It's time to take M&A Bingo off the shelf and dust off our playing card to
see how the consolidation patch is shaping up (for a recap of M&A Bingo's
oddball rules, check out "Let's Play M&A Bingo.") This week, I'm adding a pair of
privately-held companies that might be likely candidates to "explore
strategic alternatives," market-speak for climbing on board the auction
block. First on deck, is the once-ballyhooed sporting e-tailer MVP.com, backed by superstar trio John Elway,
Michael Jordan, and Wayne Gretzky. The Web site boasted big backing from
the likes of Benchmark Capital last December, but the online retailing
space has *ahem* since taken a turn for the worse.
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What's more, MVP.com has just sent a clear distress signal to the financial
community that the company's finances may have recently struck an iceberg.
The e-tailer inked a contract with SportsLine.com earlier this year to serve as the sporting news site's
exclusive e-commerce provider. The deal called for MVP.com to pay
SportsLine $120 million over 10 years. But two weeks ago, MVP.com skipped
out on a $5 million fourth quarter payment to SportsLine. A spokeswoman for
the star-studded start-up confirmed a cash-flow problem, saying MVP.com
hopes to lasso a whirlwind round of financing later this month to make good
on its bills.
This isn't the first time a schmooze-fest of high-profile investors
unsuccessfully set out to pan for gold in an unfamiliar industry. Who can
forget Planet Hollywood's box office debut back in 1992? Austrian Arnold,
Sly Stallone, and Bruce Willis kept the camera bulbs flashing as the
restaurant chain's original blockbuster investors. But after a charmed
grand opening, the theme eatery franchise has since filed for Chapter 11
bankruptcy protection, and Schwarzenegger has called it hasta la vista,
baby, cutting his losses and splitting with his old partners. This
time, it's unlikely that he'll be back.
On the bright side of things, MVP.com doesn't serve overpriced hamburgers
with a side of stale fries. The site reaches a commendable number of
monthly eyeballs and saw record sales in September. With MVP.com
potentially up for grabs, the most interested buyer would likely be
e-commerce middleman, Global Sports . The company
develops Web sites for traditionally offline retailers, and in exchange for
handling sales, fulfillment, customer service and infrastructure, takes a
93% cut of revenues. Already operating 13 sites for partners that include
Sports Authority and The Athlete's Foot, Global Sports
announced a strategic $40 million land-grab of rival Fogdog just last week.
Global Sports has the unique distinction of being a cash-wealthy online
retailer, collecting more than $150 million in funding from the likes of
Softbank and QVC in the last year alone. Global Sports also considers
MVP.com a competitor, so don't be surprised to see the better-heeled rival
gobble up another struggling dot-com guppy. Both sites occupy the same
niche space on the Web, and with Global Sports already in a consolidating
mood, the company could certainly pick up MVP.com on the cheap.
Next M&A Bingo: Napster Selling Out?
Any questions or comments, love letters or hate mail? As always, feel
free to forward them to kblack@internet.com.
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