Sports.com goes titsup.com
Isn't this supposed to be a winner
"Our attitude has been to be the last man standing at the end." Gavin Chittick, COO Sports.com, November 2001
Sports.com, Europe's biggest sports web property, has placed its UK operations into administration on Friday morning (May 31).
The business will operate as a going concern during the World Cup, but this will require the co-operation of suppliers, staff and customers, administrator Bruce Mackay of Baker Tilly told The Guardian.
He attributed Sport.com's woes to falling advertising revenues and high fixed costs, resulting in a cash flow crisis.
Sports.com also operates in France, Germany, Italy and Spain and none of these businesses are currently in administration. Sports.com is heavily backed by VCs, securing $13m in its last funding round.
Last year, Forrester predicted the survival of just three UK online sports operations - Sports.com, The BBC and Sky. The latter is not a significant Web presence, but it has the money and the TV and the sports rights, so it could be a player.
The UK sports web site scene grew very rapidly in the late 90s, on the back of big VC bucks. In the last year or so there has been a lot of consolidation. In November, for instance, Chrysalis and 365 hived off their respective online sports operations into a separate, independent business.
In recent months, some of the stronger players have come from the online betting scene. Last week, for example, UKBetting made an agreed bid £13.7m for Teamtalk.com, after a brief hostile tussle. And last November, the online bookie bought Sportal, valued at its peak at $170m, for £1 (and £190K for technology). It also bought Sportinglife.com (Until the Racing Post came along Sporting Life was the punters' paper) from Trinity Mirror for £2.
Betting appears to be the most important money spinner now for sports sites, with traditional advertising and syndication revenues bleeding away.
Online advertising revenues for sports sites are weak and valuations have tumbled. Sports.com last year bought sports and tits site Megastar.co.uk for a reputed £50,000.
Low advertising was not necessarily such a problem: several of the bigger sports businesses relied heavily upon income from contract publishing and syndication deals. TeamTalk, 365, and Sports.com are examples of this. But this kind of business requires lots of staff and that means high fixed overheads. When the contracts dry up, the overheads remain - until the next round of job cuts. ®