In business, as in sports, keeping score ought to be easy.
The winner is the company that makes the most money.
In the profit-challenged e-commerce world, winners are businesses with lots of cash and the potential to make a lot of money.
Trouble is, it’s sometimes hard to tell winners from losers until the game is almost over.
That’s the case at Chicago-based MVP.com, the cash-strapped online sports retailer that launched little more than a year ago with all the fanfare three of the world’s most famous atheletes could muster.
Now MVP’s game is unfolding at breathtaking speed, and the really interesting action is off the field.
MVP’s moves are being called in a private huddle between the superstar investors–John Elway, Michael Jordan and Wayne Gretzky–and the venture capital firms that sunk $65 million into the dream team in late 1999.
On the disabled list are 117 former MVP employees who lost their jobs within the last month, leaving a bench of 43.
You do the math. But don’t weep too much for the athletes, whose wealth far exceeds their financial exposure.
Jordan and Gretzky were invited into the deal by Elway, MVP’s chairman.
The retired Denver Broncos quarterback bought the rights to the MVP.com domain name for $70,000 in mid-1999, planning an advice-oriented site. A partner at Benchmark Capital–a leading Silicon Valley firm and MVP’s lead investor–opened Elway’s eyes to a bigger e-commerce opportunity. Under that grandiose plan, the superstars would lure masses of fans with advice and exclusive videos to a vast online sporting goods store.
Next came a flurry of dealmaking that led up to MVP’s launch amid a Super Bowl advertising blitz a year ago.
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Jordan, an investor in several Internet wash-outs, put in no more than $3 million–and probably less, sources said.
Among MVP’s unsung partners: a tiny Chicago start-up, BigEdge.com, that merged with the big-league dot-com to provide its e-commerce technology.
Yet Elway’s team started its race for the IPO goal posts late in the game. Competitors like Fogdog–recently purchased by Global Sports Inc. for $38 million–had a running start.
In addition, consumer e-commerce started to tank even before Wall Street’s tech stock wreck in April.
Investors discovered that online shoppers are even more fickle than bargain hunters in the brick-and-mortar world. And it’s not any cheaper to serve them.
MVP kept charging ahead through the summer, launching an operation with Canada’s biggest sports retailer in July, and buying a Denver-based outdoors e-tailer in August.
But the clock started ticking down in the fall, when negotiations collapsed with a key partner, Sportsline.com. The Florida firm pulled its news and information off MVP’s site to hunt for a stronger e-commerce match after MVP missed a $3 million quarterly cash payment.
A further blow: Sportsline wrote down its 10 percent equity stake in MVP from an inflated $100 million to $5 million.
Without Sportsline, MVP’s chances of lining up more money are slim.
“I had a chance to invest,” says one skeptic, “but it looked to me like trying to cash in on the Internet with famous guys’ names.”
That guy knew the score.
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