Global Sports: Catching a Rising Star

You could say Global Sports has an identity crisis. Is it a web hoster, an online retailer, a logistics and package delivery company, or an electronic commerce platform provider? The fact of the matter is, its all four, according to Michael Rubin, the firms energetic founder and CEO. In fact, Global Sports is probably the biggest e-commerce player youve never heard of. Global Sports designs and develops e-commerce Web sites using its own proprietary platform. It hosts and manages e-commerce sites for a range of companies, including Kmarts entire BlueLight.com shopping portal. It operates its own customer service and product fulfillment centers.

In addition, the King of Prussia, Pa., company owns and operates a handful of online retailing properties, including Fogdog Sports and Ashford.com, which it acquired last August.

Rubin says that while it appears Global Sports is going into competition against the same types of retailers the company wants to host, that wasnt the motive behind the Ashford deal.

“What Ashford represented for us was a platform to expand into the luxury goods category. It was less expensive to buy them than build the platform ourselves,” he says. “We can now use it to sign up more customers in that arena.”

When all of its operations are combined, Global Sports is on target to record about $100 million in revenue for 2001. That doesnt include revenue garnered by the Web sites it hosts and manages, such as BlueLight. Global Sports generated online revenue of $62.4 million for the 12-month period ended June 30, 2001.

“A lot of people have questioned whether we got here by plan or accident,” the 29-year-old Rubin says. “But several years ago, when e-retailing was such a hot space, I saw that this was the model that would win in the long term.”

How Rubin got where he is today is just as interesting as the story of where Global Sports is going. Rubin is a self-confessed serial entrepreneur, launching his first business at the age of 12. He returned from a summer ski camp in Oregon to his home in Lafayette, Pa., and started up Mikes Ski Tuning, a ski sharpening and cleaning service.

The basement business evolved into a ski swap and consignment operation, and Rubin used sales from that business to open a ski shop at the age of 14. He went on to buy two other local sports shops while still in his teens.

In 1991, fresh out of high school, Rubin launched KPR Sports International — the “K” and “P” come from dad Ken and mom Paulette — a company that sold excess sporting goods inventory. In 1995, he acquired a 40 percent stake in Ryka, a publicly traded company that designed and distributed Ryka-branded footwear, and in 1997 he folded all of his businesses under the Global Sports name.

Rubin was late to the online retailing game, but like all of his past endeavors, when he did decide to try his hand at e-commerce, he immersed himself in it. In late 1999, he sold off all of Global Sports historical businesses and gained additional financing from a high-profile venture group that included Softbank to become a full-service e-commerce outsourcer.

Rubin started by focusing on the field he knew best — sports. Within a matter of months, he had signed up five of the top 10 retailers, including The Athletes Foot and The Sports Authority, by convincing them that he could run and operate their Web sites better than they could on their own.

He then moved on to professional sports teams, winning such clients as the Carolina Panthers, the Denver Broncos and the San Diego Chargers. Today, the company boasts more than 20 such “partners,” including Bally Total Fitness, FoxSports.com, and the sports and fitness store on WebMD.

However, the deal that finally caught the publics and investors attention was Kmarts decision in August to outsource the operation and maintenance of its entire BlueLight site to Global Sports.

Lauren Cooks Levitan, an analyst at Robertson Stephens, says the deal highlighted the “open-ended potential for Global Sports to leverage its common infrastructure to drive high-margin revenue growth.”

Global Sports, which is publicly traded, is not yet profitable. The company had a loss of $7.8 million on revenue of $17 million in its most recent quarter.

However, the high-profile nature of BlueLight could serve to convince more clients of Global Sports long-term viability — a crucial factor in the current economic climate, Levitan says.