Association.

"The primary reason why fantasy sports should be taken seriously is its economic footprint," explains Professor Kevin G. Quinn of St. Norbert College, Wisconsin , author of "Sports and their Fans" who estimates that the market might be worth as much as $2 billion.

"The average amount that each of these players spends on their hobby might be $500 per year or so, moreover, these figures appear to be growing -- even in a down economy -- at near-double-digit annual rates."

If those figures continue at that pace, fantasy will soon overtake reality. Professor Quinn points out that, by comparison, the National Hockey League's (NHL) total attendance is 25 million per year, bringing in close to $3 billion in the process.

Gridiron and baseball, with their easily quantifiable constituent parts, have long lent themselves to statistical analysis. But for many within the industry the future of fantasy sports can be found outside the U.S. and with one sport in particular -- soccer.

"We branded this company World Fantasy Games for a reason," Jeff Thomas, the CEO of one of the biggest American fantasy sports companies told Entrepreneur magazine.

"Football -- by which I mean 'soccer,' as we call it here -- blows away the NFL globally, and as a fantasy sport it has the potential to be even bigger than fantasy football is in the U.S."

In Europe we talk about the art of football, the poetry of football. There's been a resistance to breaking it down and analyzing it in the past
--Professor Stefan Szymanski

Fantasy sports have come relatively late to soccer, largely thanks to the game being harder to analyze statistically, not to mention a philosophy that sits ill at ease with the necessities of clear-eyed empirical analysis.

"In Europe we talk about the art of football [soccer], the poetry of football. There's been a resistance to breaking it down and analyzing it in the past," said Professor Stefan Szymanski, professor of economics at City University London's Cass Business School and co-author of "Why England Lose: and Other Curious Phenomena Explained".

But since soccer started taking fantasy sports seriously, and thanks to the proliferation of broadband, interest in the game has exploded.

"It has grown phenomenally, year on year, since we started it in 2002," Robert Klein, executive director of ISM Games, who designed the English Premier League's official game, told CNN.

"It is not quite 40 percent growth a year, but the uptake has been phenomenal. We are up to 2 million fantasy managers for the game, playing in 200 different territories around the globe."

Fantasy sports in Europe look very different to the U.S., with the business model primarily being free-to-play, and according to an industry expert, the popularity of the game has grown hand-in-hand with the more in-depth analysis that is now offered by sport broadcasters.

"Does the rise of fantasy football show that the fans are becoming more sophisticated? Yes, I think so," said Szymanski. "So does increased consumption. We watch much more live football now. Again, the U.S. leads here. When I was growing up the only live football was the FA Cup final.

"I just wasn't watching it enough to have a tactical awareness of it. We can see more, the pictures are more sophisticated. You start to ask questions: Why did he do that? Why do Italian teams do that?"

That trend, for more knowledge and more fantasy sport, is unlikely to slow down any time soon.

"There's room for product development in terms of more sophisticated stats," agreed ISM's Robert Klein. "We are moving into social networking and bringing them into the game, creating web programs around fantasy football, and on mobile too. The game that is currently available, that is just the tip of the iceberg."