How Will Sportsline's Role In NFL Deal Affect Net Landscape?

Yesterday, the NFL announced a five-year Internet-rights deal estimated at $350M with CBS, SportsLine.com and AOL, under which SportsLine.com will operate and promote NFL.com. SportsLine.com Founder & CEO Michael Levy said the deal "does what the CBS deal did for us in 1997: it builds business for the future. Neither a mediocre ad market nor a downturn in the stock market will keep us from achieving our goals." Levy, "referring to a more immediate goal," added the relationship with the NFL "will allow us to pass ESPN in everyone's eyes." In Miami, Beatrice Garcia writes SportsLine.com will also produce the NFL's Superbowl.com, Playfootball.com and NFLEurope.com, as well as fantasy league products. In addition to "recouping the cost of producing and hosting" NFL.com, SportsLine.com will receive about 50% of the first $140M in gross revenue generated from ad sales, direct marketing and e-commerce on NFL sites. SportsLine.com President of Business Development Andrew Sturner said that the company also may receive 20% of "certain additional gross revenue generated from new broadband and subscription services." SportsLine.com announced that its portion of the $110M NFL rights fee is about 20% of the total, or about $24M. The company also is "required to pay an additional" $5.25M in cash or stock. Sturner said that the payments are "heavily backloaded, requiring a payment of just" $1.5M this year and $7M in the fifth year. Friedman, Billings & Ramsey analyst Robert Martin said SportsLine.com "will have to see a dramatic increase in revenue to make the deal pay off in the long run and see return on investment." News of the NFL.com deal "lifted SportsLine's shares, which ended the day" up $0.27 to $1.75. AOL Time Warner shares fell $1.68 to $48.50. Class B shares of Viacom fell $0.27 to $49.08 (MIAMI HERALD, 7/12). Levy: "We are clearly in a position now to take over the No. 1 spot among Internet sports sites and to generate incremental revenues." THESTANDARD.com's Terry Lefton cited sources as valuing the deal at $325M, including the value of cross-promotion and the cost of hosting and producing the site (THESTANDARD.com, 7/11).

REAX: In Milwaukee, Brett Longdin writes the mission of the NFL.com deal is "abundantly clear": to "go after ESPN.com and displace it as the No. 1 sports site on the Internet" (MILWAUKEE JOURNAL SENTINEL, 7/12). In L.A., Greg Johnson feels the partnership "underscores the media world's belief that online sports will prove to be a profitable business." S.F.-based Forrester & Co. analyst Scott Doniger said the deal does not leave "much room for small guys out there anymore, and there aren't many small online sports players left" (L.A. TIMES, 7/12).

SPORTSLINE EXTENDS WITH AOL: SportsLine.com also announced a four-year extension of its partnership with AOL Time Warner to produce content for AOL's sports channels. SportsLine.com will pay $4M for "extensive promotion from the AOL Sports channel as well as major AOL properties" such as Netscape, Digital City and ICQ (MIAMI HERALD, 7/12). ADAGE.com's Adrienne Mand notes under the SportsLine.com/AOL deal, SportsLine.com will provide fantasy sports games including NFL products, fantasy games for MLB, the NBA, the NHL, golf and auto racing, as well as college basketball tournament brackets contests (ADAGE.com, 7/12).

THIS IS WHY HE DID IT: New ESPN.com Senior Writer Len Pasquarelli, formerly of CBS SportsLine, wrote his decision to switch jobs recently "was based on the stability that ESPN offered contractually and the unknown viability of SportsLine for the long haul" (SportsPages.com, 7/12).

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