Buy.com's IPO filing with the SEC shows that the
company gave the PGA Tour $6.4M "up front" in '99, $8.5M
from the stock offering this year and 1,125,000 shares of
common stock in its deal to title sponsor the Buy.com Tour,
according to Sirak & Rosaforte of GOLF WORLD, who report the
stock offering has meant "a cool" $17M for the PGA Tour.
But while the Buy.com deal is a "potential gold mine" for
the PGA Tour, it "also has all the risks not only of the
stock market, but of the e-commerce stock market in
particular." Buy.com's net losses "increased" from $17.8M
in '98 to $130.2M in '99, and the company said in its
filing, "We expect to incur losses for the foreseeable
future." The IPO filing said the company "agreed ... to
provide" a $17M "letter of credit as security payment of the
sponsorship fee." The letter is secured by a cash account
and will terminate in June 2001, but is "subject to renewal
periods." Sirak & Rosaforte write that the deal "seems like
a lucrative no-lose situation for the PGA Tour," as
Commissioner Tim Finchem "has the up-front money ... even if
Buy.com should fail as a business," and likely "would have
no trouble finding" a new Tour sponsor (GOLF WORLD, 2/25).
DETAILS: The SEC filing detailed that Buy.com receives
"prominent featuring in the PGA Tour's controlled media,
including 'Inside the PGA Tour,' prominent display of the
Buy.com Tour logo on the PGA Tour's Web site and other
sponsorship and media opportunities;" authorization "to
merchandise and sell products in our online store that are
branded with the 'Official World Golf Championships' logo
and designs"; the nonexclusive right to sell branded PGA
Tour merchandise on the Web site; and the agreement that the
company will be the "only online store authorized to sell
branded Buy.com Tour merchandise" (GOLF WORLD, 2/25 issue).
