The deal to sell American Sporting Goods was evidently in the eleventh hour when the company called pulled off the auction block. The official line was that Jerry Turner made the decision to pull ASG off the table, but there is also some speculation that the buyers may have seen something that didnt work in the deal.
The talk coming out of ASG had the landscape changing after Turner saw the premium that Brooks Sports commanded when it was acquired at year-end by Russell Corp. The reality may have hit home that companies are usually acquired for a premium when they possess a strong brand and a strong management team.
Mr. Turner, for his part, looks to be putting some new pieces in place, telling his team last week that he will hire a CEO and CFO. SEW saw some renewed energy from the team at the WSA show as many anticipated that ASG will now put more energy behind brand-building instead of just making shoes for retailers.
The deal on the table had a former Nike executive backed by a private equity firm acquiring the business, but the price may not have been reflective of the elements that drove Brooks premium price. There was also talk in the aisles that ASG may be acquired in a phased-in deal, with that executive joining ASG as CEO accompanied by a minority interest investment by the PE firm. An option to buy out would be the end game.
Most will agree that there is a considerable amount of footwear industry talent on the team, but it was seen as limited due to a propensity by ownership to over-control every aspect of the business. The trick here will be getting Turner and wife Margaret Oung to let go a bit and let their management grow within the business. Could be interesting if a new owner is in the house.
Ryka, which is now also offering apparel, has an opportunity to build a decent specialty business if they focus on building a brand. Avia, the brand that challenged Reebok for womens mind share in the heady days of growth in the 1980s, could be re-built if the company focuses on original product instead of just making shoes. NSS has the makings of a decent skate brand.
In related news, former Nike, Brooks, and Fila sales exec Scott Carey has joined the company to run apparel sales and manage a concerted effort in the specialty channels. Turner has also committed to bring in a new apparel director to manage the product side. Nick Richino, the former New Balance, Fred Perry, and Prince apparel exec who had joined ASG a few years ago as GM of the apparel division, left a few weeks ago to work on a new project for Prince Apparel.
>>> The lesson in the Brooks deal is that a strong core management team will certainly increase the value of the company and also help re-position a brand to increase valuation
