Performance Sports Group (PSG), the parent company to brands such as Bauer and Easton has filed for bankruptcy. In the wake of the news, there were some on social media that were hoping for cheaper equipment and those with legitimate concerns if the brands would disappear. One thing is for certain. The Bauer brand is highly unlikely to disappear. It is still one of the most recognised and widely used hockey brands out there and the brand alone is worth a lot of money. Whether it will result in cheap equipment… that is unlikely. More on that later.
I tried to express my thoughts on Twitter on the matter, but 140 characters makes that incredibly difficult. Firstly, PSG has filed for Chapter 11 protection in US, which prevents any of its creditors moving in on its assets (i.e. the brands) and it has already received an offer from its main investor to the tune of $575 million. If any other investor wants to join in on the party, their offer would have to match or exceed the offer put in by Fairfax Financial.
Whilst that puts a slightly more positive spin on the news, it is not all clear sailing. PSG said it will be re-structuring and what that usually means in business terms is consolidation of businesses. This is pure speculation, but it wouldn’t be surprising if other brands in the firms’ operation were molded into one (see what Reebok and CCM did recently with their equipment businesses), so in hockey for example we could see household names disappear. Don’t forget that PSG produces equipment for lacrosse and baseball for example, so they’ll need to look at the different brands at their disposal.
In terms of what this potentially means to Bauer is that the current three equipment lines could be trimmed down to one, or two at most. In the restructuring realm, it is not feasible to necessarily keep all three lines with associated R&D and production costs going. So what we could expect is that we will see technologies applied exclusively to some lines to be transferred across to future product line/lines. This applies to goalie equipment as well, where Bauer also has three product lines.
So what about that free and cheap equipment then? Not likely. Bauer’s parent is protected by Chapter 11, so its creditors can’t move in and start a fire sale on its assets. Bauer’s troubles aren’t the same as a sporting retailer going bankrupt. In a case of a retailer going bankrupt, they need to get rid of their stocks and usually the best way to do it, is to sell everything. Cheap. Bauer and other brands owned by PSG, will have sold stock to the retailers and the retailers then need to sell that and still turn a profit, or make margin on what they’ve paid Bauer. So PSG’s financial woes are unlikely to result in any flash sales of equipment. The latest when we could expect the price to come down is when Bauer and the other PSG brands start pushing the 2017 lines, which by and large should remain unaffected. The real ramifications of the financial trouble and its impact could be seen for 2018 product lines.
This is based on the fact that Bauer has already held its dealer day and unveiled its next years’ lines to its dealers who will have filled in estimates on stocks they would like. If PSG is able to keep its suppliers (the manufacturers and the supply chain for materials) happy, production of the new lines should be well underway already. Like said, if there’s any trouble, it’s not going to be seen until 2018 and beyond.
In a lot of ways what I see happening with Bauer right now is what happened with CCM a few years ago. Though before going any further, CCM benefitted hugely from Reebok buying the company in 2004. CCM had since then focused on developing its Vector line of skates and continued to put its efforts behind this single line of equipment (while Reebok was developing the likes of the K line, Ribcore, etc). The Vector line then eventually evolved into U+, which then evolved to RBZ to JetSpeed, until last year when CCM introduced the legendary TACKS line. Then in 2016, Reebok and CCM brought the hockey equipment business under one brand, transferring all of Reebok’s lines to carry the CCM name, with Reebok focussing on the performance clothing side of hockey. CCM now has the TACKS, JetSpeed and Ribcore skate lines, Quicklite and TACKS protective line and Ribcore, RBZ and TACKS lines of sticks.
So, in short, while the news from Bauer hasn’t been the best, it’s highly unlikely that the Bauer aficionados out there will have to stock up on their Bauer equipment as the brand is going to be around. However, what remains un-certain is whether Bauer will be able to carry all of its product lines. Chances are that things will go on with minimal change, though you could expect some areas be trimmed down