SOFTBANK Acquires $80 Million Stake in Global Sports

One of the partners behind Buy.com, E*Trade, GeoCities,Yahoo! and a host of other prominent Internet properties has apparently taken a liking to Global Sports (Nasdaq: GSPT), an e-commerce provider for a number of sporting goods retailers.

Global Sports said Friday that SOFTBANK Corp., a Tokyo-based provider of technology information, with stakes in over 85 technology companies, is paying $80 million (US$) for a 30 percent stake in Global Sports Interactive, a subsidiary of Global Sports, Inc.

The King of Prussia, Pennsylvania-based sporting goods company also announced that it was going to divest its non-Internet assets — primarily its business as a marketer and distributor of discounted footwear and sporting apparel — to concentrate on its Internet business.

“We believe that the $150 billion worldwide sporting goods industry has enormous untapped potential for e-commerce, and that Global Sports, through its partnerships with six leading retailers, is well-positioned to lead the category,” said SOFTBANK CEO, Masayoshi Son, of the announced acquisition.

Anticipating Fourth-Quarter Launch

Global Sports Interactive is like an expansion sports team that has yet to take the field. It’s signed the players, obtained the financing and started its marketing campaign. All that’s left is to play ball.

The company says it expects to launch its network of six e-commerce sites in the fourth quarter of 1999. It also expects to report “operating losses for the foreseeable future,” the company said, while in the same breath adding that it will “accelerate investment spending in Global Sports, Inc.”

The company has recently inked deals with The Athlete’s Foot, Sport Chalet, MC Sports, Sports & Recreation and one “unnamed retailer with annual sales of more than $200 million” to provide their e-commerce business. In total, the sporting goods retailers represented by Global Sports Interactive combine for annual sales of over $3 billion.

Last month, the company signed a partnership agreement with The Sports Authority that has Global Sports owning 80.1 percent of that e-commerce business. Under the terms of the agreement, the Sports Authority can increase its stake to 49.9 percent, over time.

SOFTBANK clearly has a strong track record on picking Internet winners. The largest shareholder in Yahoo! and an original investor and now the largest in shareholder in E*Trade, the company is also the majority stockholder in Ziff Davis, publishers of PC Week, PC Magazine, and Computer Shopper. The company also produces the COMDEX trade show and owns ZDNet, the news, information and entertainment Web site.