Sports Authority Sprints Onto E-Commerce Field

If there’s one thing a sporting goods company doesn’t want to do, it’s arrive late at the starting gate and watch its opponents sprint to an early lead.

The Sport’s Authority, Inc. (NYSE: TSA) did get out of the gate later than many of its competitors, but it hopes that an e-commerce agreement announced Wednesday will allow it to catch up.

The Sport’s Authority, Inc. (NYSE: TSA) did get out of the gate later than many of its competitors, but it hopes that an e-commerce agreement announced Wednesday will allow it to catch up.

The Fort-Lauderdale, Florida-based sporting goods retailer signed an e-commerce agreement with Global Sports Interactive (Nasdaq: GSPT), an active player in the online sporting goods movement of late.

As a result of the agreement, Global Sports Interactive will build, maintain and enhance The Sports Authority’s Web site and will provide dedicated funds to drive online traffic. The agreement calls for an 80.1% ownership stake by Global Sports Interactive and 19.9% stake by The Sports Authority. The Sports Authority, however, can increase that stake to 49.9% over time.

Just in Time for the Holidays

The Sports Authority joins The Athelete’s Foot, Sports Chalet, MC Sports and Sports & Recreation as new clients of Global Sports Interactive. An e-commerce division of Global Sports, Inc., the company intends to launch Web sites for all its sporting goods clients in time for the Christmas season.

In order to do so, Global Sports Interactive has teamed up with two e-commerce developers. Organic, Inc., an online business builder whose client list includes Barnes & Noble, Gateway, and Starbucks, and Client Logic, whose clients include Dell Computers, Reader’s Digest and Warner Brothers. The two companies will provide operational support and customer service for the new sites.

Online Sports Sales Expected To Soar

By all estimates, online sporting good sales have barely caused the register to jingle. Forrester Research estimates that cumulative online sales for sporting goods in 1999 reached $79 million (US$), a pittance compared to the billions sold in brick and mortar stores.

Global Sports Interactive expects that figure to leap dramatically in years to come. In fact, it is predicting a rise to $3 to $4 billion within five years, a lofty prediction indeed. Analysts do agree that sporting goods sales are often driven by brand loyalty, which will allow online retailers to avoid the price slashing so prevalent in other online start-ups.

The Sports Authority’s CEO, Marty Hanaka, said that pairing up with Global Sports Interactive allows his company to avoid the costs of developing its own Web site, a factor that is surely prominent in Global Sports’ sales pitch.

The Sports Authority’s brick and mortar operation consists of 195 full-line sporting goods stores in the U.S. and five in Canada. It also has a licencing agreement with Mega Sports Co, Inc. to operate 13 stores in Japan.

Global Sports Interactive is the e-commerce division of Global Sports, Inc. The company was started by Michael Rubin when he was just 13 years old. Today, the company owns the RYKA and Yukon brands of footwear and is active in purchasing closeouts and overstocks for resale to retailers.

Last month, Global Sports, Inc. announced first quarter sales of a record $33.7 million, up 20% from the corresponding 1998 quarter. Gross profit for the quarter also rose, up 16% to $9.4 million. The company invested $1 million in Global Sports Interactive.