Jordan, Gretzky, Elway launch sports site

What's a superstar to do after retirement?

Three of the world's best-known athletes -- John Elway, Michael Jordan and Wayne Gretzky -- are joining forces with CBS Corp. and a leading Silicon Valley venture capital firm to launch MVP.com Inc., an online sporting goods merchant with ambitions to go public next year.

The venture, formally announced Tuesday, expects to start selling goods over the Internet next month. It "is an exciting and important part of my transition from football to business," says Elway, the former Denver Broncos quarterback. He is investing an undisclosed amount in the company and will be its chairman. Jordan and Gretzky also are investors and will be directors on the seven-member board.

The star power of the athletes alone guarantees that MVP will be one of the highest-profile startups in Internet retailing. But MVP is targeting a retailing segment that has been treacherous for years -- both for land-based stores and for online upstarts. Public tastes in sporting goods bounce around rapidly and unpredictably. As a result, sporting goods shops often are stuck with out-of-style inventory that must be unloaded at a loss.

Celebrity appeal
MVP is betting that it can beat the odds with a mix of celebrity appeal, aggressive marketing and a well-run supply chain that gives it much faster inventory turnover than traditional stores experience. The Chicago company has recruited John Costello, a former Sears, Roebuck & Co. executive, to be its chief executive officer. It currently has at least 70 employees on its payroll, including a Web-site development team recruited from Andersen Consulting.

To get its name known, MVP has agreed to spend $80 million in a four-year marketing pact with CBS, and an additional $120 million in a 10-year pact with SportsLine.com Inc., an online sports news service. CBS (NYSE: CBS) and SportsLine (Nasdaq: SPLN) will take equity stakes in MVP as partial payment for the advertising space. SportsLine.com was taken public in 1997. CBS retains a major stake in the site.

The CBS marketing deal was hammered out over five days, in two face-to-face meetings between CBS executives, Costello and Elway. Fred Reynolds, CBS's chief financial officer, says he and CBS Chairman Mel Karmazin saw an immediate strategic fit between MVP's goals and CBS's big involvement in sports programming. "We want to own sports enthusiasts," Reynolds says. "Between CBS itself, SportsLine and MVP, there should be no other place they have to go."

MVP also has lined up $65 million in venture-capital financing from Benchmark Capital of Menlo Park, Calif., and Freeman Spogli & Co., Los Angeles. Benchmark has backed Internet highfliers such as eBay Inc. (Nasdaq: EBAY). Freeman Spogli owns a controlling stake in Galyan's Trading Co., a Midwestern sporting-goods chain.

David Beirne, a Benchmark partner, says MVP initially will rely on Galyan's to provide merchandise and help cement supply relationships. Before long, Beirne says, MVP will build its own distribution center. Both Beirne and Costello say MVP hopes to use its celebrity cachet to target high-end sports enthusiasts and avoid knock-down price wars.

All three sports-star directors join MVP freshly retired from their first careers. In telephone interviews, Elway and Jordan said they are eager to prove that they can be successful as active business figures, rather than merely sign autographs and trade on fame that might ebb over time.

Pricey rights
"I got my first computer a year ago," Elway says. "I hadn't really understood how big and impressive the opportunities with the Internet are." But by July, he says, he had bought the rights to the Internet domain name "mvp.com," paying a bit less than $70,000. He initially planned to use the name to build up an advice-oriented Web site, with lots of tips about fitness and sports techniques.

But after meeting with Benchmark's Beirne, Elway decided to focus on sporting-goods merchandising. "I've already bought some books and DVDs from the Web," Elway said. "A couple of footballs, too. It's exciting, and I think there's real potential there."

Elway then contacted other high-profile athletes he knew, asking if they would like to invest as well. "It didn't take much persuading by John to get me to perk up my ears," Jordan says. "My wife and kids are so interested in the Internet." The retired Chicago Bull says he plans to "sell the concept to other athletes" who might join MVP later as investors.

Elway says he is insisting that all the athletes invest in MVP on essentially the same terms as other backers, rather than merely provide testimonials for cash. "We've all done endorsement deals, where they want you to do this and that," he says. "There isn't a real intimate feeling to them. This is different. We've all got money at risk, and we're committed to making this work."

Currently, a variety of sports retailers are battling for Internet customers. Among land-based chains, Sports Authority Inc. (NYSE: TSA) runs its own site, as does Dick's Sporting Goods Inc., under the dsports.com name. Global Sports Inc. is helping traditional retailers set up online, while pure-play Internet contenders such as Fogdog Inc. (Nasdaq: FOGD) and Gear.com Inc. also are emerging.

For many former pro athletes, retirement has been marked more by heartache than joy. Acknowledging that, CBS's Reynolds says: "I can't imagine that these three guys won't be hugely popular, even 20 years from now. After all, a deal like this is their way of hanging in there, too."