SBJ/January 12 - 18, 2004/This Weeks Issue

Old name Spalding keeps focus on the new

Spalding’s leader, Scott Creelman, says, “A third of our products every year should be new.”

Spalding is arguably one of the most renowned sports brands, and at 127 years of age, it is indisputably the most venerable American sporting goods trademark.

Some nine months after Spalding was acquired by Russell Corp. for $65 million, it has focused on new technology — not necessarily what you'd expect to find at a marketer of inflatable balls. Still under new ownership, Spalding is continuing in the direction it started a few years back with the Infusion, an inflation pump within the ball.

Scott Creelman, a 26-year Spalding veteran lured out of four years of semi-retirement to run what is now a Russell division, is trying to transform it into a new-product factory. There's sound reasoning for that: Spalding's biggest customer is Wal-Mart, which lives to cut margins on commodity products.

To survive in inflatables, against commodity producers, as well as the biggest sporting-goods brands in the world, like Nike and Adidas, Spalding must innovate or all the air will come out.

"If we're 'me, too,' we'll be dead in the water," said Creelman. "A third of our products every year should be new, and even if they're not, that should be our mind-set."

Bang! The new Spalding tripled its R&D budget and has introduced 40 new products since September. Nothing as innovative as the Infusion yet, though Creelman is promising to "revolutionize" the basketball category, which represents 60 percent of Spalding's inflatable business with a technology still under wraps.

As far as the latest batch of new-product offerings, there's the new ball for the AFL (sleeker and supposedly easier to see for fans and players), accompanied by a new deal to be that league's official ball.

Basketballs make up 60 percent of Spalding’s inflatables business.
There are volleyballs with a "tie-dyed" look, along with volleyballs carrying images from the classic surfing movie "Endless Summer."

In basketball, there's a line based on a new license with the Rucker League, balls with a new shiny "under glass" look and balls bearing NBA player images. There are basketballs that change color according to whether they are indoors or outdoors. To tap into the retro trend, there's also a retro basketball that looks like it predates the NBA.

Freed from the heavily leveraged ownership of its former parent, Spalding has already exceeded the financial expectations of Russell. Without releasing specific figures, Creelman said 2003 was a year of broad-based double-digit growth, with the same forecast for 2004.

Russell is trying to move from a narrowly defined apparel brand to a broadly based athletic/lifestyle brand, like Nike. Spalding is attempting the same repositioning.

"We've re-oriented the entire company," said Jon Letzler, Russell Corp. president and COO. "Generally, Spalding will be our hard-goods brand and Russell will be apparel, but I see some opportunity for crossover there, too."

The question for both brands is how elastic they can be. Research to determine that is ongoing. In the meantime, there's an active search for more acquisitions, with the $1 billion-plus Russell Corp. backing the plan.

"Just being an inflated-ball business won't get us where we want to be," said Letzler. "We need both brands to be more aspirational."

As far as possible expansion into other sports, Spalding has its eye on baseball, where it has its roots, as well as fitness and possibly golf. Again, the watchword is innovation.

"We will not compete in a category unless we have a leading technology," said Creelman. "Golf [a business he headed when Spalding owned top brands like Ben Hogan, Etonic, Top-Flite and Strata] is an option, but we won't go there — unless we have something really unique."

Another key area is licensing. Of Spalding's $300 million in trademark sales, about two-thirds are generated by Spalding's 80-plus licensees, whose products range from fine leather goods in Europe to mass-merchandise footwear in the United States. More consistency is being sought.

"Our issue isn't one of brand recognition," said Creelman. "But to be recognized is one thing, to be the brand of preference are two separate things, and that is the gap we are trying to close."

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