| 13 July 2010
If you are not a college football or basketball fan you probably are not intimately familiar with Scout and Rivals, two competing college sports networks. Although their audience is limited primarily to America's most fanatical sports fan-base, their impact on the online sports digital world and the companies' back stories are somewhat riveting.
Things have been mainly quiet for the two online publishing giants post mainstream media acquisitions. Scout has flown largely under the radar since they were acquired 2005, when they were acquired by Fox for around $60 million although their leadership team moved on in the years since and there was this ugly lawsuit settlement that they somehow managed to keep out of the public's eye.
Picture of Shannon Terry
Rivals too has been eerily silent since Yahoo acquired them back in 2007 for around $100 million dollars. It was reported over a year ago that Rivals' CEO, Shannon Terry was leaving the company, as he seemed a bit reluctant to move to the West Coast to rub elbows with the Yahoo brain trust.
Meanwhile ESPN too has had their own recruiting network problems and I've voiced some skepticism about their affiliate models on a couple of different occasions. Now it seems ESPN's foray into the college sports/recruiting space may be winding down as a handful of their largest affiliates are jumping ship including my other writing home, Bucknuts.com. Along with a lot of former ESPN sites it seems a 24/7 will be plucking a lot of great publishers from the likes of Scout and Rivals for their formal launch which should be happening in the next 60 days.
From Mr. Bucknuts announcement yesterday.
24/7 is a new effort of which Bucknuts is on the ground floor along with another 20 or so of the industry’s largest web sites. It is headed by Shannon Terry, previously the founder of Rivals.com. Terry served as Rivals’ Chief Executive Officer, overseeing the corporate strategy, new product development and day-to-day management. He was named to the Sports Business Journal's Forty-Under-40 in 2006 and 2007, and the Forty-Under-40 Hall of Fame in 2008. Terry was also named to the trade publication's 20 Most Influential People in Online Sports list in 2007 and 2008.
This is quite a jarring splash to the online digital world even outside of college sports and I'll make that connection in just a bit. But before we get to the impact of this new network and what I expect to see from them as well as things I'd want given I'll be writing on their platform, I thought it would be wise to drop some knowledge on the Rivals, Scout, ESPN saga that has been playing out over the last decade. It quite an adventure.
Venture Capital, A Failed IPO, Bankruptcy, Fire Sale Acquisitions, Competition, Big Acquisitions, Lawsuits, and Departures
Let's rewind to the late 90's. Did you have an email address back then? Did you even own a computer? If you did how did you use the web? I bring this up because it was a whole different world, but things were changing and probably a bit too fast.
Jim Heckman, the son of a former Washington football coach, started Rivals noticing that the web was changing how college sports fans were getting their information. Local newspapers did an okay job covering colleges, but the coverage was always a day late and a bit lacking in some areas.
For the real diehard fans, college sports is year round because recruiting is year round and each fan base has a passionate core group of fans who lust for as much recruiting information as they can get their hands on. Its almost kind of a disease as these fans impatiently try to will top recruits to their school and obsessively follow the entire recruiting process for dozens of players every year. Recruiting never stops, developments happen daily, and fans wanted more than what local newspapers and television could offer. They also wanted to add their own two cents about every single development along the way.
With this in mind Heckman started Rivals, hoping to cover the entire college landscape with a site staffed with full time reporters whose job was to constantly dig up the freshest recruiting news, analyze any developments, and encourage discussion in forums. Obviously the coverage of the actual games (football, basketball, other sports) were a part of the content mix, but it was the recruiting information that got recruiting junkies to pay $10 a month to get all the good stuff thanks to a pay-wall that always made overtures to your wallet because you just had to know where the next Joe Montana was visiting this upcoming weekend.
The network filled out. Some of the sites were new and owned and operated by Rivals, but some were independent sites who signed up as a partner to Rivals. Life was good and the company filed for an IPO at the height of the Internet bubble. That's where it gets interesting.
Revenue was coming in the door and the company had raised an amazing $80 million but the dot com bubble ended any hopes of an IPO and worse yet the company was running out of money. Hard to think what happened to all the money but you'd think a lot of capital was spent on hiring writers, signing up sites with bonuses/guarantees, etc, but still that's a massive amount of capital that was spent. You could probably chalk some of it up to the times as startups had no fear of burning venture capital dollars. Another thing to consider is Rivals tried to branch off to other sports which probably inflated overhead and ultimately could have been the fatal move.
With Rivals in danger, Heckman left the company/was fired and Rivals began to wind down operations and filed for bankruptcy proceedings. But Heckman found a new group of investors who wanted to buy the company and mobilized to do so.
"I will dedicate my life to making this company work for all of you, because I understand that you are the only important people in this idea. I feel that was lost, but I ask that you allow me to bring our family together again for one more try," writes Heckman, who founded Rivals.com in 1998 but then was ousted as CEO last summer. He then goes on to ask publishers for just nine months to prove his concept."
Things got interesting though as a group led by Shannon Terry and Bobby Burton also wanted to buy Rivals now that it was a firesale price and succeeded in doing so in 2001. The details of the takeover are shaky at best but from what I've gathered, Heckman and his group were real close and there was a lot of loyalty to him by the handful of people still running Rivals in its finals day, but in the end the Tennessee group won out and Rivals had new life.
Picture of Jim Heckman
But Heckman and his group moved on undeterred and you have to tip your cap to Heckman who raised more money despite losing over $80 million at Rivals and getting fired as he raised $1.8 million almost immediately after the loss of Rivals and subsequently dozens more millions in the years to come.
Initially Heckman named the company The Insiders but it later changed to Scout and up until today the companies share a fierce rivalry. In fact the two companies went to court over publisher recruiting tactics as both companies looked to scoop up the best and biggest sites on the web.
Tension between Rivals and Scout resulted in a series of lawsuits several years ago centered on tactics used to lure individual team site publishers after the original Rivals folded. The companies settled in 2003 by agreeing not to disparage each other and to abide by publishers' contracts, according to the Seattle Post-Intelligencer.
''It's very heated between them,'' said Drew Champlin, who worked at Rivals.com's BamaOnline site for six months. ''On a scale of 1 to 10, it's probably 100.''
Scout again went down the path of spreading a wide net of covering multiple sports while Rivals stayed focused on college sports. Both companies matured, began to bring in 8 figure annual revenue, all while growing their audience. There were rumors of ESPN, AOL, Yahoo, and Fox looking at both companies but in the end Fox purchased Scout on the heels of their acquisition of Myspace in 2005 for around $60 million. This acquisition really flew under the radar to most but was a larger development than it showed on the surface.
By 2005, the economy was beginning to churn again and in particular online advertising was beginning to become a major growth market. ESPN was entrenched on television, SI owned print, but who would conquer online? ESPN had the lead, Yahoo was making some noise, CBS had made some moves, and now Fox thought they could make a splash by adding Scout. Not only did they pad their audience by several million monthly visitors (cutting the ESPN lead dramatically), they now had a large network to grow out various local offerings as well promote the larger Fox Sports.
But things got real hairy pretty quickly for Scout. There was talk that Fox wanted to somehow make Scout "MySpace Sports" but apparently someone with an IQ over 100 put the kabosh on that. Scout's leadership team also began to leave and with the company in Seattle and Fox in LA, it seemed to further stagnate any type of progress with the company. Technology seemed to become a pain point as well as a cataylst for an exodus of some of their largest publishers including Bucknuts (this actually in a round about way led to me writing for them).
The publishers banded together and sued Scout claiming Scout was skimming online advertising revenue and subscription revenue in addition to a lot of other gripes that would fall under general breach of contract. Scout/Fox settled the lawsuit to the tune of $5 million+ , a rather large admission of guilt. It was about at this time that Fox was getting publicly trounced for their inept coverage of the BCS bowls (Fox had no NCAA games all year but somehow had the BCS bowl rights in another zinger of an idea). Between the BCS broadcast debacles and lack of any substantive progress with Scout as well College Football News (also acquired by Fox), you have to wonder if the suits at Fox just decided to focus elsewhere. The 5 million dollar settlement combined with the legal fees and the realization they bought a lemon of a company has seemingly dampened any chance of Scout being an intricate part of Fox's digital strategy going forward. Its the black sheep of Fox digital at this point while Myspace is merely just the very public black eye.
Heckman actually stayed with Fox and rose the ranks making inroads with Rupert Murdoch being his lead negotiator in the infamous Google Myspace seach deal. That's a story for another day, but at a high level Heckman and Fox flat out jacked Google to the tune of $900 million and Myspace has been lazy ever since as the checks kept coming from Google. Years from now this maybe looked at as the turning point in Facebook vs myspace and with the deal ending very shortly, myspace's future is very much up in the air with an incredible amount of people leaving the company/jumping off the sinking ship.
Heckman would later leave to start 5to1 media, an online advertising company with a good concept but with a lackluster reputation in the online advertising world.
Meanwhile that group in Tennessee led by Shannon Terry did a pretty solid job with Rivals and eventually became profitable. In 2007 Yahoo made a bold move and shelled out $100+ million for Rivals. With better technology and a more focused vision, Rivals outpaced Scout and more importantly avoided any litigation issues. Yahoo who was breathing down the neck of ESPN in terms of online dominance thanks to superior fantasy offerings, a new war chest of writers, and a growing emphasis on sports blogs after hiring Jamie Mottram away from AOL. The Rivals acquistion now gave Yahoo a larger audience than ESPN, a distinction that helps greatly with online advertising sales.
By the time ESPN realized that being second to a West Coast internet company was hurting their online monetiztion, they rolled out a collection of initiatives all of which are ongoing and somewhat controversial. ESPN partnered with Bucknuts as their first external affiliate and later locked down a lot of the other large Scout publishers who left and sued. ESPN city sites like ESPN New York as well as blog networks like SweetSpot and True Hoop were additional attempts to build their aggregate number to retake the online lead away from Yahoo. If you've read my stuff in the past, you know I am very critical of ESPN affiliate models and the lack of value they provide to publishers. That being said its no surprise that Bucknuts and a very large chunk of the ESPN affiliates are now leaving to join 24/7.
More than a year ago Terry left Yahoo (probably when his non compete ended). Just like Scout and Fox, it seemed Rivals being so far away from the parent company in Yahoo really impeded growth. 
Fast forward to today and 24/7 sports is on the verge of launching with a very impressive dozen or so publishers, many of which have announced their new direction similar to Bucknuts. These aren't just websites, but in many cases the number 1 website for some of the most vibrant fan communities in the country. Many of which seem to be disgruntled Yahoo/Rivals publishers or maybe they're just enamored with Terry and the team in Tennessee.
Besides various conversations I've had and some internet chatter on sites that are joining, there really isn't a lot of information about 24/7 at this time. I reached out to them for a couple of reasons including to get more info but haven't heard back. Between their website, photo account, and twitter acount I've been able to piece these facts together:
- Shannon Terry is CEO.
- Bobby Burton maybe joining
- Ronnie Sanders a former SEC recruiting Director is also involved
- They've raised a sizable amount of capital
- They're located in the same area as Rivals initially was (Brentwood, Tennessee)
- They are working around the clock on the engineering side. It seems the goal is to get the sites all on a new platform including message boards by the start of the season. The idea of migrating so many large sites, users, forum posts, articles, etc spanning multiple platforms almost makes my stomach turn.
- The network will not only launch with size-able reach but will put a dent into Yahoo and ESPN whose number will go down because of the defections
- In addition to a tremendous list of sites, they've added recruiting gurus Gerry Hamilton, JC Shurburtt, and Bryan Matthews to the fold.
View of 24/7 Sports office from their photo account.
Frankly with ESPN, Scout, and Rivals you think this would be a crowded space, but really this is a smart move. There is a lot chatter that Scout is going to be slimmed down substantially as many sites are losing money, ESPN's network is basically imploding thanks to 24/7 Sports, and Rivals while viable is also taking a HUGE hit.
A lot of startups like SBN, Yardbarker, FSV, Bleacher Report, along with media companies like CBS and NBC actually benefit from this as it looks like the front of the pack in Yahoo, ESPN, and to a lesser degree Fox will be losing some ground in terms of network audience size.
This opportunity only exists because 3 major media companies in Fox, Yahoo, and ESPN have failed to really find a model or a technology offering that is viable to publishers, advertisers, and most importantly visitors and subscribers. Blogs have also been eating away at these recruiting sites for quite awhile, but at the end of the day you still need full time people calling and constantly tracking the thousands of high school recruits spanning both football and basketball.
Obviously Terry and his people didn't like Yahoo's execution and plan with Rivals and decided to have another run at it. I am sure Yahoo is extremely irked that the guy that sent a huge check to buy Rivals is now jacking some of their biggest properties, but regardless whatever value proposition 24/7 is shopping, investors and publishers are eating it up.
Without anything to review its hard to say just how they'll be different from the legacy recruiting networks and just what they've promised to publishers in terms of things like equity in the new company, cash buyouts/acquistions, advertising guarantees, bonuses, etc. Potentially some site owners were offered full time employment as deal clinchers.
I'd surmise some amount of capital was spent to get these larger publishers on board in hopes it would spur smaller publishers and even just talented journalists to give 24/7 a look.
In terms of technology, I am on pins and needles to see what they came up with and when they'll be rolling out the platform. Rivals and Scout particularly have really failed here and technology, especially web applications, and programming languages have made major advancements since Scout and Rivals were architected.
I am hoping to see major upgrades in terms of message boards, recruiting databases (Google Maps Mashup please!), commenting, video, mobile apps, and live chat (seriously just use CoveritLive... Scout and Bucknuts use the worst chat programs known to man). They'd also be wise to fully utilize web 2.0 technology like custom widgets (no network has grasped this concept yet), blog syndication/promotion, twitter, Facebook, and social sharing options. Reading between the lines, it looks like a lot of this is in the works.
When the curtain is pulled back (who knows when that will be), they'll be live with some of the most passionate fans in the country and an audience that should span 2 million+ and maybe much higher. Its hard to say if 24/7 will conquer this niche, flush out competition, or fall somewhere along the way.
Either way I am excited to see a new burst of innovation/competition in the space as well as departing ESPN, a company whose digital ineptitude was souring my ambition to create content on Bucknuts. I'll probably do a follow up piece with more thoughts post launch. Until then, best of luck to the guys there as I know they're burning the midnight oil racing to get things just right for the launch.
written by jackburton, July 14, 2010
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written by steve2, July 17, 2010
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written by Tater, July 17, 2010
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written by jbtone, July 18, 2010
(Windows users)
use the old CTRL + or
(apple users)
apple + and your font gets bigger....
All your base are belong to us!
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written by College Wolf, July 20, 2010
Epic Fail haha!
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written by Joe M., July 20, 2010
Great Post. I had no idea what went on behind the scenes with these companies. Should be interesting how well they can dominate the space. I think sites like these made sense when they could do a paywall before there were enough blogs online to cover all the teams. Now with all the different free blogs covering each team it is much harder to make these sites successful unless they still have the base of premium payers. I would venture to guess that no one with an established paywall of payers would join 24/7 unless it was a really good deal.
Unless a site is doing millions of page views a month like an sbnation or a yardbarker I just can't see a venture backed company with offices and staff working with this model. I think the reason the individual websites always get screwed is cause the guys in the office realize they can't make the model work based on what they are offering. Then they try to figure out a way to squeeze more money out of the individual bloggers. Technically the verdict is still out on SBNation and Yardbarker as they still need to be acquired to show their model works.
You guys are doing it correctly with Bloguin by staying lean and gradually attracting new blogs and increasing your page view count though I did notice you hid your quantcast stats
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written by Ben Koo, July 22, 2010
Good to see you stopping by. I think 24/7 will have a paywall going forward for their sites, so its more of a level playing field trying to recruit publishers.
The jury is certainly out on Yardbarker and SBN, but I think we'll see SBN have a big exit in the next 18 months. Comcast seems to be the favorite, buy Yahoo could very well acquire them as well. I think AOL is conserving cash at this point. Maybe they could afford us?
We will be showing our stats on Quantcast again. We're negotiating something and wanted to present that data, but soon we'll pull the curtain back again.
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written by DM, August 11, 2010
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written by Former Rivals Start-Up Employee, August 16, 2010
One final note on Heckman: he has more energy than just about anyone I have ever met. The guy is an absolute machine and when he gets focused on something, you better watch out. Unfortunately, like most people with this type of drive, he fails in the execution of details. Jim is/was not a tactics type guy...and this weakness is one of the primary reasons Rivals/Scout did not fully realize its potential.
As for blowing thru approximately $50 million in cash...the other $30 million or so was mostly in trade with Yahoo, etc. Rivals spared no expense with occupying lush office space in downtown Seattle. At one point we occupied two floors of the original Nordstrom building and furnished it with some of the nicest cubicle furniture you could buy. Couple this with lavish trips to Vegas, big bonuses to execs/publishers/engineers, and the $50 million widdles away fast. You correctly point out that Rivals ventured into other sports/divisions in its attempt to be more of a hosting platform. From my vantage point this was a big mistake. Many people don't know this, but at one point Rivals hired a crazed feminist to start a Women's network, for christsakes. For some reason Jim thought he could compete with iVillage and others of their ilk. All of these diversions took the Rivals engineers away from their core mission...and you ultimately have what you have today.
A final note on the technology. Let me also say that Rivals CTO, Bill Sornsin, was pretty much a maniac. His insistence on building a proprietary platform notwithstanding, he was very difficult to work with. One story of note: Bill often clashed with a Rivals exec named David Eckoff. Now, David having come from Raytheon (and publisher of Inside Carolina) was not the easiest guy to work with. That said, he was very nice, but also very pedantic. This drove Bill crazy. After one particular heated email exchange, Bill Sornsin walked upstairs to David's cubicle, picked up his keyboard, and began smashing it to pieces right on David's desk. Not exactly the type of management style one would expect from a CTO.
Good luck to Terry Shannon and Bobby Burton. I always liked Bobby and I am glad to hear he is still in the game. I am sure they will do well with 24/7.
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written by Ben Koo, August 17, 2010
Also curious as to what the $30 million Yahoo trade entailed. I've always suspected there is more to this story that what I have collected and presented in this blog. Would love to know more.
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written by Former Rivals Start-Up Employee, August 17, 2010
As you know, Rivals was really a hosting service with no true business model. At the time we were several years ahead of the curve when it came to a subscription model. Absent consistent subscription revenue, the company was doomed to fail. As for the millions in trade, etc., we had deals with Fox, Yahoo, and a few others, for advertising/banners, etc. Some of this was never fully realized given what happened after Jim left.
People must remember that Rivals started with less than 10 employees and approximately 20 affinity sites focusing exclusively on college football. Within 18 months we had over 100 employees and were developing plans for multiple affinity networks. Not only was the growth unsustainable, the technology could not scale. As I previously mentioned, there was a myopic insistence on building a complete proprietary network. Not only was this nonsense, it really inhibited our ability to meet the needs of our customers. From message boards to e-commerce, Rivals absolutely refused to look outside the ego if its own CTO.
At the end of the day Rivals had an opportunity to own this business. But as is the case with many companies, greed, hubris, and ego, brought the company down. As for me, I re-joined Jim and his team when they started TheInsiders/Scout...this was actually a lot of fun because it reminded me of what Rivals originally was when we occupied a small office in Pike Place Market. I then left Scout well before Jim sold it to Fox.
I will always be grateful to Jim for bringing me on board. To this day he is one of the 3 or 4 most impressive executives I have worked with. His level of energy, intensity, and smarts, is quite impressive. My only [humble] critique of Jim: he has a tendency to promise more than he can deliver...and it often bites him in the ass in the long run.
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written by College Wolf, August 17, 2010
And awesome.
Thanks very much for the insight 'Former Rivals Start-Up Employee.'
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written by Warmonger, August 21, 2010
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written by Still With Rivals, August 22, 2010
I went independent for the few weeks that the company was in the black hole of bankruptcy. There were some good people there that kept us all informed of what was happening. Because they got invovled with Shannon and the guys at Alliance Sports, I signed back up with them as soon as they launched.
I was not a big fan of the Yahoo buy out. While I don't profess to know all of the intricacies of the business aspect, I do know that we (Rivals) were the absolute best at what we were doing. We were making money. Fans were coming on board every day. And then - BOOM. Shannon sells - AGAIN. That's right, again. Keep in mind, the orginial tech for Rivals that Heckman "started up" came from Alliance Sports and then they swooped it out of bankruptcy only to build it up and sell it again...to Yahoo.
I have already heard rumblings about the "different way" they are going to run 24/7 and imagine it's going to not be as "publisher friendly" as the previous networks. And, knowing Shannon, I would imagine that this 24/7 network - if it is built to a viable company - will be sold off in the not so distant future.
I love what I do and still have a passion for it as a fan and publisher. At some point (my opinion) Shannon became more interested in the business side of it and the "revenue" rewards and his passion shifted. I'm certainly not going to blame him for wanting more financially, especially if he has the means to obtain it. I do, however, think that he disappointed some people who have been extremely loyal to him over the years; at least one, anyway.
I wish them the best of luck over there but caution those who sign on with them. If you're happy where you are, stay there.
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written by Rich Watson, August 24, 2010
That's the essence of the creativity and vitality of capitalism.
Bring on 24/7.
Whether it succeeds or fails, invariably it will make that market better for sports consumers.
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written by RivalsEngineer, September 07, 2010
Shuken was a decent guy and good businessperson, but too new to the Internet world and Rivals was too far gone by then anyway. I didn't swim at that level but heard Saul wasn't fooling anyone, including Shuken, and eventually got what he deserve. Remember the day Saul announced Jim left and he was now in charge, we all thought "who are you?"
I was engineer and Sornsin was tough but fair. I have great respect for Jim and Bill and Patrick and Peter, the real problems were elsewhere, especially the VCs "get big fast" pressure. The keyboard deal was hilarious and really backed up our team after a very rude and personal comment from Eckoff about us. Your statement about architecture 'ego' is just not true because I helped evaluate commercial choices at Bill and Jim's request, more than once. We looked at multiple publishing systems, message boards and ecommerce and nothing off-the-shelf could handle our scale or the cross-site tagging and syndication of stories and recruiting database. Ecommerce possibly but that groups strategy changed daily. We'd love to not code all that stuff inhouse, it would've freed our time to do more things. Some software is available now but not in 1999/2000. Maybe you're one of the sales guys who constantly sneered "how hard can it be?" and pointed us to a buddy's latest startup software, all of which was shite. Or used lack of some obscure feature to excuse poor sales.
You didn't mention that Shannon/Bobby's company "Rivals II" as well as Scout used proprietary platforms also. I was burned out and didn't join either one, but that strategy obviously worked well for them.
Don't miss Eckoff's company videos on YouTube! Good luck to all former friends & colleagues.
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written by SEC, September 07, 2010
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written by blind, February 17, 2011
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