Even as the economy turns down, one panelist on our EconSports deals panel, Providence Equity Partners adviser Jim Bankoff, used the stage to confirm a seven-figure VC round for Sports Blogs Nation. Just the last dying gasp of a VC boom? Not at all, our panelists argued…
“There’s still opportunity,” said sport management group Wasserman’s COO Josh Swartz. “We’re seeing fewer brilliant ideas coming through, but there’s plenty of opportunity – apart from friends and family – to fund it. Use this period as a market opportunity; there are still going to be plenty of people ready, willing and able to write checks.”
Former AOL (NYSE: TWX) publishing EVP Bankoff: “There is too much money going after ideas that are far too early, but it doesn’t mean good ideas with good business plans aren’t going to get funded. There’s just going to be more scrutiny.” Who exactly will be spreading the wealth? Not media companies, who are far less likely to invest than 12 to 18 months ago, said Sports Illustrated Digital president Jeff Price (pictured).
– Changing the play for the new economy: Price: “Over the next 18 to 36 months, you’ve got to build a revenue model and a cashflow strategy. Start-ups are going to have to focus on being lean, mean and ultimately getting to profitability.” Schwartz: “There’s a big opportunity for smaller companies who can use the air cover of a bad banker economy to right-size their company, not spend ahead of revenue. If you can’t find a revenue model that works, you’re not going to get money from me or anyone else on this stage.”
– From the replacements bench: Even so, as traditional media contract, an opportunity opens up for online upstarts. Said Bankoff: “Local newspapers are not going to be able to hire staff reporters in the sports categories. Does that create a unique opportunity for other agents that can license high-quality content, even crowd-source content?” He would hope ‘yes’ – Sports Blogs Nation, founded by Tyler Bleszinski on the back of his own Athletics Nation blog, counts over 150 blogs all written by local fans. “As traditional media hurts, there’s a flow of money that keeps coming.” Funding comes from Accel, Providence execs and a lineup of ex sportsmen.
– Playing to the passion: An interesting discussion point flared up – what’s the best way to organize an online sports network? Sites nowadays drill down farther than general “sports” content, catering for either fans of specific sports or individual teams. Schwartz is a “huge believer” in “portalization”, sport-specific verticals, but Bankoff, whose SBNation is split in to team blogs, disagreed: “There are a lot of bigger players doing that, it’s a crowded market – it doesn’t tap in to what sports is about, which is tribal passions. You’re in to what you’re in to.” All agreed, though, that there’s little room left – for them at least – in charging for premium sports content, but they acknowledged the stress on the ad economy will challenge their preferred model.