Live Current Media, which owns the domain Cricket.com and had won the portal rights for the Indian Premier League, has raised $1.06 million via private placements with CEO Geoffrey Hampson, President and COO Jonathan Ehrlich and Chief Corporate Development Officer Mark Melville. Another tranch of up to $1 million is expected within the next 15 days. The money will be utilised to meet the payout to the Indian Premier League, and for the development of the companys Perfume.com business.
Their 10-Q filing makes for worrying reading: LCM ended Q3 with negative working capital, after having reported seven consecutive quarters with substantial losses. What’s more, they expect to continue to make losses, as they intend to spend money in marketing, and on Global Cricket Venture (GCV) – their JV with Net Link Blue Holdings.
In order to address short term liquidity needs, the company plans to sell six domain names – Brazil.com, Vietnam.com, Indonesia.com, Malaysia.com, GreatBritain.com and Communicate.com, which they expect will get them $6-10 Million…enough money to last them till the end of 2009. LCM has over 800 domains.
LCM has also announced earnings results for the Q3, the quarter ending September 30th 2008: They’ve reported revenues of $1.95 million, around $1.93 million of which is from their Perfume.com business. We hadn’t expect much from the Cricket related businesses – the IPL wasn’t operational during the quarter, and Cricket.com and BCCI.tv have only just been launched. BCCI.tv is the site for national Cricket, which hardly generates as much interest as the IPL or international Cricket, so don’t expect much from that site either.
They incurred a cost of $1.01 million related to the MOU with the BCCI and the IPL, and establishing Global Cricket Venture with NLB. During Q3 these costs totaled $276,485, $678,221 in Q3 and $55,317 in Q1.
More on the Champions League T20 Deal, BCCI Deal, and details of the formation of Global Cricket Ventures
Champions League T20 Website Deal
The Champions League T20 (CLT20) tournament is expected to begin on December 3rd; Interestingly, GCV is not required to pay any minimum guarantee (MG) to BCCI in connection with the Champions League. Revenues generated from the website will be split evenly between GCV and the Champions League. We do think that LCM has a better chance of making money from the Champions League T20 cup site than they had in the first season of IPL, where they literally had a couple of days to set up the site before the tournament began; hence – minimal revenues.
According to the filing, beginning 2010, LCM guaranteed the BCCI a minimum of $3 million annually and the IPL $2 million, all via a revenue sharing agreement which includes percentages of advertising, sponsorship and merchandise sales. Now when the deal was announced earlier this year, the payouts mentioned were similar – for a total of $5 million, but for a period of 10 years starting in 2008. The BCCI appears to have relaxed the timeline for the payouts. According to the filing:
“On or about October 1, 2008, the Company was scheduled to make a payment to the BCCI in the amount of $625,000 and a payment to the IPL in the amount of $375,000, in connection with the Global Cricket Venture. Subsequent to quarter end, the amount owing to the BCCI was renegotiated and decreased to $125,000. In addition, the payment of $750,000 that will be due to the BCCI on October 1, 2009 was eliminated entirely. The payments due to the BCCI and the IPL for the October 1, 2008 commitment, although negotiated to a lesser amount, have not been made to date. Discussions are underway with both parties with regards to the timing of such payments and payments will then be made accordingly.”
Global Cricket Ventures (GCV) With NetLinkBlue
GCV controls the right to live stream IPL matches over the internet and has exclusive IPL-related global mobile rights in addition to the digital cricket-related assets the Company obtained from BCCI. LCM utlizied a third party broker to negotiate the Venture MOU with and agreed to compensate the broker by way of an option over 6% of the shares of GCV from shares owned exclusively by LCM Cricket Ventures.
LCM is entitled to a 40% equity interest in GCV. On October 30, 2008, LCM Cricket Ventures was issued 50.05% of the shares of GCV, but anticipates that LCM Cricket Ventures’ ownership interest will be realigned in accordance with the MOU.
I wonder if Global Cricket Ventures will raise capital separately – sell around 20 percent equity in a manner that LCMs holding will be down to 40%, NLB’s holding will be near that, but marginally lesser than that of LCM, and the rest will be picked up by an investor. Time will tell.