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Thursday, April 26, 2001 By David Radin
Greed and sports teams. For many sports fans, these two terms are synonymous. Imagine what happens when teams sell stadium naming rights to Internet companies. PSINet, CMGI and Savvis are high-profile Internet firms that have paid big bucks for stadium naming rights.
These firms have several things in common:
They are dot.com-related companies.
They have grown tremendously.
Their fortunes have changed, putting them all in severe financial straits.
So The Baltimore Ravens (PSINet), The New England Patriots (SMGI) and St. Louis Blues (Savvis) are all in jeopardy of not getting paid for the naming rights on their homes. At best, they're risking major embarrassments because they may have to restructure their deals or even change the names on their stadiums. At worst, they lose out on a substantial sum of money if the companies whose names adorn their facilities default on their agreements. It's yet another Internet temptation creating a real world problem.
If only the teams had thought about why these companies wanted the name rights. (I'll give the executives the benefit of the doubt by not blaming ego gratification.) Having your company's name on a stadium makes your company look more real, more substantial for the investors. And that props up stock prices.
Have a question for David Radin? Contact him at his Web site
When you're making your money in the stock market instead of from profits, this is a particularly important consideration. But it's also a red flag to anybody thinking about risking any important asset on them. At least, it should be.
Why didn't the teams more thoroughly look at the companies? Certainly there must have been other, cash rich companies that would have been willing to pay large amounts to have their names on these stadiums. After all, you can't buy a stadium name everywhere. They are monopolies in the truest sense. But these teams decided to go with the riskier high-flying companies instead of banks or other stable companies when selling these rights. Good luck collecting.
More about image and dot.coms: A cold hard lesson learned by many dot.com executives is that image is not everything. Performance counts too. MarchFirst was created only a year ago from the merger of two technology companies. Instead of using the names of the merged companies, the executives coined the MarchFirst name and tried to establish its new image quickly.
So it took out full-page ads in the Wall Street Journal and became a high-profile advertiser in TV sports events (such as the World Series). This was not a home run of a strategy because it used up lots of valuable working capital. The stock price sank as quickly as the company's image -- from a high in the $80s to pennies. Now the company has filed for Chapter 11 bankruptcy protection. Unfortunately, it's a common story.
In a high-growth market, cash is king. If you have it, find ways to keep it, not spend it. The cash needed next quarter for growth companies is almost always higher than this quarter. It's a tough lesson learned. In future columns we'll discuss better methods to market a growth company.
Q: On one of my MS-Word documents, I have highlighted some bullet points in yellow. Now, I'm trying to get rid of the highlight. I can remove it from the text but not the bullet. How do I complete the removal?
A: Select an area that includes the entire bullet, plus the line above and line below the bullet on which you want to remove the yellow. Then, click the down-facing arrow next to the highlight button on your tool bar. When your color selections come up, click on "none."
David Radin is host of the nationally syndicated radio show "Internet Insider," a local version of which is aired at noon Saturdays on KDKA AM 1020. You can ask him a computer or Internet question by following the instructions at www.post-gazette.com/interact, where you also can find an archive of his previous Q&A columns.
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