MVP.com, the sports e-tailer backed by athletic superstars Michael Jordan, John Elway and Wayne Gretzky, announced Monday that it will close its offices in Boulder, Colorado and Austin, Texas, and lay off 48 percent of its 166 employees.
The restructuring will eliminate the positions of 39 employees in Boulder, 20 in Austin, and 20 at the company’s Chicago, Illinois headquarters.
Company spokesperson Paula Davis told the E-Commerce Times that the layoffs in Chicago are effective immediately, but that the offices in Boulder and Austin willremain open until around the first of the year. She added that the laid-off employees will receive severance pay.
MVP.com’s announcement comes a month after SportsLine, the publisher of sports Web site CBS Sportsline.com, said that it was terminating its agreement with MVP.com because the superstar-backed site failed to meet its contractual obligations.
Davis said the restructuring was not directly related to the SportsLine announcement, but that “these cuts are a product of the need to integrate functions and a need to lower costs.”
She added that certain functions became redundant when MVP.com acquired Boulder-based PlanetOutdoors.com and Austin-based Igogolf.com.
The Fans Go Wild
When MVP.com launched, it attracted the attention of both the e-commerce and sports worlds because it was backed by three of the biggest names in sports: Jordan, who led the Chicago Bulls to six National Basketball Association (NBA) championships; Elway, who picked up two Super Bowl wins with the Denver Broncos; and Gretzky, who is hockey’s all-time leader in scoring and the winner of several Stanley Cups.
Investors, hoping to cash in on the US$150 billion global sporting goods market, rushed to offer their financial blessings to the site. Initial investors included Benchmark Capital and Freeman Spogli, which sank a combined $65 million into the company.
MVP.com also netted an alliance with CBS that called for $85 million in advertising, promotion and other considerations over a period of four years, in exchange for an undisclosed equity stake.
Sacked by SportsLine
MVP.com then scored big when it won the right to operate the online retail business of CBS Sportsline.com. Under the terms of the exclusive 10-year agreement, MVP.com was to pay SportsLine $120 million. The agreement also gave SportsLine a 10 percent equity stake in MVP.com.
Last month, less than a year into the deal with MVP.com, SportsLine announced that it had terminated its agreement because MVP.com was late with its scheduled fourth quarter 2000 payment of $5 million. SportsLine also said that MVP.com was in breach of other unidentified terms of their agreement.
For its part, MVP.com insisted that the missed payment was not due to slow sales but was part of renegotiations with SportsLine over the terms of the contract. SportsLine conceded that the two companies were trying to restructure the deal but said that “negotiations for a restructuring of the agreement were unsuccessful.”
MVP.com is only the latest dot-com to bid farewell to employees. A report released last month by Chicago-based outplacement firm Challenger, Gray and Christmas (CGC) revealed that for the sixth month in a row, dot-com layoffs had reached record numbers.
During the month of November, 8,789 dot-com employees lost their jobs — an increase of 55 percent over October’s layoff toll of 5,677. The November layoffs made up 28 percent of all the jobs ended since CGC began tracking the disappearance of dot-com jobs a year ago.