Wired for Competition

When Euro 2000 gets underway in Brussels in June, one of the soccer tournament's fiercest contests will take place far from football's usual battleground of green playing fields and packed stadiums. In cyberspace, an array of sports websites will also be fighting for Euro 2000 supremacy, using tournament coverage to captivate and capitalize on a prized breed of Internet consumer with an insatiable appetite for content and a proven capacity for loyalty: the sports fan.

If content is king in the new media age, then sports should have the run of the field. "Sports and the Internet play into each other's strengths," says Tom Jessiman, managing director of the U.K.-based company Sports.com. The medium provides a 24-hour cornucopia of specialized immediacy, brimming with updates and fantasy leagues and argumentative newsgroups. In turn, fans devour the news, analysis and statistics so readily available and so easily personalized online.

Even in such a compelling content domain, however, companies staking their claim in Europe's online sports marketplace must still conquer the primary challenge of building a brand on the Internet. Pan-European frontrunners such as Sports.com and U.K.-based archrival Sportal, along with other sites like one-sport wonders or apparel makers, have approached the task differently, leveraging partnerships with high-profile clubs and tournaments, spending millions in marketing, or offering up star athletes in chatrooms all in an attempt to draw the true believers. "As barriers disappear and people get more connected around the globe," says Rob Hersov, head of Sportal, Euro 2000's official website provider, "sports is the one form of tribalism that will survive and thrive. It's pure passion."

For sites that figure out how to exploit such passion, potential rewards are high: Europe's online sports sector could generate over $5 billion in annual revenues by 2005 from sources like advertising and e-commerce. Sites in the U.S. are already raking in revenues, and, according to Internet research firm Jupiter Communications, U.S. consumers will spend some $3 billion annually in online sports-related purchases by 2003, snapping up items from tickets to footwear. And sports not only rouse passions and open wallets, they claim the eyeballs advertisers value: Internet usage tracker Nielsen//NetRatings ranked U.S. sports network Rivals.com as the content property on which individuals spent the most time last January. In that month Rivals, which offers results, news and affinity sites covering football through cheerleading, had 5.4 million people spend an average of over an hour on its network.

The diversity of the European marketplace may offer more potential, but it also presents complicated challenges. In their quest for European dominance, it's been a case of think globally but act locally for Sportal (www.sportal.com) and Sports.com which have both embarked on fast geographic expansion, grappling as they go with different cultures, languages and sports. Sportal has sites in seven countries, as well as sports-specific sites such as the rugby-fixated Scrum.com. Sports.com has launched in five countries, where different market preferences have thrown up some surprises Jessiman reports that on the French site, more traffic opts for handball coverage than for that of golf or tennis.

Sportal has in part made its name through allegiances with popular teams and events. Its Internet partners include football giants like Germany's Bayern Munich and Italy's AC Milan, for whom it maintains websites. "First-mover advantage is long gone in European sports," says Hersov, referring to the widely held view that the first entrant to establish itself in a sector will dominate. "It falls away to the power of recognizable brands leveraging cross-promotion." Sportal, which gets exposure and revenue from its partnerships, has spent little on traditional marketing.

Sports.com has a different approach, believing that the only way to build a long-lasting franchise is from the ground up with revenues coming from advertisers and content sales to other websites, and significant resources allocated to marketing. "The notion of cross-leveraging from team sites doesn't work," insists Jessiman. And still the contenders and their business models keep coming. Later this year the U.S.'s prolific Rivals.com is planning its European launch a network which will include unofficial fan sites offering passionate, rogue opinions to visitors, and sharply targeted databases to advertisers. "We're facilitating irreverence," says Mark Terry, a spokesman for Rivals.com Europe, and "gossip and opinion and what fans are still talking about 48 hours after a match. It's very much about the screaming heart."

It's also very much about revenue streams, and building a business solid enough to appeal to investors rattled by recent fluctuations in technology stocks. Based on recent rounds of funding, both Sportal and Sports.com are valued at over $200 million, and both are considering going public some time this year. But Paul Wedge, an analyst at stockbrokers Collins Stewart, remains unconvinced about the ability of the sports-Internet marriage to generate profits in Europe. "It's still an unproven concept," he says.

Perhaps, but Hersov is convinced that users will return to Sportal's sites as long as the content is "unusual and addictive." Plans for the future include webcams at the training sessions of Sportal's partner clubs, and microphones in stands to record levels of crowd singing. The sites are also prepared for the projected explosion in wireless application protocol (wap) technology which enables users to get real-time news and scores with their mobile phones.

Market forces are as likely to drive what happens next as technological advances. A wave of consolidation will occur as expanding companies swallow minnows. And as Internet rights increase in value, it is those sites with strong partners like Sports.com, which is majority owned by U.S. giant Sportsline.com that are expected to thrive. Only the biggest players will have enough cash to pay for online highlights now and, in the future, entire games. The competition will be fierce, but for those sites that secure devoted fans and the future prosperity they may bring, it will be worth the fight.