Arguably the biggest potential issue facing the fantasy industry right now is something that we all hope will never actually become a real issue.

It’s the NFL labor situation, a subject about which we’ve all been pretty tired of hearing for two years or so now. The past NFL season was played with no salary cap, and when the current league year ends on March 3, there will be no operating agreement between the league and the players union.

In real terms, that means free agency can’t open. It means that teams won’t be able to sign their draft picks. It means no practices (or games) until the two sides quit publicly bitching and work things out. And although the gripes might seem trivial to many outsiders who just see a bunch of millionaires quibbling over how to split a dollar, the unrest is very real to any company that puts the wraps on one fantasy football season only to prepare for the next.

To that end, two sessions at this week’s Fantasy Sports Trade Association winter conference in Las Vegas dealt with the key questions.

First up was Blake Baratz and Andrew Brandt to help break down the key gaps that must be bridged. Baratz, the founder and president of the Institute for Athletes, is tied to the issue even more than we fantasy folks because he’s an agent for NFL players such as Green Bay TE Jermichael Finley. Brandt is a former vice president for the Packers, among other pro football jobs, and now runs the National Football Post — where he has been steadily tracking and covering the situation.

Two key points came from the Baratz-Brandt panel: Five weeks is a long time to iron out bargaining issues, and none of us ultimately knows how things will go.

The five-week timeframe refers roughly to the stretch remaining between now and the March 3 end of the league year. Brandt and Baratz agreed that, although the sides don’t appear close right now, there is a lot of time left for them to meet at the table and hammer out a new deal before the current collective bargaining agreement expires. Both said they’re optimistic that a new deal will arrive without any interruption to the 2011 season, to the point even that they agreed on a rough guess of about a 65 percent chance that a new CBA will be in place by the NFL draft at the end of April.

Of course, Baratz and Brandt also agreed on the completely arbitrary nature of attaching such a percentage. There might be plenty of time left, but the deal will only get done if the league and the players sit together at the table and get it done. The rest of us can only watch/ignore and pray for no more ridiculous initiatives such as “Let Us Play Day.”

Baratz and Brandt also ran through some of the key sticking points in negotiations, but those details are more than we need to get into here. Fantasy companies have a different set of questions, and Fantasy Sports Writers Association president Mike Beacom led a panel later on Tuesday to address them.

As I said at the top, anyone whose business relies heavily on fantasy football — and pretty much anyone who likes the NFL — hopes that this whole issue disappears before it impacts us at all. Unfortunately, we have to at least think about the possibility of the 2011 league calendar getting disrupted and what that might mean for us.

The Magazine

First up are the fantasy football magazines. Putting a publication on newsstands in June or July means generating most the content through April and May and planning everything out before then.

Digger Turnbull of XML Team related the story of how his Canada-based Fantasy Sports Services — acquired by XML Team early last year — decided that it couldn’t afford to publish its annual hockey magazine heading into the 2004-05 season that was ultimately eliminated by a lockout. Instead, they decided to produce a free PDF version.

We would all like to think that the NFL and NFLPA would never allow this fight to eat into the regular season, and, indeed, all involved have much more to lose than their hockey counterparts did. If the league still lacks a CBA at press time, though, do you go ahead with your usual magazine procedure? That’s a question each company will have to answer for itself.

Of course, even if no games are lost, a disruption to the usual schedule will greatly impact the content. Free agency can’t open without a new agreement, and Brandt pointed out on Twitter Friday that last year’s cap-free, altered rules will mean 500 free agents whenever the window opens. You know where Tom Brady and Peyton Manning will play their games next season, but how much prognostication can be done with so many guys facing potential address changes?

Online

The magazine folks will feel it the most, but the impact would no doubt make its way to the Web as well.

David Dodds co-owns Footballguys.com, which relies on Web subscriptions to drive its annual revenues. Should labor unrest linger into the summer months and delay the start of on-field action, there’s little doubt subscription sales would wait, too. Dodds said that one option in such a case, because much of his writing staff is paid on a per-article basis, would be to start paying in credits. Those credits would represent a percentage of subscription sales and thus grow as subscribers return.

From a sheer production standpoint, of course, the longer the no-CBA period, the smaller the eventual window for season-prep advice. A flurry of free-agent signings and late-arriving rookies would mean a crunch in evaluation time and even later nights at what is already the busiest time of year for many content producers.

To that end, RotoWire president Peter Schoenke added that it would actually be tougher to prepare for and deal with a shortened training camp and preseason than for no season at all. The lack of season obviously wouldn’t help with fantasy revenues, but it would at least eliminate a lot of work.

The panel agreed that the worst case would be an NFL season proceeding with replacement players, but such a scenario seems highly unlikely, so let’s ignore it for now.

The Games

So we’ve gone over content, but what about the games — particularly the pay-to-play varieties?

Jeff Thomas — CEO of World Fantasy Games, which operates football contests via RapidDraft.com and SportsBuff.com (and owns and operates this site) — said that smart business folks will have a refund policy in place ahead of time. He also said that his company likely won’t collect entry fees until it’s clear that the NFL season will happen.

Obviously, free-game sites wouldn’t have to face the refund issue, but everyone would certainly be pinched by the large traffic drop that would follow the elimination of NFL games. It would also be interesting to see how fantasy players would react to a shortened NFL season: how much of the crowd wouldn’t return when the games did. Thomas pointed to the weekly version of RapidDraft, part of a new and growing market of short-term fantasy games that would be ready to start whenever NFL action did.

Couldn’t We All Go to College?

The question was raised of whether fantasy college football could see a boom if the 2011 NFL season went bust. The consensus: No.

Fantasy college football games would probably garner more players by way of the displaced NFL-based leagues, but they wouldn’t provide an automatic substitute. The game is still a different one, from the player universe to, in many cases, different league-hosting sites and the lack of preseason games to get familiar with college players.

As Schoenke pointed out, switching from the pro fantasy game to college would still present a learning curve, which is enough to scare off many users.

Please Render All This Moot

The bottom line for all fantasy companies, whether game or content based, is that all scenarios laid out above are at least possible. We all hope that the league and its players solve all their problems and get a new agreement in place before any portion of the 2011 NFL calendar is affected, and that very well might happen. Proceeding as though that is certain, however, would be a mistake.

Company: RotoWire.com
Launch date: January 1997 (RotoNews.com); March 2001 (RotoWire.com)
Became full-time operation: 1998
No. of employees: 10 full time/85+ part time

In its two iterations, RotoWire (part of Roto Sports Inc.) has been a leader in fantasy content — from providing the basic template for the now-ubiquitous player update to saturating the annual list of Fantasy Sports Writers Association award nominees. President Peter Schoenke recently took the time to tell FSB.com about the company.

1. Were the three founding Northwestern grads classmates (and/or college friends)? If so, how much talk was there of going into business before the 1997 launch of RotoNews.com?

Herb Ilk, Jeff Erickson and I lived near each other in Chicago after graduation and were in the same fantasy baseball and football league I started in 1990 while at Northwestern. I quit my day job to join an Internet startup in the futures industry in 1996, and Herb was obsessed with starting a web business of his own. I learned Internet programming at the startup job and came up with the RotoNews idea during that time. I built it on the side with Herb’s help along with Jeff (who I roped in because he was the most knowledgeable fantasy player). Back then not everyone had a computer, so I actually started an Internet company with two guys who didn’t own a computer. They did things at the library and on the side at their day jobs.

2. What business(es) were the three of you in before that launch?

I was a reporter for Dow Jones, covering the futures markets in Chicago and occasionally getting my byline in The Wall Street Journal. Herb was an environmental engineer. Jeff had just graduated from law school.

3. What kind of startup costs did RotoNews generate, and how did you come up with the initial capital? How and how well did you cover the costs of the business back when your offerings were free?

Initially it was all sweat equity, and I just paid the hosting costs (which were not much) out of my own pocket. Then in 1998, when we exploded (climbing into the top-10 most trafficked sports websites), we bartered server and office space with a company who had management I knew from my work at the futures industry startup. We were just so busy with the site we didn’t even have time to raise money. It took off that fast. Whenever someone has a business plan in fantasy sports or an Internet startup idea, the first question I often hear is “what’s going to happen when I get so much traffic my servers crash?” That never happens. It’s always the opposite problem. I’ve seen only a few exceptions, and RotoNews.com was one of them.

4. How did you turn the site into a sellable commodity so quickly at a time before fantasy had really been accepted into the mainstream?

We helped lower the barrier to entry for fantasy sports by providing users with an ability to quickly get information to manage their teams and later low cost software to run their leagues. We were one of the sites at the forefront of the movement that made the hobby mainstream and it resulted in a surge of traffic that made us a valuable business.

The whole idea of “player notes” just took off, and the way we presented them with the “news” and “analysis” for each update quickly became the industry standard. Then in 1998 we added free commissioner services for baseball, football, basketball and hockey. We were the first site to offer league hosting for free and our traffic exploded.

5. Why did you sell RotoNews in 1999, and what involvement did the founders have under the new ownership? Things certainly seem to have worked out well, but do you guys ever regret selling?

We were chasing the dot-com riches like everyone else and just wanted to get public quick. But it didn’t go well. We were one of the top-10 trafficked sports sites on the Web, and I estimate that we hosted as much as 60 percent of all fantasy football and baseball leagues online. But the management at Broadband Sports ended up just using us to pad their traffic numbers and didn’t realize what they had. (Their focus was on athlete web sites for such players as Brett Favre and Anna Kournakova.) What would that share of the fantasy sports market be worth today?

We ran RotoWire.com for the parent company but saw very little of the $60 million they spent before going bankrupt. It was just a crazy time, like a lot of dot-com failures, with big expenditures on office space, unnecessary hiring and tons of waste. It was just insanity, but we sort of stayed off in the corner, below the radar, and kept running the site. When Broadband Sports went bankrupt, we basically lost the commissioner business, since NBA and NHL leagues went without stats during the bankruptcy process and since we couldn’t launch a baseball product in time for 2001. By that time in 2001, Yahoo! and CBS (for a season) went free and users moved there. So the opportunity we had to dominate the commissioner business was gone.

6. What went into the virtual relaunch as RotoWire in 2001, as far as necessary capital, staffing, rebuilding a reputation, etc.? Basically, how much were you able to pick up where Rotonews left off and how much had to start again from scratch?

After Broadband Sports went bankrupt, Jeff, Herb and I decided we wanted to keep RotoNews going, so we kept all the employees of the unit and literally walked across the street and started it back up. We had to change the domain name due to legal complications (later on we got RotoNews.com back), but most of our customers found us right away due to word of mouth. Other than the domain change, everything else was basically the same. We were able to raise the funding we needed based on our prior success.

7. How much difficulty did you have building the subscription base once the site content went to a pay model?

It was a difficult and somewhat radical decision to switch to a pay model in 2001. After all, we were the champions of free fantasy everything when we were RotoNews.com. But we quickly realized after the dot-com crash that advertising just wasn’t paying the bills. We went mostly pay in the fall of 2001 and probably lost 90 percent of our traffic. But it worked. We instantly became profitable, and it’s been a business model that has consistently worked for us since. Plus, it really allowed us to invest more into the quality of the product since adding even the smallest improvement or new content area would add a small amount of paying subscribers that would make it profitable (unlike a free site, which doesn’t have much to gain from the little extra traffic they get for smaller content additions).

It’s funny because I used to get mocked at the FSTA conference for being the “free” guy. We’d have panels where all the commissioner and game providers would basically yell at me for offering the product for free. Now at the same conferences I’m the pay guy and most of the commissioner products are free. The free vs. pay debate continues to rage in the fantasy sports business (and elsewhere on the Web, if you’ve seen all the articles about Wired magazine editor Chris Anderson’s new book, “Free: The Future Of A Radical Price,” such as Malcolm Gladwell’s piece in the New Yorker). I’m definitely a former free guy who’s seen the light of the pay model.

8. How much does RotoWire rely on subscription fees for revenue, and how much is supported by advertising and business partnerships, such as the farming out of player updates?

Selling subscriptions to RotoWire.com is our primary revenue source. We’re focused on offering products that fantasy players are willing to pay for to give them an edge in their leagues. We do have additional revenue sources, but they’re byproducts of keeping the content strong enough that people will pay for it.

9. RotoWire has won a slew of fantasy writing awards. How do you manage to lure, discover and/or retain such high-quality writers?

I think that’s where our lengthy experience in the business has paid off. We’ve made a lot of good connections and have figured out how to build and manage a large, skilled staff. But really it comes down to the quality of the staff we have that manages our writers.

10. RotoNews/RotoWire has given us such things as the player news template, the first free online commissioner product and the first mobile player update feed. What kind of innovations can we expect to see from you in the near future?

There are three areas where we try to constantly innovate. The first is delivering our fantasy news via new technological mediums. The hardest part of the business is keeping up with the technological innovations. We used to just have our website. Now we’re sending news via SMS text alerts and we’re on Twitter, Facebook and mobile platforms. It’s all an effort to get the fantasy player the news he needs where he can best put it to use. We just launched a Blackberry app, and an Iphone app is on the way.

The second is the way technology is altering how fantasy players prepare for their drafts and how they play the game. An example here is how our draft software continues to innovate in how to process the vast amount of information and news you need to sift through to beat the competition during a draft or auction.

Lastly, we constantly try to expand the depth of our coverage and to add new sports.
I think as the fantasy hobby continues to grow it’s going to catch fire in other sports, particularly soccer/football. As a result, we’ve become the leading fantasy soccer resource, covering the sport on a global level. We think that will pay dividends in future years as fantasy games find formats to better connect with soccer fans and international fans learn from their American friends that fantasy sports is a way to enhance their fandom. We’ve also ramped up college football since I think that sport is set to grow with major media sites now running leagues.

For the established sports, we’re adding new areas of coverage such as international baseball where we expanded our Japanese and other foreign league player news and have international player rankings.

You’ll continue to see new ideas from us in all those areas.

We’ve been keeping you up to date since March 2009 on the FSWA’s planned hall of fame, and Tuesday brought the clearest public sign that the process is working.

The Fantasy Sports Writers Association has announced 14 finalists for its inaugural class, which will be rolled out Sept. 9 to coincide with the start of the NFL season. The names (listed alphabetically): Greg Ambrosius, Matthew Berry, William Del Pilar, Scott Engel, Dan Grogan, Kelly Grogan, Bob Harris, Emil Kadlec, Eric Karabell, Greg Kellogg, James Quintong, Brendan Roberts, Peter Schoenke and Ron Shandler.

With its focus on writers and content in general, the FSWA required that any candidate have at least 10 years experience on the editorial side of fantasy. More than just writers, though, this effort is might to acknowledge those who have made significant, lasting impressions on fantasy content.

We’ll have more on the process for whittling this group down to the inductees as well as some background on each candidate in the days to come.

For now, though, FSB.com congratulates everyone who made it this far. The fantasy industry is still new, but to be recognized as one of its most impactful contributors to date is an accomplishment in itself.

It seemed fairly obvious from the sale process that Mock Draft Central generated serious interest on the open market.

When founder and president Jason Pliml first told FSB.com of the intention to sell, the plan was to put MDC up for auction back in November, with a starting bid of $195,000. Before things got to that point, though, Pliml’s company fielded enough direct offers that the direction quickly changed.

“We had at least eight seriously interested parties and probably another six that expressed initial interest,” Pliml told FSB.com this week. “The number of serious suitors was cut in half when we required an all-cash offer as opposed to a combination of cash and private equity.”

Pliml said that although every potential suitor was looking to acquire the whole company, the interest tended to lie in one of three areas:

• Those who were looking to add MDC’s sizable user base
• Those most interested in the inherent live-draft technology
• Those who wanted to grow the company while basically following the existing path

“RotoWire falls into the last category of running it and growing it using a similar business model, particularly since the business model MDC operates under so closely parallels the RotoWire business model,” Pliml said. “Because of the similarities, the transition has been very smooth thus far.

“RotoWire has the same philosophy of good customer service and innovating with technology, so I anticipate they’ll be able to grow things and roll out new features as they get comfortable running what is already in place.”

RotoWire president Peter Schoenke echoed those ideas of similarity and growth potential lying in the parallel philosophies, adding that an existing relationship between the companies helped bring a deal to fruition.

“It just was a really good fit for both parties,” Schoenke told FSB.com in the wake of the announcement. “I’ve known Jason since he started the company and we were one of his first business-to-business partners, so there was a lot familiarity.”

Both sides said that the agreement came about pretty easily, with any delay in finalizing the sale generated only by the sometimes slow steps of the legal-paperwork process.

Now that the acquisition is done, though, Schoenke said RotoWire plans to use its content to bolster MDC’s offerings and vice versa. He sees plenty of value in areas such as the broad and deep average-draft-position statistics of MDC that can help bolster RotoWire’s content offerings in a number of sports. In turn, Schoenke said that RotoWire content will be “integrated” into Mock Draft Central offerings, and that his companies technical knowhow will be put to use in growing the MDC software and applications.

“We plan to invest a lot into the continued development of the draft application … [and] improving the consumer side of the web site,” Schoenke said, adding that they’d like to retain as many “as possible” of MDC’s business-to-business relationships. “MDC really is a unique site in the fantasy sports business in many ways, so we’ll leverage that content and the business opportunities from the software.”

Pliml says he anticipates sticking around for about a year to help get through the transition process, and Schoenke said that Geoff Stein is playing a similar role and will also not remain with the company long term.

Mock Draft Central, meanwhile, joins RotoWire under the umbrella of Roto Sports Inc., which also owns DatabaseSports.com and FantasySportsAdNetwork.com.