Summit Sports insiders speak

After last week’s piece on the case of Summit Sports World, Inc., and its P 200-million plus debt to the PBA, NBN-4, IBC-13 and several suppliers, this writer was contacted by two former officials of the company to air their side.

Frederick Orticio and Junie Portez, who helped organize the consortium, sat with this writer over lunch yesterday to give a historical background to what turned out to be a disastrous business venture for them.

"We and the five incorporators were new to the business," explained Orticio, who says he served as Summit Sports World’s general manager until last year. "NBN had already set everything up. They had talked to IBC-13; they had hired Video Art, Inc. to market the PBA games on television. Everything was set up before we came in."

"Just imagine," adds Portez. "For an initial investment of P 200 million, you see projections of P 600 million just for the 2003 season. For a net profit of at least P 100 million, anybody who had the money would jump at the chance."

Even though the pair claim that none of those projections were signed by any officials of Video Arts (who would be responsible for bringing all that revenue in), Summit Sports, headed by Fidel Cu, entered into the agreement with NBN with full faith. However, officials of the consortium started to find some of the nuances of their partnership unusual.

"NBN did all the talking to the PBA, and to sponsors, as well," Orticio elaborates. "Summit was never involved in any negotiations or discussions. But Summit was expected to pay for everything."

"Being newcomers, we trusted that NBN would guide us, and that everything given to us on paper would be followed, like production budgets, etc.," adds Portez.

Gradually, Summit started to notice certain discrepancies with the initial rates of television packages offered to sponsors, and the actual sales. Although the amount of money that would supposedly come in was acceptable, the rates were being discounted.

"Bakit nalugi ang Summit? (Why did Summit lose money?)" asked Portez. "Imagine buying something for P 30, and selling it for P 12. We heard that our 30-second commercials, originally projected at P30,000 each, were going for P 12,000. And we were not informed. So we were expecting to make money back from the revenues, but they weren’t coming to us in the volume that was projected."

Whether or not that was the prevailing market value for a PBA television commercial at the time, Summit started to feel uncomfortable with the set-up. Even the Roll-Tec device, capable of flashing up to 28 different advertisers alternating for a pre-determined number of seconds each during the games, were originally meant to be sold at P 2 million each, but ended up under-priced. The in-venue marketing also ran smack into the efforts of the PBA itself to generate sales in the venues, as well. Soon, Summit had Video Arts replaced. However, this also had its problems. The new marketing group, Dreamsports, could not sell the PBA television packages at the original rates, since a lower price had already been introduced. Advertisers would refuse to pay a higher rate. Furthermore, some sponsors were scared, since they didn’t know who would be the one to collect the commissions, Video Arts or Dreamsports. This was aggravated by the fact that the NBN-Summit group was taking over the PBA TV coverage after Viva-Vintage used it to promote its entertainment products, so ratings were low, and advertisers were sitting on the sidelines, waiting for them to pick up.

Summit was expecting money to be flowing back to them. Instead, it was a trickle. They needed money to keep the ball rolling, so to speak. Needless to say, after paying P 100 million initially for the PBA’s franchise fee, they were banking on sales to keep them going. It didn’t happen. Summit’s budget started to run out.

Orticio and Portez claim that Summit paid Manilabank P 6 million for a P 200 million credit line, and that, if the consortium stopped making payments to NBN for any reason, the PBA could get the money from Manilabank, if NBN submitted the pertinent paperwork. The two former Summit officials doubt that it happened, since Summit supposedly assigned P 53 million worth of receivables from San Miguel Corporation to the PBA.

More and more problems started to come out. By about July of 2003, barely five months after they began, NBN 4 started withholding the certificates of performance from Summit Sports. A certificate of performance (CP) is a document from the airing network proving that it did indeed broadcast a specific commercial at a certain time on a certain date. Without it, the producer of a television program cannot collect money due from an advertiser. This created a chicken and egg situation. Without the CP’s, Summit could not collect on whatever packages it had sold. And yet, if NBN released them, there was no guarantee they would get a portion of the revenue, either. Furthermore, the network was not the entity authorized to collect, in the first place.

Eventually, Summit Sports stopped paying altogether. After meeting with a few suppliers and promising to make payments, Summit filed a Petition for Corporate Rehabilitation with the Pasay Regional Trial Court. They also closed their Makati office.

"We came out because of our conscience," Orticio claims. "Because we know that there are people who need to be paid. But we also feel that we were left out of many decisions and were not informed of others, and this could have saved everybody a lot of trouble."

Upon breaking their silence, the two former officials of Summit make the case that they aren’t the bad guy, but the victim and the biggest loser in this case.

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Catch this week’s episode of The Basketball Show on ABC 5 at 3 p.m.