Web 3.0 & Online Sports (Part 5)

M&A and VC activity

In February 2007, Sports Illustrated bought a 40% stake in the social networking site FanNation for $25 million, valuing the sports social network at $60 million. FanNation aggregates, filters, and customizes all the relevant player and team content available at any time on the Internet.

Sports Illustrated has also entered into an agreement with Takkle in which the high school sports network received additional funding.

Recently, ESPN acquired Scrum.com a rugby site. The site also has a Fantasy League and Fan Forum.

ESPN is going niche in its acquisitions. Earlier it had acquired Cricinfo.com, a popular site dedicated to cricket, from the Wisden Group in June 2007. ESPN has also acquired NASN, the only European cable channel dedicated to North American sports from Setanta Sport Holdings and Benchmark Capital Europe for a reported $107 – $120 million.

Yahoo! has acquired Rivals.com, a college football and basketball-focused news and community site. The deal is rumored to be around $100 million. Rivals.com, launched in 2001, had more than 2.5 million page views. With the acquisition, Yahoo! Sports will be adding Rivals’ more than 180,000 active subscribers to its existing user base.

Magicalia has further strengthened its position in the motorcycling market with the acquisition of the UK’s leading motorcycling community website Visordown. Magicalia had earlier acquired LondonCycleSport, one of the highly ranked cycling sports sites in the UK.

In August 2006, FUN bought CDMSports for $4.25 million in cash and $0.75 million in FUN shares plus an earn-out potential of up to $5 million. CDMSports is one of the leading providers of fantasy sports products and services in North America. CDM has 44 fantasy sports games, which are played by approximately 200K customers in eight sports. CDM had revenues of $8 million and earnings of $1 million in 2005.

In 2006, Mountain View, CA based PicksPal, a start-up sports networking site raised $4 million in second round of funding from Canaan Partners and Bay Partners. It had earlier raised $2 million in 2005.

Sports Composite DE, which operates fantasy sports site RotoHog, has received $6 million in its first round of funding, from Jeff Fluhr, co-Founder and former CEO of StubHub, DFJ DragonFund, Mission Ventures, SCP Worldwide, and Allen & Co, among others.

Takkle, Inc, a social network for high school sports, recently raised an undisclosed amount of funding from Sports Illustrated and the New York City Investment Fund.

Prep Sports Online, an online high-school sports network based out of Sterling, IL, has received an undisclosed amount of strategic investment from Wasserman Media Group.

Yardbarker, a social sports news and opinion web site has raised seed funding from an impressive lineup of angel investors, which included Russell Siegelman, Ron Conway, Steve Blank, Ronnie Lott and Harris Barton. Early-stage venture capital firm Labrador Ventures also participated.

With traditional media aiming to grow an online presence, more of M&A deals are on the cards. Moreover, the VCs are seeing this as a good opportunity.

Conclusion

While TV continues to dominate both as a distribution platform for sports content and an advertising medium, online and mobile platforms are evolving fast, to give a multi-faceted look to the game. Sport is said to be a highly desirable demographic with an estimated 150 Million active consumers in the United States which means ample opportunities for new digital sports marketing, video games and fantasy sports.

Online Sports has come a long way, thanks to the growing consciousness of being fit, increase in online advertising targeted at the sport category and the emergence of fantasy sports and social networking sites that allow users to follow and track sports closely.

If the recent acquisitions by the biggies like ESPN, Yahoo, etc. and the considerable interest among the VCs and the entrepreneur community in funding and launching new sports sites is any indication then we are going to see a lot of action in the coming months in this space.

ESPN has partnered with game developer Skyworks Technologies in June 2007 to launch ESPN Arcade, which is expected to launch 40 ad-supported videogame titles. With bigger players, like Google planning to join the fray (it has already launched Joga), the ball has just begun to roll for online sports and we are in for some nail biting finish.

[Part 1]
[Part 2]
[Part 3]
[Part 4]

This segment is part 5 in the series : Web 3.0 & Online Sports
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