Rivals.com is a popular site for diehard US collegiate and high-school sports (mainly American football and basketball) enthusiasts boasting over 2 million regular users in the US. It has around 180,000 paid subscribers (at $99.95 annually or $9.95 per month) and also makes money from ads and ecommerce and recruiting.
The company operates 105 college team sites and 48 regional sites for high school fans.
Rivals.com will expand Yahoo’s own Yahoo Sports publishing capabilities that are under the management of senior vice president Scott Moore. Moore described Rivals.com as extremely complementary and pointed out that Yahoo has previously licensed content from the site.
He expects traffic on the site to substantially rise once Yahoo applies its marketing gloss and savvy. The goal is to push further past ESPN.com, the other leading online sports site in the US today. Moore said that Yahoo Sports, which attracts 15 million visitors every month, surpassed ESPN traffic around two months ago.
While the financial terms of deal have not been made public, Rivals.com was pegged to be worth in the region of $50 to $75m and only turned profitable in the past year.
The acquisition, which has been rumored for months, is probably the end-goal that Rivals.com CEO Shannon Terry has been aspiring to ever since he set up the site back in 2001.
Sunnyvale, California-based Yahoo hinted that the Rivals.com brand and all the senior management team, including its CEO, will remain intact but will be integrated into Yahoo Sports.
Terry, however, has a checkered past that includes an embarrassing run-in with the Securities and Exchange Commission in 1998 while working as a principal with stock promotion firm SGA Goldstar Research that resulted in a fine.
It’s clearly still a touchy subject for Terry who threatened to sue tech blog TechCrunch in April this year for comments that highlighted his alleged role in a widely publicized pump and dump stock scheme in the mid-90s.
Yahoo said it was well aware of Terry’s past business dealings.
Our View
The timing of this deal is surprising as Yahoo’s every move is coming under increasing scrutiny by Wall Street investors. Online sports media is a lucrative business for sure. But it’s not really the strategic cash cow for long-term growth that Yahoo is looking for to stave off increasing pressure from rivals like Google.
It also comes at a time of transition for the once proud internet leader, coming as it does on the heels of a top-management change earlier this week that saw co-founder Jerry Yang installed as CEO following the resignation of Terry Semel.
Suggestions that the deal could be worth around $100 are also being labeled too much in some quarters. In other recent sports media consolidation activity Fox paid $60m for Scout.com in 2005. There is also the somewhat tarnished reputation of CEO Terry which might have influenced two previous on-off mergers with Fox and AOL a couple of years ago. But Yahoo doesn’t seem to mind and kept its lips more or less zipped up on the topic. Clearly it believes everyone should get a second chance when it comes to business.
