It was inevitable. NASDAQ listed Live Current Media‘s costly experiment with running a digital business centred around Cricket in India has ended now, with the company selling the prized Cricket.com domain, and assigning its Indian Premier League (IPL) contract to Global Cricket Ventures (GVC) for $1.75 million plus related expenses. Importantly for the company, LCM has exited all liabilities related to its Cricket business – past, present and future – with the transaction. GCV Mauritius will hire LCM President Mark Melville and cover severence costs related to layoffs of employees associated with the Cricket business. LCM was believed to have rejected a $6 million offer for Cricket.com in early 2008.
What is not clear in the release, is whether LCM still retains its stake in Global Cricket Ventures, to which the IPL Portal rights had been transferred earlier this year (contract). We’ve contacted LCM for a clarification. As per LCMs 10-K filing with the US SEC earlier this year, the company owned 50.5% stake in Global Cricket Ventures.
Details of The Deal
The $1.75 million plus severence payout is as follows:
— $1 million in cash to be paid quarterly in equal installments with the first payment of $250,000 to be paid within two days of closing
— The assumption by GCV Mauritius of a liability totaling $750,000 related to past obligations to the BCCI
— The assumption by GCV Mauritius of salary and employment expenses related to the Live Current employees associated with cricket.com. These expenses include salary obligations for Live Current’s President, Mark Melville, the payment of up to $60,000 in severance costs resulting from the termination of other cricket.com related employees, and a monthly payment of $2,500 for general overhead expenses. These expenses will be paid for a period of up to 6 months.
Why LCM Struggled To Monetize Its Digital Cricket Business
In our opinion LCM struggled to monetize its Digital Cricket Business because of the following reasons:
1. Financing Issues: LCM has been struggling for capital following expenses related to the launch of its digital Cricket business. The company had incurred costs of approximately $1.47 million related to setting up the Cricket business – business development, product development, travel, consulting and salaries, and the setting up of the GCV joint venture. Last year, they had also expensed an additional $1 million owed in total to the BCCI and IPL for the rights.
LCM had initially bought official portal rights to the much hyped Indian Premier League, for 10 years for a consideration of $50 million. As we had reported earlier, the payouts related to the deal were eventually reduced to $20.75 million, and the payment schedule is as follows:
2. Timing & Type Of Deal: Live Current Media is believed to have inked the deal with the BCCL just days before the launch of the inaugural IPL, giving it very little time to launch the portal and strike deals with advertisers for monetization. Thus, by its own admission, LCM made little or no money from the first season of the IPL. LCM did not have online live streaming rights, and hence $50 million for 10 years appears to be an overpriced deal for just the official portal rights. Thus, LCM had to form a joint venture with NetLinkBlue Holdings which has Live Streaming and Mobile rights to the IPL.
3. Cricket.com Plan: The IPL is an annual event that lasts around a couple of months, unlike, say, the English Premier League or the Bundesliga. What happens to its official portal during off-season? The initial plan for LCM should have been around first building IPLT20.com, and then using it to drive traffic to Cricket.com, which would compete with the linkes of Cricinfo and CricketNext. However, LCM did not build a Cricket portal at Cricket.com, instead, ported a facebook based fantasy Cricket league it had bought for around $25,000 to Cricket.com. Even though the game has 28,660 teams, how is it being monetized? There was no content driving traffic to Cricket.com.
Tragedy also struck, with the Champions League T20 being postponed for a year due to the terror attacks in Mumbai, and then President & COO Jonathan Ehrlich barely escaping with his life from the Taj in Mumbai. Ehrlich subsequently left the company.
LCM can now make a clean start with its other domains – Perfume.com, Karate.com, among others. As the company has found out, doing an advertising dependent digital business in India, is a tough proposition.
— IPL Portal Rights Deal Negotiated Down From $49 Million To $20.75 Million
— LCM & NetLinkBlue Yet To Assign IPL Digital Rights To Global Cricket Ventures; BCCI & IPL Payout Details
— BCCI.tv Launched By Global Cricket Ventures, A Live Current Media – NetlinkBlue JV
— Global Cricket Ventures Moves Fantasy Cricket Game Out Of Facebook, To Cricket.com
— In Dire Straits, Live Current Media Raises $2 Million; No MG for CLT20