INTERVIEW—Calling His Own Plays

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After toiling in the shadow of Disney’s Michael Eisner, Richard Nanula is now charting his own course as head of a firm specializing in Internet sports site

A decade ago, Richard Nanula was the youngest CFO ever of a Fortune 500 company. At the tender age of 30, he was CFO of the Walt Disney Co., and the national media dubbed him heir apparent to Disney chief Michael Eisner. And with good reason.

Nanula helped turn around a struggling Euro Disney in 1994, played a key role in integrating the operations of Capital Cities/ABC in 1996, and headed Disney’s chain of retail stores.

But in 1998, Nanula jumped to Starwood Hotels & Resorts Worldwide Inc., becoming that company’s president and chief operating officer. After a personal falling out with Starwood CEO Barry Sternlicht, Nanula resigned and signed on as head of Broadband Sports Inc., where he remains today.

The Santa Monica-based designer and operator of online sports sites has official sites for 350 athletes spanning 19 sports, including sites for Los Angeles Laker Kobe Bryant and tennis star/model Anna Kournikova. Yet in the business world, the company is best known for its stellar pointman, Nanula.

The Pasadena native, son of an Italian father and African-American mother, appears to be living up to those expectations.

A few weeks ago, Broadband Sports entered into a partnership deal with ESPN.com to create an online sports channel. It has also inked deals with America Online, Yahoo Sports, Lycos, eBay, DirecTV and Fox Sports Net.

But like many such startups, Broadband Sports now finds itself weathering an intense Internet storm. The company withdrew its IPO filing in August. In early November, the company laid off 20 percent of its 250-person staff. And it is being sued in federal court by the NFL Players Association over the site’s featuring of NFL players.

Question: Having been once dubbed Michael Eisner’s heir to head Disney, and now running a relatively tiny operation, do you have any regrets about leaving?

Answer: Not at all. I’m too busy doing what I’m doing to be imagining myself doing anything else. When I was CFO at Disney, companies trying to recruit me would ask, “What would you do if you had your dream job.” I would say, “I’m already in it.” Whether I don’t have those thoughts anymore or I don’t allow myself to have them, it just doesn’t occur to me to be dreaming about doing something else. I can’t even point to something that I’d rather be doing. I know I can’t be a professional athlete. But who wouldn’t want to be Michael Jordan? There isn’t really another job out there that I’d like to do.

Q: OK, let’s talk about what you’re doing now. What’s your take on the online sports industry and how do you see Broadband Sports fitting into the space?

A: Online sports is interesting to me for a number of reasons. Sports is the perfect application online. There is so much news and information. There are so many different games on. Online is much better than television for accessing what you need. You can find out about your team, your player, your score, and you can do that whenever you want. And there’s almost always something going on. There are a number of players attacking it from a number of different ways in the space. The way I see us fitting in is appealing to the hardcore sports fan who has a favorite player, a favorite team and who wants to get something deeper than what any newspaper or any television show can get them.

Q: Are sports fans taking to the Internet medium?

A: I think they are. Sports is one of the more successful applications online in terms of traffic and in terms of advertising. I think it’s off to a pretty good start.

Q: Where does Broadband Sports hope to find most of its revenue?

A: We’re focused on getting revenue from as many different ways as we can. Obviously, advertising sponsorship is one way. We also take a cut from content syndication to distribution partners. We sell memorabilia and collectibles around our athletes. Today, our revenue is roughly equally split between those three sources. We also believe there is a business in the reasonably near future for people to pay for content.

Q: How would that work?

A: Once again, I don’t think if I offered them the greatest sports page and the greatest sports content generally, they would pay. USA Today does that. The local papers do a good job at that. But if you’re living in Los Angeles and you’re a Minnesota Twins fan, where are you going to get your information on the Twins? If I could e-mail you a product everyday the latest and greatest on your Twins, the latest and greatest on your college, and maybe it has video, audio, interviews with athletes, analysis by one of our writers I think you’d pay for that product.

Q: What’s it going to take to get there?

A: Not very much, actually. We have writers. We have athletes. It’s just a matter of our organizing that and launching it.

Q: Who are Broadband Sports key backers?

A: We have a number of venture backers right now, including Sequoia Capital and Institutional Venture Partners. We’re doing another round of financing now. So we’re raising money to get us to be cash-flow positive.

Q: This is your first position with an Internet company. What’s it like at the helm?

A: It’s a wild environment. Six to eight months ago it was, “Go public and raise as much money and spend it however you want,” and today it’s, “Don’t go public, stay private and spend as little money as you can, weather the storm and be a survivor.” It’s amazing to go through both of those phases within the same one-year period. It’s a challenge.

Q: How has your experience at Disney contributed to your work at Broadband Sports?

A: It was great working for a big successful company as it was becoming big and successful. I got the opportunity to do a lot of neat stuff. We went through our ups and downs there as well, which prepares you for the kinds of swings we’ve had in this market over the last 12 months.

Q: What did the recent layoffs mean for the company?

A: It was tough. It’s about surviving and being healthier. You can’t afford in this environment to keep a whole bunch of people around who are working on discretionary issues and future sorts of things.

Q: What about the IPO? Any plans?

A: There are no specific plans now. The markets are such that we’re going to have to wait.

Q: Broadband Sports has been making some deals lately, partnering with ESPN.com for example, and buying others. What’s the strategy?

A: We’re trying to expand our business. We’ve been looking at a lot of different initiatives. There are a lot of companies that aren’t going to survive on their own. And maybe they do some things as well or better than we do. Maybe they do things differently. Maybe they have some assets that hook up nicely with the assets that we have.

Q: What about the site that Broadband Sports did for the Dallas Cowboys?

A: Yes, we designed and produced the Dallas Cowboys site. It was a great experiment for us and it’s a terrific site that now gets more traffic than any other NFL site.

Q: Any plans to design and produce sites for other NFL teams?

A: We haven’t decided to go after other teams. That will be an interesting business for us down the road, but for today we’re just sticking with the Cowboys.

Q: What are the major challenges facing Broadband Sports?

A: I think today you’re dealing with a choppy marketplace for financing. We’re dealing with securing peoples’ commitment to working on a startup with the high risks of an entrepreneurial environment, where maybe six or 12 months ago that was a little bit easier to do than it is today. We’re getting through this time, getting past it and stabilizing. Then, it’s about recommending a growth strategy that works for us.

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