By: Danny Ecker
CRAIN’S CHICAGO BUSINESS
February 17, 2014
The parent company of Rosemont, Ill.-based helmet maker Riddell Inc. sold its baseball and softball business for $330 million, which it plans to plow into its football and action sports brands, the company announced.
In a deal that had been rumored for weeks, Van Nuys, Calif.-based Easton-Bell Sports sent the Easton baseball and softball brand to Exeter, N.H.-based Bauer Performance Sports Ltd. and is "working towards an agreement" with a separate entity to sell its Easton Hockey brand.
The news comes in the wake of a report that Easton-Bell's private-equity owner, New York-based Fenway Partners, couldn't find a buyer for the roughly $800 million company last year because of Riddell's mounting exposure to concussion related-lawsuits.
Riddell, which accounts for about a quarter of Easton-Bell's revenue, was named in some of the lawsuits that were part of last year's $765 million settlement between the National Football League and more than 4,000 former players over concussion-related claims filed against the league since early 2011. It still faces claims from hundreds of those plaintiffs.
Easton-Bell will rebrand itself BRG Sports once the sale clears, turning its focus to a family of brands that includes Riddell, Bell motor sports helmets and Giro and Blackburn cycling accessories.
Selling the Easton brands will "provide a terrific opportunity for us to focus on growing our core football and action sports brands and enhancing our cutting-edge, market-leading products, while simultaneously streamlining our operations and solidifying our financial strength," Easton-Bell Sports Executive Chairman and CEO Terry Lee said in a statement.
Getting more attention from its ownership couldn't come at a better time for Riddell, which recently lost its title as the official helmet of the National Football League.
While demand for more protective gear and higher price points for some products have driven the company's revenue up by more than 40 percent since 2009 to roughly $200 million a year, its rising costs have flattened profits over that span.
Having more resources dedicated to its brand could help the company negotiate its increasing expenses costs from concussion-related litigation and resulting higher insurance premiums, said Maura O'Hara, a private-equity expert at the Illinois Venture Capital Association.
When a private-equity firm sells off one piece of a company, "it becomes very easy to figure out whether you're being successful or not successful, and typically that drives better performance for the remaining brands," she said. "If you don't believe you can sell the entire entity for a price that will provide an adequate return on investment, then it makes sense to sell off what you can to return money to your partners, and then find a way to make the difficult part better."
Still, mitigating the risk of selling football helmets won't be easy to overcome, especially with dwindling participation in youth tackle football.
The number of kids playing tackle football ages 6 to 17 dropped almost 16 percent in 2013 from 2012, according to the Sports and Fitness Industry Association.