Business News

DraftKings shares rise four% after Michael Jordan joined the betting firm as a board advisor

Charlotte Hornets owner Michael Jordan answers a question during a 2014 press conference at the Time Warner Cable Arena in Charlotte, NC.

Jeff Siner | Charlotte Observer | Tribune News Service via Getty Images

DraftKings' shares rose 4% on Wednesday after the company announced that Michael Jordan was joining the betting company as special advisor to the board of directors.

Jordan, a member of the National Basketball Association's Hall of Fame, will have an interest in the company under the deal. He is the current chairman and owner of the Charlotte Hornets franchise.

Jordan is expected to offer DraftKings his expertise in strategy, product development, diversity, equity and belonging, marketing activities and other important initiatives.

"While the immediate financial impact is difficult to measure, we see this development [DraftKings] benefiting from its association with the most revered living athlete in the United States," wrote Jed Kelly, an analyst at Oppenheimer.

The move offers "opportunities to work even more closely with the NBA; and we see the Jordanian heritage that binds to [DraftKings] as validating legalized online sports betting as the mainstream industry as more states seek to legalize sports betting," added Kelly added.

According to CEO Jason Robins, the six-time NBA Finals MVP attorney and Chicago Bulls icon will be more than welcome to the company.

"Michael Jordan is one of the most important personalities in sport and culture who have forever redefined the modern athlete and entrepreneur," said Robins in a press release. "The strategic advice and business acumen that Michael brings to our board is invaluable and I look forward to adding him to our team."

The Covid-19 pandemic continues to disrupt numerous professional and college sports leagues as attempts are made to bring home the athletes and fans of the coronavirus armed forces.

An NBA spokesman told CNBC's Jessica Golden, "NBA team investors, including governors, are permitted to participate in sports betting and fantasy sports business subject to the safeguards required by league rules to prevent actual or perceived conflicts of interest."

Despite the Covid-19 headache, DraftKings investors are largely positive on DraftKings' longer-term outlook, and by the close of trading on Tuesday, their stock rose more than 240% this year to $ 36.93.

The ability to broker a deal with Jordanian companies is perhaps the most striking example yet of the excitement in the world of sports games and the wealth now associated with the emerging industries.

Recently launched in the public markets, DraftKings teamed up with Diamond Eagle Acquisition Corp., a special-purpose acquisition company, and gaming technology provider SBTech, in April. The move enabled him to bypass the typical IPO.

At the time of its IPO and the completion of its merger with Diamond Eagle on April 24, DraftKings was valued at approximately $ 780 million. FactSet estimates it is now worth more than $ 13 billion.

Related Articles