SignalShare, one of the first installers and operators of WiFi networks in large sports and entertainment venues, has declared bankruptcy. Their clients include Oracle Arena, Oakland, Calif.; Joe Louis Arena, Detroit; Toyota Center, Houston; BMO Harris Bradley Arena, Milwaukee; University of Maryland and others.
The bankruptcy announcement comes on the heels of a looming legal battle between SignalShare and equipment leasing company NFS, Beverly, Mass., who are suing SignalShare over allegations of fraudulent activity and failure to pay back money owed to NFS.
The case against SignalShare was filed in a Massachusetts federal court Jan. 28, 2016. NFS seeks $7.8 million in damages. The aborted auction of assets was scheduled for July 14.
NFS said in their complaint: “[SignalShare] would represent to NFS that it had entered into an agreement with a sports arena or team and would induce NFS to provide funding for the acquisition of the allegedly-needed equipment. SignalShare would provide fake or forged invoices for the equipment it allegedly ordered, or provide fictitious serial numbers for items allegedly purchased and installed in the fraudulent contracts. Between May 20, 2014 and May 21, 2015, SignalShare conned NFS into advancing funds on 10 fraudulent lease transactions to the tune of $4.9 million.”
That was just the start of legal problems for SignalShare. A few months later, on May 15, SignalShare Chief Technology Officer Joe Costanzo abruptly quit and he is now suing his old employer as well.
Attempts to reach officials from SignalShare, Raleigh, N.C., by presstime were unsuccessful.
As the legal proceedings escalated, NFS obtained an order that allowed it to schedule an auction of SignalShare’s assets including leases, software code and hardware. The leases are valuable and many firms could foreseeably be interested in taking over the network operations or purchasing the leased equipment.
SignalShare’s most solid asset is their Live-Fi software, a mobile platform that allows venues to engage with their fans in real time. NSF claims that SignalShare officers attempted to transfer ownership of Live-Fi code to a subsidiary company of SignalShare to shield it from NSF’s grasp. A judge presiding over the case blocked the transfer.
SignalShare specialized in mobile engagement for mass audiences. By optimizing wireless networks they allowed venues to connect with fans and deliver location-aware customized content – including offers, discounts and call-to-actions – to attendees’ mobile devices during events.
“The situation is manageable but not optimal,” said Bill McConnell, general manager, SMG Jacksonville, which manages EverBank Field, Jacksonville, Fla., where the Jacksonville Jaguars play and SignalShare is contracted. “The good thing for us is that the system is in and operating. The WiFi at EverBank Field is on an Extreme Network. SignalShare is the integrator. We have a three-year contract with SignalShare and it will run out sometime next spring. There’s no doubt we will need a new integrator. The systems continue to operate. It’s an issue that SignalShare is going bankrupt, but one we can manage.”
Theorizing on what went wrong, Greg Flakus, president, GF Strategies, Vancouver, noted: “What happens a lot of the time when you have a lot of private investors who want their cash out in a certain amount of time, and you’re spending a lot of your money buying capital equipment, is that the cash flow dries up and then one day you are out of money. It takes a lot of money to support these giant stadiums and sports teams, and the technology is constantly changing.”
Flakus calculates SignalShare to have opened its doors in 2007, when WiFi connectivity was in its infancy, and points to connectivity industry growth as another blow to SignalShare’s business plan. “A factor that can’t be overlooked is that, in the early days, SignalShare was brought in as a contractor for Verizon and AT&T. Those guys all now have their own staff and departments that specialize in building networks, which meant less work and revenue coming SignalShare’s way.”
Flakus thinks that another part of why the model didn’t work is that it involved so many different parties who had to work together to put the networks in place. “There are usually four to five different companies involved in getting these networks up and running at a typical venue,” he said. “There’s the food and beverage people who need connectivity to power their points-of-sale systems, the scoreboard designers who need connectivity, signage needs power, there’s a lot of different departments and companies involved to run a venue. Coordinating the different companies and getting them to agree on various components, and agree on financing and contract terms, can be very difficult.”
Another factor, according to Flakus, is that the sports leagues – Major League Baseball, National Football League, National Basketball Association — have moved toward a model where they have an all-encompassing contract with the stadiums and arenas in their leagues that include WiFi connectivity. “That leaves the independent guy, like SignalShare, with challenges to getting contracts.”
“The amount of data that fans need now is almost into the terabytes at big games and major festivals,” said Flakus, “and that requires more and more signal strength which means more money having to be thrown at keeping the network running.”
Regardless of how the legal disputes play out, more important to the venues that currently have SignalShare equipment is what will happen to their networks. Several of the venues that have deals with SignalShare are on their last legs. Teams from three venues, the Sacramento Kings (Sleep Train Arena), the Detroit Red Wings (Joe Louis Arena) and the Golden State Warriors (Oracle Arena) are all moving into new buildings.
The situation is so complex, and legally daunting, that Scott Manley, vice president for arena operations for Toyota Center, where the Houston Rockets play, said he could not even speak to it.
Flakus sums up SignalShare’s downfall this way, “SignalShare is a company that had a great idea, they were out there first with it, but then when it got to the point to go forward and expand, they went for it, like entrepreneurs do, and they got over-committed with a lack of cash flow. They expanded too fast, tried to take on big contracts, and when it came time to produce, they needed more equipment which required more capital funds, and they could not deliver.”
Interviewed for this story: Greg Flakus, (360) 573-7027; Bill McConnell, (904) 630-0336