SoCalHoops Recruiting News
More Rivals News: Assets To
No Bankruptcy Yet--(Apr. 11, 2001)
Last night, when we announced the news that Rivals would be going down, we also reported that there had been or would be imminently filed a petition in bankruptcy court to protect the company from creditors. While that may in fact happen eventually, it has evidently not yet been filed, and reports published today in the Seattle Post-Intelligencer and the Seattle Times both seem to indicate that the decision of the board of directors of Rivals, which is a privately held company, and thus not subject to the same kinds of disclosures and flow of information that might be obtained if it were a publicly traded company, is that the plan is to simply sell off all of the existing assets. Of course whether that just refers to the "hard assets" (e.g., things like computers, desks, chairs, real property, personal property, etc), or whether "assets" would also include intellectual property rights, such as the rights to some or all of the approximately 600 "publisher sites" which are part of the network, is really pretty much unclear at the moment.
Nevertheless, there was some additional news out of Seattle on the situation, and at least for the moment, even with all of the layoffs and the announced intention to sell the assets, the servers are still up and running, many of the sites in the Rivals network continue to be updated, and the message boards are still functioning. Clearly it's just a matter of time, but the fact that someone hasn't yet flipped off the switch raises the possibility that someone, somewhere might yet be able to save some or all of the network, either in a spinoff of the recruiting sites, or the college team-site network.
In either event, here are two additional stories published today on this subject from the local Seattle papers:
Rival Networks closing down
Wednesday, April 11, 2001
By JOHN COOK
SEATTLE POST-INTELLIGENCER REPORTER
Rival Networks, an online sports network that operates more than 600 team-specific Web sites, will close down and lay off about 80 remaining employees, according to investors and former employees.
The closure brings to an end one of the most ambitious and heavily financed Internet companies in Seattle.
Founded in 1998 by Jim Heckman, Rivals raised more than $70 million from a marquee list of private investors, including Hummer Winblad, Softbank and Intel. It then filed to raise as much as $100 million through an initial public offering last March but set aside the proposal. Along the way, the company took over sponsorship rights to the Hula Bowl, co-sponsored a $10 million basketball sweepstakes and hired Denver Bronco coach Mike Shanahan as pitchman.
But like many Internet companies, Rivals ran into trouble when investors turned against money-losing concerns. Problems worsened after acquisition offers from Yahoo! and ESPN fell apart. A last-minute possible sale to Nike Inc. also collapsed, former employees said.
"This is a hard day for me," said Heckman, who was ousted as chief executive last year but remained a shareholder. "There is no good reason this had to happen."
Employees were told of the layoffs yesterday afternoon at the company's headquarters. They were given two weeks severance.
It was not known what would become of the 600 team-oriented sites -- such as Dawgman.com, PatriotsFootball.com and WhiteSoxInteractive.com. Most of the content for the sites is provided by independent publishers, usually one- or two-person operations. "It's a shame," said one former employee of the publishers. "We are talking about people who don't cost us anything. It is like a work force of 600 people who have to go elsewhere."
Board member Bill Sornsin declined comment. Other executives and board members did not return calls seeking comment.
Sports Web site Rivals.com calls it quits
By Luke Timmerman
Seattle Times Eastside business reporter
Rival Networks, a struggling Seattle-based sports Web site, will be shut down.
The decision to cease operations and sell the company's assets came yesterday after weeks of negotiations with Yahoo! and, later, Nike. Both companies talked seriously about an acquisition but abandoned the idea. Rival officials blame the failure to make a deal on the rocky financial market.
With collapsing deals rumored for weeks, many of Rival's remaining 80 employees - hopeful and frustrated - waited out the talks until the end. They now will get severance packages worth between two and six weeks' pay.
Rival Networks, better known as Rivals.com, was launched in August 1999 to provide links to information on sports, teams and leagues, ranging from professionals to high school. The site's content publishers now will need a new host, but users should still be able to find the same sports news on different sites.
Rivals.com Chief Executive Saul Gamoran said he was "extremely proud" that Rival had built the most visited and "stickiest" sports site on the Web. (Stickiness refers to how long a user stays at a site.) But he said a sales deal fell apart mainly because of the tumultuous financial markets.
"We tried very hard to effect a sale of the company, and we came pretty close, but we were unable to cross the finish line, " Gamoran said.
Despite the rough market, many current and former employees are upset with Gamoran and President Mark Shuken for not closing a deal, according to a founding employee in engineering. The employee said Softbank, a Japanese software and technology-investment company, had been shepherding a deal with Yahoo! to protect its investment, but Yahoo! lost interest.
Jim Heckman, the founder and former chairman and chief executive officer who still had a financial interest in the company, expressed disappointment. "There is no good reason this happened," he said. "We have a great business model and great people."
Yesterday's announcement closed the book on a company whose hopes peaked a little more than a year ago, before the market soured on e-commerce and Web advertising. At the time, Rival planned an initial public offering and had attracted high-profile investors such as Softbank, Hummer Winblad Partners, Intel and Rupert Murdoch's News Digital Media.
But as the venture-capital market tightened and the stock market for dot-coms tumbled, Rival found itself running out of cash and outgunned by deep-pocketed competitors such as Disney's ESPN.com and Viacom's CBS Sportsline.com.
Even in Rival's brighter days, the company hemorrhaged cash. In a regulatory filing last year, Rivals.com reported little more than $1 million in sales for 1999 and a $21.4 million loss. At its peak in January 2000, the company had about 190 employees and $9.6 million in cash, and got a $34.5 million investment from Softbank.
At the time, Rivals.com had hoped the site's stickiness and its 5.4 million visitors would lure e-commerce traffic and advertisers, even as the stock market soured on Internet companies.
Trouble surfaced last summer. Heckman abruptly left the company in June and was replaced as chief executive by Gamoran. One month later, the company cut 40 employees - then about 21 percent of its work force.
Despite those setbacks, Rival continued in recent weeks to tout its Web ratings, saying it had 1.3 million visitors a month and had been the stickiest sports site on the Web for 20 straight months. Through the end, the company pointed to the passion of its customers, saying they spent an average of 77 minutes a month on the site. Rivals.com also said it had 700 writers and experts covering players and teams.
Despite the market turmoil and shunning of dot-coms, Rival clung to what it considered promising signs. In its last several months, the company began what few Internet companies have been able to do: charge subscription fees to look at its content.
From December through March, Shuken said the company picked up $441,000 in revenue when it signed up 23,000 subscribers, paying fees of $4.95 a month or $29.95 a year, to see some of its content. Shuken said those figures "validate our content is worth paying for and shows the strength of our audience."
Through last fall, the company continued to invest in e-commerce merchandising, building online stores that it said generated about $1.6 million in revenue.
Through this spring, the company has retained its extensive news on college football and basketball recruiting. Because of recruiting's popularity, Rival said it beat ESPN.com with 30 million page views on the day in February when top recruits signed letters of intent to attend Division I colleges.
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