THIS SOUNDS AWESOME IN MY OPINION:-)
stockhouse.com
WSMI CDN = CANADIAN DEALER NETWORK.....
StockHouse.com Interview - September 14, 1999
By Chaya Cooperberg (ccooperberg@stockhouse.com)
An upcoming IPO of 50%-owned Bee-Trade.com and promising deals in the wings may give World Sports Merchandising Inc., a still-in-development online auction company, impressive growth. "We'll be profitable in our first year," says WSMI CEO Christopher Bradshaw.
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World Sports Merchandising Inc. [O.WSMI] CEO Christopher Bradshaw has told StockHouse about plans to spin off Bee-Trade.com, the company's new online auction network that is jointly owned with Sterling Media Capital. The plan is to take it public in January 2000, and the hope is that the IPO will raise US$20 million.
Mr. Bradshaw also says the company is busy negotiating some big, revenue-generating deals. One involves selling tickets to a billion-dollar charity lottery online. Another will make WSMI, which plans to change its name to World Sports and Music Inc., the first company to sell ticket packages to Olympic events over the Internet--for 25% of the profits.
Originally focused on selling through TV shopping channels and print publications, WSMI is in the process of shifting towards marketing its sports and entertainment collectibles online, and developing its own line of sports and art products. Bee-Trade.com is the gateway site to the collectibles network, which includes sites such as BidAway.com and Bee-Market.com. WSMI believes that through strategic alliances, it can establish a major online presence, with revenues not only from selling products and advertising but also from selling the data accumulated on people coming to the site.
WSMI says it is on track to kick off the network launch on September 15th with two sites up and running. It plans to have 12 sites online by the middle of October.
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StockHouse: Could you briefly outline the history of the company's operations?
Christopher Bradshaw: We started as a sports merchandising company, selling product offline through infomercials. We did a lot of things on Shopping Channels, per-inquiry ads in magazines and newspapers. That was our main focus for about the first year of operations. As well, we picked up sports athletes under exclusive contracts. We had Ty Domi, Roger Clemens, Martin Brodeur, to name a few. This was in the first eight months to a year.
We started looking online when eBay came out. I started looking at it to see what sort of sales they were getting, what kind of products they had listed. We did hands-on research on the online auctions. We weren't looking to do an auction of our own. We were just seeing if the lines we had would work online. We listed 50 to 60 products, which we continue to do, to find out when people start bidding, what their bidding habits are, see how people actually pay for what they bid on. Things of that nature.
StockHouse: According to previous reports, we should be seeing the launch of your online auction network this month. Will that be happening on schedule?
Christopher Bradshaw: Yes, it will. Our first two sites will be released in September. Our schedule date is September 15th. The first one is Royal Animated Art. That's animated art sales. We have over $200 million dollars US in inventory. It's a three-way joint venture between Royal Animated Art, WSMI and Cable Print Network Marketing.
Royal Animated Art supplies us with cels from Archies, Beetle Bailey, Fat Albert, all those cartoons. There's just a tremendous amount of stuff. It's a three-way split. We pay what the costs are, which are very low on these things, and we split the profit three ways.
This project brings membership along with it. Royal Animated Art has a mailing list of about 30,000 people who buy animated cels. Those people are going to be contacted and given free membership to come and join the network. There is an estimated 200 million fans of the combined cartoon cels that we represent.
StockHouse: So that's the first site that's going up. Which is the second one?
Christopher Bradshaw: The second one is a company called Mainstreet IPO. This is a company that allows companies to do self-underwritings online. Basically, you go get your prospectus files cleared with the SEC. You then put your prospectus on the site. It's sold in a Dutch auction format, which means the last highest bid wins. It gives anybody the opportunity to participate in IPOs, instead of whom the broker decides is worthy of the IPO.
StockHouse: Do you plan to create other auction sites for products and services outside the sports and entertainment realm?
Christopher Bradshaw: Absolutely. We have a couple of other projects. One is called the Church Basement. This is an association of 70,000 churches in the US, and they have 4.2 million parishioners. These people are going to supply product.
StockHouse: Like a huge garage sale?
Christopher Bradshaw: Yes. And you know about garage sales--people show up at five o'clock in the morning, and jump over your fence because they're looking for those rare items. Some woman might have a bunch of old baseball cards around and she'll sell the whole box at $5.00. She has no idea of the value, which gives people the idea of going to and searching these pages.
Plus, these 4.2 million parishioners will also be our membership. They'll actually be signing up. Obviously not all of them have Internet, but even if you took 10% of the 4.2 million, we'd have more members than Bid.com [T.BII] on one site alone.
StockHouse: Are these paying members or do they join for free?
Christopher Bradshaw: No, membership is free. Our main business is data management, which is basically names, demographics--where they live--and psychographics--what they like, what they buy. Once you hit 250,000 names or more, they're worth $6.00 US per name per year.
StockHouse: So, selling mailing lists is the company's main revenue?
Christopher Bradshaw: Yes. The good news is our partner, Beryl Wolk (Sterling Media) has 47 million names now, and sells then 6 times a year for $1 US a name. His job, and our partnership, is to manage our database--to put them into a category and market them. He currently sells them to Ford, GM, McDonalds. You name a large company, he sells his list to them.
StockHouse: I didn't see any mention of this on your site.
Christopher Bradshaw: Our sites are changing daily. Nobody can see it yet, but once our network is up and running, all of our sites will explain everything. We're still a little bit behind because we've been just pushing so hard on getting our deals done, doing the cosmetics, and getting the software re-engineered.
StockHouse: What's the potential of the online auction market, and what competition do you face?
Christopher Bradshaw: The potential is huge. There's probably 300 maybe 500 auction sites out there right now. Out of those 500, there's two that I know of that actually work, and that's eBay and Yahoo. Those are our competition.
StockHouse: What about Bid.com?
Christopher Bradshaw: Well, I don't want to say anything bad about them. But, no, they have a different philosophy. To even sign up and look at their products you have to give your credit card number. When you go there, it takes forever to load. We have researched literally every site there is. We found six main problems. The first is product. Most of these sites have zero product. If you went to a store that had three dresses and five pairs of shoes, would you shop there? No. Even the really big ones, like the Excite auction site, took me an hour and a half just to become a member.
StockHouse: What are your advantages over the competition?
Christopher Bradshaw: What we have done is, we have built to be big. We're modular, so we just keep loading on top, building vertically. eBay, for example, started off selling Pez Dispensers. Nobody had any idea what was going to happen. So they are building sideways. They said, Pez Dispensers work. Let's put on Beanie Babies. Now, let's put on all of the other things. But they were built as a small unit, not to grow to what they are. That's why they have the problems that they have. They've been trying to switch their software over for eight months now and every time they do it, it crashes their system. That's why their stock gets beaten up all the time. They're down for three or four days at a time. That's bad news.
StockHouse: Do you have your own turnkey online auction technology?
Christopher Bradshaw: We do. What we did is we bought a site called BidAway. We were trading around the 50- cent mark when we were talking about what we were doing. When people actually saw BidAway, it kind of died and quite frankly we didn't want to release it. It was not a material change. People found out about it and said, is this the great site you're talking about? My God, it's horrible. We bought it for nuggets of technology and some of the architect. So we didn't have to go back and reinvent the wheel. Then we hired Ogilvie Rothschild. They've come in and taken that model, and obviously changed it around. But we didn't have to start from ground zero.
StockHouse: I looked at the BidAway site and I didn't see much action on it. What are you going to do to increase the interest and the traffic?
Christopher Bradshaw: Well, we haven't done anything to date. What we're doing now is we're actually having it remodelled. It's not set up properly. That's another problem with a lot of the auction sites. It's too hard to navigate. We've already done it in the back room, we just have to actually do the face plate and then put it back out. Once we do that, we have a deal with Cable Print Network Marketing, which is our partner in Philadelphia. They have 8 to 10 brand new products and services going through that office every week. What they're going to do is list every single product on our site.
Two things on the Internet we've also found in our research is brand new fresh product sells at whatever price you want and sells very well. The other one is inventory ends with deep discounts. Those are the two things we're focusing on: brand new exciting product and deep discount blow-outs.
StockHouse: Doesn't WSMI create its own product line, especially sports and art items?
Christopher Bradshaw: We have an in-house artist, Rob MacDougall. We own all of his original artwork. We have a five-year exclusive deal with him.
StockHouse: Is it cost-effective to create your own merchandise line?
Christopher Bradshaw: Absolutely.
StockHouse: But you seem to be getting greatly reduced merchandise through third parties.
Christopher Bradshaw: No, actually that's two things that World Sports is focusing on, or will start focusing on: the production and the procurement of product. We build our own product like original artwork. We make prints from that, get them signed by the subjects. We also take that artwork and make 5 ounce pure silver trading cards out of them, which we've done with Elvis, Jimmy Hendrix, Roberto Alomar and Joe Carter. That's another line called Silver Liners. That's an in-house line. World Sports and the principals have been in the sports industry for the last 15 years. We know literally every sports collectible distributor in North America. We can get all of their products listed on any of our sites any day of the week, quite frankly.
StockHouse: How is the sports memorabilia market doing these days?
Christopher Bradshaw: It's booming as always. But always the biggest problem is signatures. Up to 70 percent of all signatures are fake. So, what we've done is put together an in-house project, which is another one of our online auction network sites, called the Authentic Zone. Every signature that's purchased on that site has a 300% purchase price guarantee. If you buy a signature from us, and prove it is a fraud, we give you three times the purchase price, the tax and your shipping. So you can feel safe buying signatures from us.
StockHouse: When will that site be up and running?
Christopher Bradshaw: It's actually coming out on the 15th of October.
StockHouse: How many sites do you plan to have in the network?
Christopher Bradshaw: We're going to have hundreds. Right now we have Royal Animated Art, Mainstreet IPO, the new BidAway (that's the new and improved with the two different product lines being sold there), Rob McDougall, as well as the new Art Process we have that's going to be featured on Rob McDougall's site. That should be up relatively soon. I'd say probably the 1st of October. We have the Church Basement and we got the deal signed about a week ago. That will be probably out in the middle of October. The Authentic Zone will be out in the middle of October. And a couple of other ones we're not allowed to talk about yet. We'll have 12 sites up and running by the middle of October, I would suspect.
StockHouse: September 30th was plugged as the big launch date with a car give-away. Is that still going to happen or has that been pushed off?
Christopher Bradshaw: Nope. Actually, it'll start on September 15th. When our first sites come out, the sweepstakes begins.
StockHouse: How is the company currently funded?
Christopher Bradshaw: We have sold $5 million US worth of banner space. We pre-sold it. 25% of it, 1.25 million US, gets paid out on September 25th, and we're told our cheque will be here early October.
StockHouse: Are there plans to raise more financing, and if so, how do you plan to do it?
Christopher Bradshaw: Yes, through Bee-Trade. Bee-Trade is going to own the entire auction network. It's a branding operation and we're doing an IPO on Bee-Trade. We're taking it public.
StockHouse: What role will WSMI play in the new structure?
Christopher Bradshaw: We currently own 50 percent of it. The interest on it is absolutely unbelievable. We're doing four million shares at $5.00 a share US. We're doing the IPO on Mainstreet IPO. The cost of that listing has already been paid for. We're doing the site in exchange for that. We have a seed financing that's already subscribed. Part of the money's going for WSMI as a down-payment on the auction network. The balance is to be used to write our prospectus and to pay our filing fees.
StockHouse: When do you think the IPO going to happen?
Christopher Bradshaw: We're looking at January.
StockHouse: Are there plans to promote the spin-off soon?
Christopher Bradshaw: In the last month and a half, we haven't been doing any promotion at all. We've just been putting our nose to the grind and getting our deals done. Our promotion will be done through the Internet Marketing Consortium which gets 800 million hits a month. The Bee-Trade logo is going to be a little bee buzzing around in a circle. That little logo will be on every one of the sites' homepage. You click it, it goes to out network page, tells you about all of the different auction and e-stores we have and a description.
StockHouse: Are there any plans for a full-out advertising campaign?
Christopher Bradshaw: Yes. We have a deal with Cable Print Network Marketing. It is one of the largest, if not the largest marketing company in the US. They're doing infomercials, per inquiry advertising, etc. We also have a deal with a group called News USA. It's over two years, but we get a total of eight news article placements and 16 radio spots per month
StockHouse: What new ventures are being negotiated right now, and what can we expect in the future?
Christopher Bradshaw: There's a couple that we have coming up. One is a billion-dollar charity global lottery. We're building a site in 21 languages. Basically, it's a ticket window to sell lottery tickets for a billion dollars US. The funds are paid all at once, zero tax. Somebody will be a billionaire when they win. We can't get into too many details. It's from a royal family. They have about a trillion dollars and they're philanthropists and they'd like to help out some of the victims in Turkey, in Kosovo. It's going to be run through the UN. We'll be managing the data.
StockHouse: How will MSMI profit from this venture?
Christopher Bradshaw: At $100 a ticket, we have to do at least 10 million to break even. Now you multiply that by $6 dollars US per name per year. That's where the real money is. Plus, we also get a percentage, 20% of the advertising. There's no money to be made off the tickets. It all goes towards charity. But the advertising--just imagine the hits you'll get!
StockHouse: When will the deal be closed?
Christopher Bradshaw: The deal is closed. We just haven't announced it yet. We have to put together a news conference. We're sort of working out where that's going to be. It'll probably near the end of the week.
We also have another deal that we're cooking up. It's to sell Olympic tickets online. We're in conversations with the Salt Lake City Olympic Committee. We would've had the deal 3 months ago, but the person that was in charge of it resigned because some of those scandals they had down there. There's currently nobody selling tickets online. Our hook is that when they have Olympics, there are certain events that are extremely popular. They have other events that nobody wants. Our proposal is to sell packaged tickets. If you want two tickets to the hockey game or two tickets to the figure skating, some of the popular events, you have to take two tickets to some unpopular events. If you look at the numbers, they sell out the big events and they get people who are pretty much the families of the participants at the other events. This way they can maximise their profits.
What we're also doing is selling advertising space to the hotels, limousine services, restaurants, and we'll have site maps. Just the hits alone! Then all of the sponsors of the Olympics will be sponsors of our site.
StockHouse: What will WSMI take on that deal?
Christopher Bradshaw: It's a four-way joint venture that one. We get 25% of all profits realised. We make a surcharge on the tickets, advertising space and again data.
StockHouse: When do you hope to achieve earnings and profitability with all this growth?
Christopher Bradshaw: Soon. We're not going for the regular Internet model where we spend $200 million to do $10 million in revenue. We like to middle things. We like to partner. We don't do things we're not good at. We don't want to own inventory. We don't want to be in warehouses. We don't want to have plants and equipment. We do what we do well, and let others do what they do well. I think we'll be profitable in our first year. After our network is up and running, or sooner.
StockHouse: A lot of good news has been coming out of the company recently, and there was a run-up in July. What do you think is holding the stock down right now?
Christopher Bradshaw: Nobody has any idea what we're doing.
StockHouse: That's the only reason?
Christopher Bradshaw: Yes. If anybody knew what we were doing, quite frankly, we'd be trading at a lot higher than we are now. And that's what we're doing now. We're doing our circular for our annual meeting.
StockHouse: What is WSMI doing to get an American exchange listing?
Christopher Bradshaw: Well, we're doing an IPO with Bee-Trade. We're also looking to get inter-listed with WSMI. Bee-Trade is going public through Mainstreet IPO. That's pretty much a done deal. We're looking at early January to have that finished. At the same time, we're looking to take over a shell to roll WSMI onto Nasdaq.
We could be financed five times over right now. We've been offered, but we're not going to give away two thirds of the company to get a year's budget. We move forward no matter what. Everybody in this place, even if they don't get a cheque one week, still keeps pushing towards the same goal.
StockHouse: Thank you for speaking with us today, Mr. Bradshaw.
Disclaimer: The opinions expressed herein do not necessarily represent the views of StockHouse Media Corporation or any subsidiaries or affiliates thereof.
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