By Eric Smith
The guidelines that USA Basketball issued last week suggesting smaller ball sizes and lower rim heights for some youth divisions might seem minor when it comes to the manufacturing, distribution and sales of those products.
But whenever a sport’s governing body announces new equipment standards–whether they’re merely suggestions or mandated because of safety concerns–it can have a major impact on the production process and sales cycle for that gear. It can even alter participation trends in that sport for years to come.
Take the recent change in youth baseball bats. Three years ago, Little League announced the league would adopt the new bat standard that USA Baseball had developed for mandated use beginning Jan. 1, 2018. The organization in August 2015 officially sent out the alert that current bat regulations would be in effect until that date; then the new bat standard would kick in for most leagues.
It meant manufacturers had to build those bats to the new specifications and safety standards, and that retailers would need to clean out old inventory, stock the new bats and inform unaware consumers to the changing equipment standards. And it meant that many baseball associations, teams and parents would need to buy new bats before starting play in 2018.
The sales bump, not surprisingly, has been dramatic. Year to date, bat sales are up 63.2 percent, according to SSI Data, sister company of SGB Media. And those numbers will only increase through 2018, according to Tom Cove, president and CEO, Sports & Fitness Industry Association (SFIA).
“This will be the biggest year for bat sales in years. No question,” Cove said. “Because every 12-and-under organization except one–USSSA Baseball–has banned any bat that ever was used before. That’s remarkable for a sport like baseball. We’re going to sell a massive amount of bats this year.”
What Goes Up …
The new basketball rules likely won’t result in a massive amount of sales because they weren’t as sweeping as the bat rules and didn’t require new product–just recommendations for different sized balls for different age groups.
The average sales prices for bats and basketballs are vastly different, as well. The average sales price for a youth bat this calendar year to date is $58.15, with many options ranging from $180 to $300-plus, according to SSI Data. The average selling price for a basketball this year is $22.05, with the smaller (size 5) balls averaging $18.15.
Here are the new guidelines that pertain to on- and off-the-court equipment, according to USA Basketball:
- Smaller basketballs for ages 7-8 (size 5, 27.5” circumference) and ages 9-11 (size 6, 28.5” circumference). Using a smaller ball that is more proportional to the size of children’s hands allows for better ball control, leading to enhanced skill development.
- An eight-foot basket for ages 7-8 and a nine-foot basket for ages 9-11, when possible. Lowering the basket height for younger players assists with developing proper shooting form and increases the opportunity for shooting success.
- A 24-second shot clock for ninth-12th grade and a 30-second shot clock for ages 12-14, when possible. The 30-second shot clock for the 12-14 age segment, along with the 24-second shot clock for the ninth-12th grade segment, allows for more possessions for each team, better game flow and additional decision-making opportunities for players.
The impact on basketball manufacturers isn’t the same as what bat producers endure with new bat standards, but basketball brands like Wilson are intent to “explore how this realignment in sizing (for a younger age group) is communicated clearly on our packaging,” said Ben De La Cruz, global product line manager, performance basketball & soccer, Wilson.
Meanwhile, retailers are already feeling the effects of the market’s demand for new bats. At the recent Bank of America Merrill Lynch Consumer & Retail Technology Conference, Dick’s Sporting Goods CEO Ed Stack said the bump in bats would help drive revenue in the retail giant’s team sports business.
“We’re enthusiastic about the team sports business in most categories,” he said. “The baseball business has been very good and will be very good through the first couple of quarters with the new bat regulations for Little League. Virtually everyone who plays Little League this year needs to buy a new bat because of the new regulations.”
Working through a similar equipment change a few years ago with high school and college bat standards helped prepare Dick’s for managing the change–and the ensuing sales surge.
“We saw that coming,” he said. “We have had the experience of what happened at the high school level with the BBCOR [Batted Ball Coefficient of Restitution] bat a few years ago. And we were very aggressive on how we approached that. And we’re actually in the process of reordering bats trying to take a bigger position.”
Other retailers such as Hibbett Sports said a sales increase for a newly regulated product brings a nice infusion of top-line growth, and Jeff Hamilton, the company’s vice president of equipment, said the rule change in basketball might also provide revenue increase as leagues purchase new balls according to the revised guidelines.
But retailers–and the manufacturers who supply them–also acknowledge that a spike in sales in response to new product on the shelves usually follows a slow year when the old product is becoming obsolete and no one wants to purchase it. And the next year also will tend to suffer when compared to the current frenzy. So the peak is both preceded and followed by a deep valley.
“As much as a boom there is this year, there’s a big dip the year prior,” said Trevor Anderson, director of category management for bat manufacturer Easton. “Ultimately, at the end of the day it evens out, but it takes a lot of work to get through it all.”
Because retailers know next year’s comps will suffer, they are reveling in the revenue jump but also warning analysts to watch for a drop-off. “We got a great wave to ride right now,” Stack said. “We’re going to ride it as much as we can, but it will create a headwind next year.”
Importance of Communication & Timing
Every link in the supply chain–from manufacturer to distributor to retailer–plays a critical role in ensuring that customers get the right product when they need it (i.e. when the governing body of a sport sets the official “out with the old, in with the new” equipment schedule). The process usually begins when the league alerts suppliers to the coming changes, long before the public announcement.
“We keep in close contact with the governing bodies of all our sports and continually talk through innovation opportunities, ball design and construction developments, how we might be able to improve our products to make the game more rewarding for players and what performance elements we can improve so that more athletes can enjoy the game,” said Wilson’s De La Cruz. “Understanding upcoming rule changes as they relate to product creation, development and manufacturing is very important. This underscores the importance of having ongoing discussions with the governing bodies and being a good, strategic partner at all times.”
As for new bats, Little League issued this statement in August 2015: “Little League looks forward to working with USA Baseball, and will begin educating our local leagues, and the parents of our 2.1 million baseball players, preparing them for the important change coming in 2018.”
Even though leagues work with the manufacturers on new product safety standards and other specifications, new equipment mandates leave suppliers with an inventory glut. What happens to outdated bats and balls, helmets and shin guards?
“There’s no grandfathering in of the product; it just stops. You can’t use the old bat but have to use only the new one,” said Easton’s Anderson, who added that the company will ship obsolete bats to Latin America or sell them to recreational leagues that don’t follow the same standards.
“It’s a big ordeal and you’ve got to work with the big retailers and your account base and educate them of this rule change coming. Normally they have a bunch of stock all year and if the rule change comes and they’re not aware, they have a bunch of bats sitting in their stores that are no longer legal for play.”
Retailers, in turn, must communicate the changes in product to their customers. Companies like Hibbett Sports are constantly monitoring rule changes, according to Hamilton, who understands that they are often made to protect the safety of the participants, heightening the need to work closely with suppliers on creating the right messaging about, and ensuring availability of, the new products.
“The importance of communicating updates in a timely manner is imperative,” Hamilton said. “When there is a rule change, we need to begin the planning process right away to convert old inventory into new, and the sooner it’s communicated the more time you have to accommodate for the rule change. Ordering the proper amount of new equipment is key and delivering the new equipment to stores in a timely manner is critical. New rule changes also create demand for new product, which benefits both parties and moves the industry forward with new technology.”
It’s too soon to understand if USA Basketball’s rule guidelines will have a similar effect on equipment sales. The suggested guidelines are just that–suggested–and USA Basketball understands that it will take time to implement new ball sizes and lower rims for many youth leagues or rec centers that can’t afford wholesale equipment changes.
“We’re hoping that we can unify rules and regulations and standards, so the committee came out with smaller balls for development, the lower rims, 30-second clocks for certain age groups,” said Craig Miller, USA Basketball chief communications officer. “We recognize that a facility that has a basket in place isn’t going to remove it and put one in that they’re able to lower the rim. That’s probably not economically feasible.”
One other option for gyms is an adapter that shortens regulation height rims for youth leagues, another product that could see a spike if adoption of the new guidelines takes off.
Impact on Participation
A mandatory change to a piece of equipment is a complex issue, according to SFIA’s Cove, not only because of the intricate supply chain machinations required to produce new equipment, but also because it can influence participation in the sport.
For example, if the new bat that Little League has adopted doesn’t perform as well as the old bat–if it can’t hit a ball as far or as hard as previous iterations–will fewer kids want to play baseball?
“If it turns out that the new standard was an overcorrection and it reduces performance to the extent that kids have a harder time hitting the ball, therefore kids will have less fun playing the game, then what looks on paper to be a terrific thing may not be terrific in the long term,” Cove said. “It’s too early to tell. We have high hopes that it’s all going to work out, but we are concerned.”
On the other hand, because smaller basketballs are easier for younger players to dribble, could that equipment change perhaps encourage increased participation? The non-equipment guidelines that USA Basketball passed down–no zone defenses for ages 7-8 and ages 9-11, equal playing time throughout the game for ages 7-8 and throughout the first three periods for ages 9-11 and no 3-point field goal scoring for ages 7-8 and ages 9-11–are designed to make the game more fun.
“There’s not going to be some massive new growth in basketball sales, but what we like about these changes generally is they’re likely to grow the game,” Cove said. “If you put more kids in the 7- and 8-year-old leagues, and the 9-10-11-year old leagues then, guess what? There’s going to be more kids playing basketball for the next 10 years.”
One other factor in this discussion: New equipment that doesn’t center on improved safety but rather innovation for innovation’s sake can also work against a sport, because if products are always changing and parents are always being asked to buy new, expensive equipment for their child, that could discourage participation.
What’s known is that change is inevitable, especially as safety in sports like football and even girls’ lacrosse–where the addition of helmets is being debated–becomes even more front-of-mind for parents and leagues.
As for the manufacturers, distributors and retailers whose livelihood relies on ever-changing youth sports equipment, flexibility is key. It’s also critical for companies to learn from each gear mandate change and begin preparing for the next one as much as they can.
“We’ve been through them before and I’m already anticipating the next one,” said Easton’s Anderson. “I don’t know which sport it will be in, but I’m sure it will happen.”
Photo courtesy Easton