The deal that has been the talk of the hockey industry since late September finally occurred last week as Nike reported reaching a definitive agreement to sell its Bauer Hockey subsidiary to an investor group led by Kohlberg & Company and Canadian businessman W. Graeme Roustan. The deal is valued at $200 million.
Nike expects the cash transaction to be completed before the end of its current fiscal year sometime near the end of May 2008.
Steve Jones, director of communications for Nike Bauer Hockey commented that the deal took a bit of time to finalize as Nike Inc. was “always committed to finding the right new owners.” Jones said he feels the new ownership group fits that scenario as Roustan has a history in the hockey market. That commitment includes co-founding “Pro Hockey San Jose” in 1989, a grass roots organization formed to lobby the NHL to locate an expansion franchise in the San Francisco Bay Area and, in 1992, establishing Hockey for the Homeless, a non-profit that has produced tournaments and a celebrity hockey game as fundraisers with proceeds going to other entities like Habitat for Humanity. Roustans own portfolio of companies focus around the arena and aviation industries, while Kohlberg & Company is a PE firm that focuses on acquiring mid-market companies and helping to identify global growth opportunities and strategic developments.
Nike Inc. was also focused on finding the right new owners since terms of the deal were expected to allow use of the Nike Bauer trademark, which has built steam in the hockey market, especially over the past few seasons, to carry forward. This deal allows Roustans group to use the Nike Bauer mark through 2010, and more importantly, through the 2010 Winter Olympics in Whistler, BC. Jones commented that with the company effectively on a two year product cycle, “the spring launches will continue to carry the Nike Bauer name and we will continue to market Nike Bauer as a hockey brand.”
On the back-end, Jones noted that Bauer has operated largely as an independent company since it was acquired by Nike Inc. 12 years ago. “We have been a stand-alone subsidiary from Nike Inc. since the acquisition. Marketing and sales have been separate.”
NBH R&D will remain in its offices in St. Jerome, Quebec and will remain with the new company. There are no current plans for an office move or senior management changes, nor for any personnel cuts. In fact, the only clear plans will be the addition of jobs down the road as the new company begins to move into more of an independent stance and out from under Nike Inc.
In the end, Nike Inc. said its decision to end its relationship with Bauer was not as much about the business itself, but rather with NKEs overall business and its “23:11” goal of reaching $23 billion in sales by 2011. Nike previously reported that Nike Bauer had $150 million in sales for fiscal 2006, but was expecting to double sales from its overall subsidiary businesses as part of achieving the “23:11” goal. As Jones put it, “the reason for the sale was Nikes decision to shoot for exponential growth within its smaller businesses. Hockey was a small part of the companys overall portfolio and trying to achieve those aggressive growth targets is just not plausible in a sport with relatively flat participation.”
According to data compiled by SportScanINFO, hockey equipment sales, including both ice and roller, decreased in the high-singles for fiscal 2007 ending the first week of February. For that same time period, Nike Bauer saw a slight uptick in market share.
Major growth for the hockey market lies as much in the hands of organizations like One Goal focused on growing the game, as in the hands of any company or management team…
