Ron Williams has been in the sporting goods business long enough to know a pretender from a contender. Right now the team-sports specialist for River Grove, Ill.-based Wilson Sporting Goods Co., a $546 million industry mainstay, is anything but pumped by the numbers game of African-American representation in the sporting goods business. 'Because they see black athletes on television selling footwear, clothing and other products, people assume it's a natural progression for us to be on the business side of the industry. But that's not the case,' observes Williams, founder and chairman of the Association of Black Sporting Goods Professionals (ABSG).
In fact while sporting goods ads often feature prominent black athletes such as Michael Jordan, Jerry Rice, Deion Sanders, and more recently, Shaquille O'Neal, few of those campaigns bear the stamp of approval of a top African-American corporate executive. And even though African-Americans are avid consumers of sporting goods products, almost none of the advertising work featuring these sports stars goes to black-owned ad agencies.
Meanwhile, black-owned businesses continue to have a hard time getting a significant share of the sporting goods market, which generated more than $30 billion last year alone. Drew Pearson Companies (DPC), the largest black-owned company in the industry (No.79 on the BE INDUSTRIAL/SERVICE 100), generated just $33 million in 1992.
How important is this industry? Consider this: The sale of Major League Baseball tickets generated $560 million in 1991, while sales of hats, jackets and other League-licensed sports gear generated $2.4 billion. Once again, African-Americans, highly visible on the hardwood, diamonds and gridirons of America, are all but invisible in the most important sports contest of all--the off-court competition for dollars. The following is the third in a series of special reports, 'The Business of Sports.' In this installment, BE looks at the progress made by black professionals and entrepreneurs in the sporting goods industry.
Stuck On The Sidelines
The climate for change, it is safe to say, is less volatile now than it was three years ago. It was then that Operation PUSH, the Chicago-based civil rights organization, launched a boycott of Nike Inc. in a futile attempt to force the industry giant to 'Just Do It-: hire more minorities. Although that wake-up call has led to widespread introspection, change has been slow-footed for an industry that has profited by leaps and bounds since bursting out of its Chuck Taylors (The Air Jordans of a bygone era) in the 1970s.
The National Sporting Goods Association (NSGA) reports that industry sales rose from $25.2 billion in 1988 to $30.3 billion in 1991, with a 4% increase projected for 1992. Beaverton, Ore.-based Nike led all companies with $3 billion in sales in 1991, while Stoughton, Mass.-based Reebok International Ltd. was second with $2.2 billion. The most prominent segment of the industry is the footwear/apparel market. Thanks to the ringing endorsements of superstar athletes and the hip-hop fashion statements of black entertainers, African-Americans accounted for 22.6% of the $2.7 billion basketball shoe market, according to American Sports Data Inc. of Hartsdale, N.Y.
Yet best estimates are that blacks represent less than 3% of the industry's professional work force nationwide. Critics are quick to charge that prominent African-Americans, such as Nike board member and Georgetown University basketball coach John Thompson, are extremely rare and offer little more than token representation in the industry. It is widely acknowledged by industry observers that blacks were simply left out of the mix while privately held sporting goods companies boomed overnight. However, that was then, and this is now. If organizations like the ABSG have anything to say about it, the issue of minority representation is not going to go away quickly or quietly.
Williams, a 15-year industry veteran, estimates that even the ABSG would be hard pressed to come up with the names of 120 black professionals in the sporting goods industry. His own employer, Wilson, has over 100 sales reps nationwide, but only two are black.
Not surprisingly, Nike and Reebok are among the corporate front-runners in what figures to be a marathon journey toward black representation from the mailroom to the boardroom. Reebok--with such key players as Bryony Bouyer, manager of Boks brand, and Leslie Mays, director of cultural diversity--has a minority work force of roughly 11% among it's 1,850 employees worldwide. Nike has 644 African-Americans, or 12.4% representation, among its 5,214 domestic employees. But only 58 blacks (less than 2%) are in the managerial or professional group.
African-Americans aren't progressing much faster in ownership circles. It is here that a handful of former and current athletes are having the most success bankrolling the manufacturing of goods such as shoes, caps, shirts and shorts.
Former Dallas Cowboys receiver Drew Pearson co-owns Dallas-based DPC, which specializes in caps and other sports-fashion apparel. Los Angeles Raiders receiver and kick returner Tim Brown owns Dallas-based ProMoves Inc., an athletic footwear company that posted $2.5 million in sales in 1992. And Major League Baseball Hall-of-Famer Lou Brock owns Brockworld Products Inc., a St. Louis-based wholesaler, merchandiser and retailer of novelty and gift items, with more then $4 million in sportsrelated sales in 1991.
Aside from those well-known sports figures, the ownership runs the gamut from Harold Martin, owner of Novi, Mich.-based MVP Products Inc. (which specializes in custom-designed athletic shoes for high schools and colleges), to James Copes, owner of two Oakland-based sports specialty shops.
Yet, whether as owners or as corporate leaders, it is clear that African-Americans are relegated to the sidelines of an industry heavily dependent on black athletes and black consumers. 'It seems like this is a business that only the white majority of America has been associated with,' says Pearson. 'But really, I can't think of anyone who would be better qualified to sell sports apparel than blacks. I'm disappointed that we have failed to find sales reps, qualified manufacturers and qualified black retailers in this business.'
The ABSG: Driving For Change
Since its founding, the ABSG has become the industry watchdog, with Williams, its chairman, as chief sentinel. 'Until we as black people become part of the solution, we will continue to be part of the problem,' he warns.
Together, the ABSG and its corporate members, which include Nike, Wilson and Reebok, have begun the process of identifying and educating qualified candidates for the sporting goods business starting as early as high school. For example, at press time, more than 300 minority students were slated to attend the ABSG's Career Awareness Program at Atlanta's Emory University last month, in conjunction with the Sporting Goods Manufacturers Association (SGMA) Super Show. But tension between the ABSG and the companies it hopes to change remains very thick. (For more information on the ABSG, call 310-821-6910.)
About 15 years ago, after attending several national trade shows, Williams first noticed how few blacks there were in the industry. This prompted him to help start the ABSG three years ago--putting his career at risk in the process. 'I've been like Malcolm X out here. They don't want to touch me,' says Williams, referring to other sporting goods companies.
'Until our association was founded, no one was holding these manufacturers and this industry accountable,' Williams adds. 'We're not trying to create an us-against-them situation. We need the industry because that's where the jobs are. But there comes a point where you need to see some progress.'
Williams continues: 'Regardless of the percentage of total dollars, African-Americans spend a lot of money in this industry. And there's no question who sporting goods companies are advertising to. All the ABSG is saying is that if you recognize us as being viable consumers, then your workplace should reflect your marketplace.'
Needless to say, not every company sees eye-to-eye with the ABSG. Williams points to New Haven, Conn.-based Starter Sportswear Inc., a $200 million marketer of sports apparel, and $688 million Russell Corp., based in Alexander City, Ala. Both companies have benefited from the intense popularity in black urban communities of jackets, caps and other gear emblazoned with team logos, such as those of the Los Angeles Raiders and the Chicago Bulls. 'Starter apparel has almost become a uniform in the black community,' Williams says. 'Yet [company representatives] have been very arrogant and bullheaded about why they have to do anything just because their market is in the black community.'
According to Williams, Russell's position is that the scarcity of blacks in the sporting goods industry is a societal, rather than industry, problem. Therefore, he explains, the company feels it's not their problem. 'The bottom line,' Williams says, 'is that black people must become more informed and concerned consumers. They must make the decision that if a company will not hire us, we will not buy its products.'
For the record, Starter, Russell and a number of other companies declined to address the issue in detail. A survey on racial diversity sent out by the ABSG and the William Monroe Trotter Institute at the University of Massachusetts (the results of which were released at the SGMA Super Show in February) resulted in only five responses out of 50 queries. 'The CEOs, presidents and directors of human resources have decided not to cooperate or release any information pertaining to the status of minorities in their companies,' charges Harold Horton, survey administrator and associate director of the institute. 'If they aren't making this information available then it appears to me they have something to hide,' he says.
SGMA President John Riddle responds that while the numbers are low, the industry is receptive to diversity issues. 'Traditionally the industry has not recruited; it has not needed to,' he asserts. 'However, to be sensitive to our country's needs, we are trying to ensure that the pool of professional applicants within our industry family is as diverse as possible. Our industry is small on dollars but big on recognition.'
Riddle continues: 'We're the size of Chrysler Corp. We are small, vertical and entrepreneurial. Our advice to those knocking on our door is not to simply go after the world class companies, but get to know the smaller companies that are 90% of our industry. After all, there are more opportunities within the 90% than in the 10%.'
Leslie Mays of Reebok echoes Riddle's thoughts about recruitment. She points out that most sporting goods companies were set up by white males with while males in mind. 'It's an industry that has not necessarily been open to people of color over the years, primarily because it's a new industry that got started on the family-business level,' Mays explains. '[Minorities] were just not in the mix when these companies started and began growing so quickly. I think the industry has made great strides, but there's still a lot more we have to do. I think we're just laying the foundation,' she says.
Doing The Right Thing
That foundation, critics argue, should ultimately result in blacks not just being recruited for human resources and administrative-support jobs, but also for engineering, research and development, sales and marketing, and design posts. 'A lot of companies just try to paint a picture,' says Henry Chriss, a chemistry laboratory manager with Nike. 'They want to get the proverbial token in there and say |See what we did.' I'd like to see a company get African-Americans in higher-skilled, higher-level positions. There are a lot of very educated and qualified minorities for these positions. Companies just need to do a better job of getting out there and finding them.'
Nike's recruitment of Chriss away from Middlefield, Ohio-based Duramax Inc., where he was quality-control laboratory manager, and Urban and Minority Affairs Director Michael E. Lewellen away from Southwestern Bell in St. Louis, are positive signs of Nike's commitment. Less significant was the appointment of basketball coach John Thompson, a long-time company shoe endorser, to its board of directors.
'Doing the right thing is not hiring Thompson to your board of directors,' says Martin of MVP, the black-owned athletic footwear company. 'Doing the right thing is hiring educated and qualified personnel.'
Reebok has allocated $19 million to minority businesses over the next two years. This includes a multimillion-dollar, full-service assignment with New York-based UniWorld Group Inc. Reebok has also stepped up its image by naming former Harvard basketball coach Peter Roby as director of basketball promotions and Brian Dunmore as advertising and marketing legal counsel. The company is also relying on the design and engineering expertise of E. Scott Morris and Robert Purvy.
But the most compelling story at Reebok could be that of 27-year-old Bryony Bouyer, Boks brand manager. Boks, a casual shoe with an athletic heritage, is scheduled to debut in the spring of 1994. 'I remember saying when I was in college that if someone gave me a chance to do something, I would do it well,' says Bouyer of her start as an administrative assistant at the foot wear company six years ago. Bouyer discovered that youthful exuberance is very much in vogue at Reebok. After stints as a marketing assistant assistant business manager, assistant brand manager and associate brand manager, she was told by Reebok to take the next 18 months and design a shoe that would be fashionable in 1994.
While her proven ability to organize and complete projects is important Bouyer is banking on being culturally connected enough to feel comfortable walking into the same stores as the younger crowd targeted by Boks. 'The challenge is in developing that right kind of product to appeal to the right kind of people,' she says. 'In athletics you can decide the trend, but fashion is different. You're trying to get that right product with the right attitude.'
In fact, the industry has become increasingly dependent on fashion trends. Robust sales of apparel with college and pro-team logos are propping up industry growth, as demand for sports equipment and even athletic footwear has cooled, say industry observers.
Lately it has been black fashion that has captured the imagination of the industry, whether it be Los Angeles-based Eurostar Corp., which is using former gang members to help design its shoes, or Modesto, Calif.-based Hi-Tec Sports Inc., whose 'Magnum' military-style boots have become--to company officials' surprise--an inner-city rage. And as sporting goods companies work to improve their numbers, the steady flow of black-consumer dollars has not gone unnoticed.
Major League Opportunities
DPC is clearly one of the benefactors of this trend. The 7-year-old company has grown from being a $500,000 operation in its first year to a $33 million company in 1992. CEO Pearson, along with President Kenneth W. Shead, 46, Executive Vice President Mike Russell, 32, and CFO Dave Briskie, 31, own DPC. Pearson points to licensing agreements with the NFL NBA, Major League Baseball and the National Black Collegiate Licensing Co. as the main reasons why DPC has flourished. 'The bread and butter, the bulk of our business, is the licensing business,' says Pearson, 41. 'If we didn't have the licensing, we would still be in the sports apparel business, mainly selling to major corporations. We would not be selling retail.'
Needless to say, wanting a license and getting one are two entirely different animals. NFL Properties, the licensing arm of the National Football League, earned $2 billion in 1991. It processes over 600 product applications per year and rejects the majority of them. The Atlanta Olympic Committee, which will host the 1996 Summer Games, has already mailed out over 2,000 applications, with the Olympics still three years away. 'The major barrier we had as a business was getting through to the league and being able to be granted a license,' recalls Pearson. 'It's not a thing that's tough only on minorities; its tough on everybody, period, because it is such a treasured and valued commodity.'
Former Dallas Cowboys President Tex Schramm and the Rev. Jesse Jackson were instrumental in helping Pearson get a license. Major League baseball was still reeling from the fallout over derogatory comments about blacks made by former Los Angeles Dodger executive Al Campanis in 1987. It was at that point, according to Pearson, that DPC presented itself to the leagues as a 'qualified minority company' to help ease the negative atmosphere prevailing in pro sports. (Racist remarks allegedly made by Cincinnati Reds owner Marge Schott have renewed the intensity of calls for equal opportunity in sports. At a meeting of Major League Baseball team owners, held in Grapevine, Texas, in January, Jackson's Rainbow Commission of Fairness in Athletics presented 14 points of concern, all directed at baseball's treatment of minorities.)
With minimum guarantees to meet and 8% to 10% royalties on every licensed product sold, DPC struggled 'the first year or so because we didn't have strong financial backing,' Pearson says.
Fortunately, all three leagues met with DPC as it barely met its minimums. Now it is surpassing the minimums three times over. 'It was a blessing, and we're fortunate that they gave us time to grow, because now it's paying off,' says Pearson. 'If you execute once, you get these agreements; if s going to be lucrative to your business.'
A license 'gets you almost immediate acceptance with the retailer,' says Jeffrey C. Durand, a black sports agent and co-owner of Minneapolis-based Hansen Sports Inc. Hansen's Wrist Pro wrist protector is a hot new product with both pro and amateur athletes. If retailers carry the product, 'that's more than half the battle,' he adds.
Former baseball star Lou Brock, 53, has been selling Major League Baseball-licensed novelties and gifts since 1974. It was only in 1991, however, that his company, Brockworld, got the green light on a line of League-licensed active wear. He is also branching into the now affordable field of photo imaging, a technique that enables him to superimpose the likenesses of sports fans and 364 Major Leaguers onto a T-shirt poster or photo. Brock has conducted test marketing in Houston, Los Angeles, Kansas City, San Diego and St. Louis.
This isn't the first time that Brock has been on the cutting edge of sports licensing. Almost 20 years ago, he was so amused by the umbrella hat worn by a Chicago Cubs fan, that he tracked down the patent and bought it for around $4,000. He later wore a similar hat while taking the field before a game, thinking people would find it so funny that they'd stop throwing objects at players in the outfield. The hat eventually caught on with the college crowd, and Brock's future in sports merchandising was on its way.
Tim Brown's ProMoves doesn't have an umbrella hat or a license with either of the pro leagues, but it may have the next best thing: a high profile NFL player as its majority owner. Brown, the 19B7 Heisman Trophy winner from Notre Dame University, decided three years ago to sell high quality, performance-oriented athletic shoes that were codesigned and sold by the NFL players who wore them.
After bouncing the idea off industry experts, Brown, 28, and his brother, President and CEO Donald Kelly, 34, eventually entered into a royalty-driven venture with the Missouri-based Pagoda Trading Co., known for its licensed footwear for the Walt Disney Co. and Mattel Inc. The first line of shoes hit the market last February, and sales have been brisk. 'All we're trying to do is carve a little niche for ourselves. There is such a tremendously large market that you don't need a 20% share to be successful,' says Kelly.
Larry Dower, vice president of sales, says that it doesn't hurt that Kelly presides over ProMoves with a never-say-die attitude. 'Donald Kelly doesn't know the words |No, it can't be done.' Its just not in his vocabulary,' explains Dower, an 18-year industry veteran. 'People have said to us, |Are you guys nuts? Who needs another shoe company?' But it all goes back to Donald. |That doesn't matter,' he says. |We'll get our share of the market.' '
Kelly was making $35,000 a year working for a Texas utility company when Brown first suggested they start a shoe company. He had long since given up on the bachelor's degree in social work he earned from the University of Texas-Arlington, saying that he realized 'the best way to effect change in society is to create jobs.'
After a year in his new job, which has resulted in a lot of sweat equity, Kelly says: 'I don't intend to ever design a shoe, but I know that I obviously have to manage this situation and be the driving force in making sure things get done. I'm just hoping and praying that I make the right decisions.'
To compete with Nike, though, may take more than praying. Williams, who spends the better part of his days calling on sporting goods stores in the name of Wilson, explains it this way: 'I can walk into a store and a guy will tell me right up front: |That's a nice shoe you've got, the price is right, But there's one problem: It doesn't say Nike. Why should I buy Wilson when I know Nike will sell?' Their image has really transcended the industry. If you think of cola, you think of Coke. That's how the industry thinks of Nike.'
It is that reputation and, some suggest, the lack of planning by Operation PUSH, that caused its 1990 boycott of Nike to fail. Still, it caused concern within the sporting goods industry and throw the spotlight on the lack of African-American entrepreneurs and corporate professionals, much to Williams' delight. The ABSG among others hope that the industry will eventually have something else in common with soft drink, fast food and other consumer-products businesses with a bottom-line stake in the black consumer market: a demonstrated commitment to both diversity in hiring and in business development.
