Struggling sports content site Quokka Sports Inc. has agreed to sell a majority of its college athletics business to zUniversity Inc., a collegiate marketing and Web site development firm, said sources familiar with both companies.
The sources could not value the deal, but they said it involved a cash payment that would give Quokka some badly needed funding. As part of the deal, zUniversity will also hire more than 20 Quokka employees. It will also enter a long-term technology licensing agreement that could further ease Quokka's cash crunch.
Quokka is struggling to find a profitable business model and is rapidly burning through its existing cash, a problem the entire sports category is experiencing. Several high-profile casualties, such as MVP.com Inc. and Broadband Sports Inc., have recently gone belly-up. Even ESPN.com and CBS/Sportsline.com Inc. can't turn a profit, despite strong traffic numbers.
This month Quokka laid off 217 employees - almost 60 percent of its staff. That move followed a 90-person layoff late last year. The company's stock has whipsawed between 9 cents and US$15.25 over the past 52 weeks.
ZUniversity already develops sites for more than 100 universities. The Quokka deal would give it relationships with more than 20 collegiate conferences and more than 80 additional universities.
Not included, however, are Quokka's most valuable collegiate assets. Those include NCAA rights that allow it to produce official sites for some of the most prestigious events in college athletics: men's and women's basketball Final Four, the "Frozen Four" hockey championships and collegiate baseball's World Series. Quokka got those rights when it acquired Total Sports last year. Quokka also produced the NBC Olympics site for last year's games in Australia.
The deal gives some indication as to Quokka's plans for reshaping itself. The company appears to be concentrating on big, Web-friendly sports events, such as the NCAA hoops tourney, and it seems to be trying to generate revenue by selling or licensing its technology and Web-development expertise.
Santa Monica-based Digital Coast Partners has been retained by Quokka to help it sell off what it now considers non-strategic assets.