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Your Source for Recreational Sports Play
1161 Chess Drive, Suite B Foster City, CA 94404 Phone (650) 372-3335 Fax (650) 372-3338 matkinson@esports.com Electronic Sports Inc. Contact: Michael L. Atkinson,
President& CEO
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Overview
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Company
Founded in 1998 by two friends looking to find a game of pickup basketball in their community, eSports.com has been positioned to become the leading brand for recreational sports around the world. The Company has developed a unique and powerful website that integrates three key components for successfully penetrating the $150 billion recreational sports market: Community, Content, and Commerce. This website utilizes the latest internet technology to offer both athletes and sports organizations worldwide a better way to manage and enjoy their sports play, as well as a one-stop-resource for all of their sporting goods and information needs. With its clearly defined business model and unique marketing strategy and its highly •skilled management team, the Company plans to build a large and lucrative sports consumer base and become the dominant consumer brand in electronic sports by 2002.
Industry
Recreational sports is a $150 billion industry worldwide. Nearly half of that is generated by the U.S. market, which is home to an estimated 100 million adult and youth recreational sports athletes. With the boom of the Internet, many of these sales are moving online. In 1999, U.S. consumers spent $137 million shopping for sporting goods over the Internet; and that amount is expected to reach $4.5 billion within five years, an increase of over 500 percent. With no category leader in the online sports market, eSports has the opportunity to quickly and successfully capture this market and become the dominant brand.
Market
eSports.com's target market consists of recreational sports athletes of all ages, genders, sports, and levels of play who want to spend less timemanaging their sports activities and more time playing. The Company is also targeting recreational sports organizations at both the local community and national levels to help them better promote and manage their sports programs, and gain access to their membership base. These organizations include parks and recreational departments; national and local sports organizations such as the Amateur Softball Association (ASA), American Youth Soccer Organization (AYSO), Little League; corporations; schools and universities; and others.
March 2000
PROPRIETARY
INFORMATION:
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Electronic ports S Inc.
Executive ummary S
Competition
While there is no category leader in the online sports market that shares eSports.com global perspective or unique user aggregation strategy, the Company will compete for users with online portals, and other sportsrelated sites. These include several direct competitors that offer community-based information and e-commerce shopping. The Company believes it has several important competitive advantages: • • • • • • The best brand name in electronic sports Superior and advanced technology A global marketing and brand strategy Access'to valuable, high-profile, strategic partnerships and alliances An experienced and svccessful management team A broadband perspective which includes WAP (wireless application protocol) and digital TV applications and marketing channels
Marketing
S tra tegy
The Company has developed a worldwide marketing strategy that is high-impact, low relative cost, proactive, and sustainable. The plan has been designed to quickly build brand equity and user loyalty in the U.S. and in strategic markets internationally. The U.S. plan uses a bottom-up/top-down approach that focuses on building athlete and participation in 36 of the largest metropolitan areas, as well as developing partnerships with regional sports organizations. The international plan is a two-phased "Hub to Portal" approach on quickly building brand equity and revenue by creating an eSports Hub, and then phasing functional eSports Portal as markets are developed. organization national and that focuses in the fully
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Currently the company has partnered with Upper Deck International, gaining immediate access to millions of sports enthusiasts, and has a marketing alliance with MVP.com. The Company is pursuing a number of other high-profile alliances and strategic partners in media, telephony, sports, and entertainment, as well as sponsorship opportunities as a means of increasing the company's user base, visibility, credibility, and revenue. The Company is developing a public relations strategy that is focused on building traffic, advertising attention, and awareness among its target audience. As part of the company's overall marketing strategy, this public relations campaign will help position eSports.com as '*Your Source for Recreational Sports."
March2000
PROPRIETARY INFORMATION: DoNotDistribute
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Electronic Sports Inc.
Executive ummary S
Development
The Company completed its first phase of development with the launch of the site on February 14, 2000. The www.eSports.com website enables users to build their own webpage, post and distribute documents, create and manage their sports calendars, run "Locker Room" discussion threads, and much more. Additional functionality, including e-commerce, will be added upon completion of Phase II and I!I in March and May 2000, respectively. '_(_'_;;..,_ ,. ,.,.,.,., _" ..... .-..:.:._.. :_. ....... .:........ .:_._::_: : . ..:. :.m
Fin a n c ia I P roj e c ti o n s
REVENUE MODEL
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The company has identified several revenue opportunities tPoget/nrgl_onurs ................... S..': .",." _', ........... that are forecasted to provide profitability gains of $3.1 •:_,z.:,_r_.:.:;_: -_:'_t:;i:;:'%"!.!:"_:::.,. •. ...... :.... "" million in 2002, raising to $49 million by 2004. The .......•............. _:'_.:_ _' " i.. .................. company feels confident that it can reach these ...............=.,:.,..,_i:._:::_:_-::,_::=::::. ............. projections based on its superior service offerings, r_: ..................................... • .... ........ ...................................... _ ........... .seasoned management team, and marketing strategy, providing the Company is successful at securing private equity in the amounts and in accordance with its business plan. These opportunities include: • • • • • • B2C e-commerce commissions (+-10%) from affiliate relationships including MVP.com B2B e-commerce revenue generated from direct sales to local organizations, businesses, and schools B2B e-commerce revenues from private label apparel sales to local and national organizations Franchise fees, royalties, and advertising fees Publishing revenue from internally and externally generated content Advertising and sponsorship revenue FINANCIAL DATA 2001 $42,000 $26,000 ($7,500) 2002 $119,000 $47,000 $3,100 2003 $218,000 $67,000 $19,900 2004 $298,000 $71,000 $49,000
SUMMARY OF FORECASTED ('000) Revenue Operating xpenses E Operating lncome
2000 $7,600 $10,640 ($7,600)
Management
The Company has assembled a very successful management team that has proven track-records in business management, business development, publishing, corporate finance, strategic marketing, and technology. With this top achieving team, the company has access to significant talent and resources in these key industries. The company also has developed a superior brand development and finance advisory board.
March2000
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Electronic SportsInc.
ExecutiveSummary
Funds
Requested
and $2.5 million to finance the initial launch of
The Company is seeking $10 million for U.S. operations the European operations based in London U.S. Financing Cycle Round1 Round2 Round3 Amount
Due Closed Closing 6/15/00
$500,000 (ConvertibleNote) $2,500,000 (SeriesA Preferred) $10,000,000 (SeriesB Preferred)
U.K. & EUROPE Financing Cycle Round 1 Round2 Amount $2,500,000 (Convertible Note) $10,000,000 (SeriesA Preferred) Due 4/15/00 1/15/01
Use of Proceeds
The $10 million of new capital requested for U.S. operations will be used to finance the expansion of the website and implement the U.S. Aggregation Marketing Strategy. The $2.5 million seed capital requested for the European operations will be used to effectively launch eSports Europe, assemble the core management team, develop the technology to power and manage the Hub website and support the marketing efforts for the initial eight months of operation.
Exit
Strategy
By implementing the core strategies and executing our business plan, leveraging our experience and contacts, and exceeding our goals, we project an exit, providing liquidity to our shareholders, 18 months from completing our Series B financing via the public markets. The exit strategy for the UK enterprise may be to integrate into the U.S. parent company when it files for registration, planned for January 2002.
March 2000
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