College Football Recruiting's $22 Million Dollar Man
Published on: March 06, 2012 | Written by: Clay Travis
Shannon Terry, the man who has made more money off the Internet recruiting business than anyone in the country, is sitting in a dark brown booth on a Monday afternoon in early March. Wearing a black Nike dri-fit shirt emblazoned with the 247Sports logo, the third college team site and recruiting company he's founded in the past nineteen years, Terry, a bearded, tall 42 year old former college athlete who finished his career as the 9th leading scorer in David Lipscomb basketball history, can barely sit still, "I'm weird," he says, "You can't be normal and do this kind of stuff."
Since 1995, when he founded his first company, Terry has been obsessively plugged in to the college football recruiting world.
"To this day," he says, "there is no better feeling than going out and covering and scouting a recruit, getting footage, taking pictures." Terry takes a drink of his tea, is lost in thought for a moment. "My favorite thing in the world is to do a full report on a prospect."
He pauses for a moment. "And the irony is, I don’t get to scout and cover recruiting anymore. I’m now consumed by the business side – product roadmaps, cash flow statements and recruiting talented reporters.
Indeed, without a moment's hesitation Terry can tell you the best high school football recruit he's ever seen: "Dewayne Robertson."
The Kentucky defensive tackle signee in the class of 2000, who was the number four overall pick in the 2003 NFL draft pick, was one of the final recruits Terry covered.
Terry, a man in perpetual motion, pauses for a moment or two, squints, thinks back about Robertson, "I haven't talked to a recruit in almost ten years," he says.
He hasn't been to a football game in three years either.
That hasn't stopped him from constantly refining his craft, the business of serving the most fanatic college fans on Earth.
Born in rural north Alabama in tiny Woodville, population 300, the only child of two cattle farmers, Terry was raised to appreciate hard work. "It's psycho how hard-working my parents were," Terry says. "Words can't describe what I grew up seeing. When I left to go to college I actually thought I was lazy because I couldn’t live up to their expectations of hard work."
The 1500 acre farm grew soybean, cotton, and wheat, but the crops existed to feed the cattle and there was always work to be done.
Terry's mom was "the most passionate sports fan I've ever seen. She'd stay up late watching anything, UNLV, Fresno State, you name it. She watches." His father was different, "I don't think my dad watched sports until four or five years ago."
Growing up Terry was an Alabama fan -- a fact that he still hears about on the message boards today -- but now he says he's more of an SEC and college football fan. "The Auburn people won't believe it," he says, "but it's true."
Terry was a good high school athlete who harbored hopes of playing at Vanderbilt, but he broke his arm in two places his senior year and ended up accepting a scholarship to Nashville's David Lipscomb University, a small private school located in a leafy suburban setting. A shooting guard/power forward in Lipscomb's four out offense, Terry put up good numbers while playing for the school, but he's fallen out of love with college basketball since graduating.
"I hate college basketball now," he says. "Even though the product looks like it is starting to improve, I just can't sit still and watch an entire game. I hate the way the game is played. 19-17 at halftime – are you kidding me? No thanks."
His parents hoped he would be an engineer upon graduation.
Instead, at 23 years old, Terry started a recruiting website, Alliance Sports.
And with a competitive athlete's focus and drive, Terry applied himself to the world of college football recruiting.
Nearly twenty years later and now running the third company he's founded focused on recruiting, Terry's ambitions are large.
"We want to build the destination for college sports," he says.
"i'm obsessive compulsive about this business," Terry says. "I sleep four hours a night. I'm drawing site designs on the steam in the shower door. I am not normal."
Terry, the divorced father of a 16 and 13 year old, is "fear driven. I fear failure more than anything."
"And I love competition. I want to compete every day."
Launched in August of 2010, Terry's 247Sports network now boasts 40 different team sites and over 45,000 paid subscribers. At $10 a month that means 24/7 is bringing in around $5 million a year in subscriber fees and that number is increasing at a torrid pace. "We're running ahead of schedule, ahead of where I thought we'd be," Terry says. He's been monitoring subscriber feeds for seventeen years since as a 23 year old he founded his first company that was designed to focus on the nascent field of Internet college football recruiting.
Prior to Terry and a few others taking to the Internet, college football recruiting lacked timely updates. The whims and vagaries of 17 year old athletes were not analyzed in real time. "Our business took talk radio, team print magazines, and the 900 phone line updates and rolled it all together," he says.
In pre-Internet times recruiting junkies used to call 900 phone lines for the latest recorded updates. Sit on the phone line and listen as someone like Sirius radio host Bill King, who hosted a popular recruiting radio show in the South, read you information about the latest recruits. Information that he and his staff had gleaned and recorded. Men across the South made furtive phone calls to the hotlines. There's no telling how many fights ensued, relationships ended, over 900 phone numbers on the telephone bills.
But these weren't covert sex chats, they were the foundation of a lucrative recruiting business, bringing in hundreds of thousands of dollars a year to inform the most diehard fans about recruiting classes and sought after recruits.
But it wasn't a mainstream business.
Then came the Internet.
And recruiting went mainstream.
Within a few years Terry and his partner at Alliance Sports, Greg Gough, were bringing in a million dollars a year in revenue.
By 2000, just as the first Internet wave crested, Terry and his partner sold out to Seattle based start-up Rival Networks for $3 million.
"I made $2 million," Terry says, "and I was out of the game."
Terry was 30 years old, a freshly minted millionaire, and had no role with the new company.
Then Rivals went bankrupt, squandering tens of millions of dollars in a single year.
Asked how the money vanished, Terry laughs, "If you got it, it ain't hard to spend it," he says.
As the Internet bottomed, a representative for Terry approached the liquidator and made an offer. At first he was rebuffed. A few months later a Terry-led group bought Rivals’ assets for about $500,000.
Terry moved the company to suburban Nashville and began to rapidly grow its reach. The business model was simple -- find subscribers and charge them $10 a month for premium access. At first the primary question was how many people would pay? Especially when the list of successful pay sites is littered with failures. Even in today's market it's rare to find a successful subscriber based business model. Major media companies -- with the possible exception of ESPN's Insider -- have found it almost impossible to directly monetize consumers for online content.
Would college fans pay?
A definitive yes.
Terry's Rivals network had grown to 230,000 subscribers by the time Yahoo came calling in 2007.
That year Yahoo bought the company, now doing projected subscriber and advertising revenue of nearly $35 million, for a reported $98 million.
Terry, who owned 20% of the company, pocketed another $20 million.
Before he was 40 years old Shannon Terry had made $22 million off Internet college sports and recruiting.
"When we sold to Yahoo," Terry says, "I looked around said, 'What the hell am I going to do now?'"
That was especially the case once Terry came to undrstand he wasn't going to enjoy his time in the corporate environment at Yahoo. Bouncing from one boss to another and forced to shuttle back and forth to Santa Monica, California, Terry soured on his role at the company. After two years he quit. For another year he set out to fulfill the three-year non-compete he agreed to when he sold Rivals to Yahoo.
Shortly after his non-compete ended, Terry, now living in a suburban Nashville hotel as he went through a divorce, sat in a truck talking to his mom back home on the farm. Suddenly he was surrounded by a squad of police cars.
Turns out his hotel was the site of a major drug sting and police thought Terry was a dealer. Police warned him of the situation and told him to be careful so Terry, an avid gun collector, placed a .380 pistol in his backpack.
That same week he was scheduled to fly to Houston, Texas where he intended to meet with team site owners about his new venture. It was a day trip so Terry didn’t plan to carry any luggage. That same morning he received an unexpected call from his attorney to come downtown and pick up 300 pages of corporate documents for the anticipated launch of the new company.
Terry grabbed the backpack and rushed out the door. As he placed his bag on the x-ray scanners a sick feeling rushed through Terry's stomach, the pistol was still in his carry-on bag.
Seven officers surrounded him, Terry was handcuffed and arrested on the spot.
"I was obviously very embarrassed. I was back in that mode where my brain was totally consumed on building a company and nothing else registered. The police were so nice that they convinced American to hold the flight fifteen minutes while they were booking me," he says.
Charged with a Class C misdemeanor, Terry made his flight and his meeting. "Making that trip probably was the biggest event of our company thus far. That day I signed OUInsider," he says. Which led to Bucknuts – the market leading Ohio State site – which helped us pick up another ten really good sites. If I miss that flight, we don’t get those ten key team sites."
As for the pistol?
"It's probably a manhole cover now," Terry says.
Now nineteen months into his newest recruiting endeavor, Terry looks back over his nearly twenty years in the business and thinks the recruiting services have helped cleaned up college football. "Fifteen years ago it was the wild, wild west out there. But each year it gets progressively cleaner. You'll get caught now if you're paying players directly or indirectly and you're a coach. We see almost nothing. Where schools have to be careful is the rogue booster. Some guy, rich as hell, doesn't give a damn about the NCAA rules. Those guys are dangerous, but for the coaches it's cleaner than ever. Now, the kids are smart and they get helped, but it's mostly nickel and dime stuff."
"More power to 'em. Some of these kids show up on campus and you can put everything they own in a Kroger bag. It’s going to be hard for them to say no to a free meal at Denny’s if given the chance … and how can you blame them."
With 247Sports Terry is more philosophical about the road ahead, less eager to sell out again.
The constant grind of a generation in the recruiting business has taught Terry lessons about his own life. "I used to work all the time," he says. "I'd be putting the kids to bed a half hour before they wanted to go to bed, rushing them to sleep, all so I could go back to work. It about ruined my life. You can't live that way."
Now Terry has new rules for himself.
"Except for January I don't go online after seven at night. I just don't do it. I don't check email after leaving the office and I never do anything Friday after three. Then nothing on Saturdays. Come six or seven every day, I unplug. Because for me if I get online at six or seven, I'd still be working at 2 AM."
His addiction is recruiting.
But now Terry has a new life philosophy, "I'm going to do everything in my power to own Monday, Tuesday, and Wednesday. I'm in the office by six and I don't go to lunch, I work. I feel more productive than ever."
Having raised $7.2 million in venture capital, Terry's company is close to turning revenue positive. Indeed, last month he was profitable for the first time. With nearly 100 employees, Terry believes that his 45k subscribers will continue to grow and that good things lie ahead for his company.
Indeed, he's already intent on taking his recruiting information mobile -- "Eventually our mobile offering will be as good as the desktop experience." -- and growing his technology platform.
"We’re trying to build a site that will be the blueprint for the next 10-15 years, not replicate what our team has already done and accomplished," Terry says
Built into his fixed costs is new technology that Terry and his COO, Noah Stanley, believe will revolutionize the information available to recruitniks across the country. Says Stanley, the driving force behind 247Sports technological drive: "We want our information and data to be the best in the country. And we don't want it be just our information. We want people all over the country to be able to analyze our data and find things that we might not have noticed."
Notice a player in a high school game and wonder whether he might be a college athlete one day?
Well, even if he's not one of the 247 top players in the country -- 247Sports debuted their 2013 rankings in November of 2011, a full 15 months before signing day -- you'll be able to search for him on the 247Sports database.
According to Stanley that database will have at least 4,000 kids in each class, a veritable river of recruiting information, videos, and photos.
Debating what the site should look like in 247Sports conference room: Terry on left, lead designer Dave Lester in center, COO Noah Stanley on right
Already, fans are finding the pages. Last month 247Sports did 2.2 million unique visitors, the vast majority of whom come searching for player or team rankings.
And who were those searchers? Right now 247Sports' subscribers are 95% male and generally between 34 and 45 years old.
Terry believes that there are at least 500,000 subscribers out there willing to pay $10 a month for team services.
Exact numbers are hard to nail down, but presently Scout -- which sold to Fox for $60 million in 2005 -- has around 70,000 subscribers, Rivals around 200,000 subscribers, and 24/7 has 45,000.
With just over 300,000 current subscribers among the sites that leaves quite a bit of room for growth.
And lots of room for competition.
To that end 24/7 Sports is debuting several new formats -- ranking football players as sophomores, constantly updating team recruiting rankings, releasing the top 247 player rankings in November, a full fourteenth months before signing day, partnerships with newspapers like the Austin-American Statesman and the Knoxville News-Sentinel that brings 24/7 writers' content to the masses, and message boards that allow subscribers to make their comments visible to all.
Indeed, Terry has seen that 77% of his subscribers would like to see their comments posted outside the pay wall. It's further evidence that fans want to be heard, want their opinions shared as widely as possible.
But for now he's focused on the competition, the journey, the leap into an online recruiting world that's shiftier than a five-star running back clocking a 4.3 forty.
"You try and build the site for the future," he says, "but you know the future changes so quickly."
Nearly a generation after he launched one of the first pay recruiting sites in the country, Terry has pocketed $22 million from the business, more than most of his five star recruits will ever see from playing sports, but Terry insists it isn't about the money.
"You have to love this," he says, "if money was my goal I'd have gone to a hedge fund or something."
Asked about his exit strategy with 24/7 Sports, his reputation for flipping recruiting sites, Terry laughs, leans back in the booth at the restaurant.
"I don't give a crap about my exit strategy, it's the journey, it's the competition. It's building something from nothing. I don't want out because I love what we're doing every day."
Seventeen years after Shannon Terry first started writing online about where recruits might end up in school, he's content right where he is.
Call it something simple: Five Star Zen.