New sports apparel site opens up $50 mil review

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MVP.com, the new Internet sports apparel site from three athletic legends -- John Elway, Michael Jordan and Wayne Gretzky -- is seeking an agency for $50 million in annual ad spending.

John Costello, the former senior Sears, Roebuck & Co. marketing chief who is MVP.com's CEO, disclosed the review for a full-time shop.

Leagas Delaney, San Francisco, has been doing project work for the site, expected to be launched this month.

Mr. Costello said MVP will be participating in on-site marketing at Super Bowl XXXIV in Atlanta, but will not have a TV commercial on the Super Bowl telecast on ABC.

MVP, a site that will sell high-end merchandise and feature sports tips from top athletes, last month inked a four-year, $85 million deal with CBS Corp., which will get an equity stake in the new company. The $50 million ad budget includes barter time on CBS properties.

Additionally, MVP -- in a 10-year, $120 million deal -- will acquire and operate the online retail business of SportsLine.com, which runs CBS SportsLine (sportsline.com). SportsLine.com also gets an equity interest in MVP.

MVP is entering a tough sports licensing and apparel industry that has seen little growth over the last few years, according to industry analysts. Young adults are turning away from licensed sports apparel, moving to more fashion-oriented athletic shoes and clothes. Recent Internet sports-apparel site start-ups -- Fogdog.com, Gear.com -- haven't been able to garner a significant portion of the market.

MARKET `PROBLEMATIC'

"The marketplace is a little problematic," said Keith Kreiter, president of Edge Sports International, a sports agent and marketer. "A lot people are moving toward fashion . . . You are seeing rappers and even athletes wearing the fashion-type labels."

Just having major athletes or stars isn't enough to make a retail project work, some analysts note. They have already compared this high-profile effort to the financially troubled Planet Hollywood, a chain of entertainment-themed restaurants originally funded by major movie actors, such as Bruce Willis.

Mr. Costello said MVP is different since all these big-time former athletes are not only major investors but will participate actively in the business. MVP was founded by Mr. Elway, who takes the title of chairman; Messrs. Gretzky and Jordan are directors.

"What I saw was a huge market that was not dominated by any single retailer," said Mr. Costello. "Sporting goods is a very information-intensive industry, which is a natural fit with the Internet. It's a large industry that is an important part of people's lives in which there is no clear-cut market leader."

"There's not much competition -- it's very open at this point," said Patrick Keane, Internet analyst for Jupiter Communications. "They get established media distribution in one of the most robust Internet categories: sports. They are also getting four years of [advertising on CBS]. That is going to be mission-critical."

NIKE COMING ON BOARD?

Mr. Costello wouldn't discuss manufacturer deals. But Nike could be a natural business ally. Fogdog.com already has a wide-ranging deal with Nike, but that will, in part, expire in March.

Mr. Jordan could help move some of Nike's business to MVP, according to industry executives, since he's chairman of Brand Jordan, the Nike division that pulls in about $1 billion annually, 10% of Nike's overall revenue.

No matter what happens, MVP will have business arrangements with most sporting goods manufacturers through a financial deal with Galyan's Trading Co., a Midwest retailer.

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