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Volume 20 No. 42
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Fireman looks for profits in sports, finds ‘fuzzy acounting’

Terry Lefton
The sports economy is the red-headed stepchild in a room full of fair-haired WASPs.

How many businesses are there in which the desire to participate is strong enough that profitability is often a secondary or tertiary motivation for investing?

We have a friend of more than 20 years whose marketing business is now owned by a holding company. They asked him last year to find an agency or other sports-related business that would be immediately profitable and backed him with a war chest of better than $100 million.

“We keep seeing a lot of fuzzy accounting in companies we’ve been looking at,’’ he said. Accordingly, no acquisition has been made.

Paul Fireman was asked to look for a sports agency to buy, but hasn’t found the right one.
That’s a long-winded way to get around to the subject of this column: Paul Fireman, who purchased the rights to distribute Reebok shoes in 1979 and sold Reebok to Adidas for $3.8 billion almost six years ago. Familiar as he is with all sports properties and of the vagaries of selling from storefront, Fireman reminded us that the sports economy isn’t so different from the one he sold into for so many years: oversaturated and largely profit-starved.

“Sports are easy and attractive to enter,” Fireman said recently, in a Manhattan conference room. “Every kid grows up kicking or hitting some kind of ball, and there are easy points of entry. Building a brand and sticking around is what’s hard.”

As for those elusive profits within sports? “It reminds me a lot of most malls,” mused Fireman. “You walk through them, and most of the stores aren’t making much, if any, money.”

Having built and sold a brand behemoth, the Reebok founder these days is applying his acumen to spotting growth brands. His Fireman Capital Partners has investments in companies marketing jeans, eyewear, juice, paint, fashion bedding for children, and, most recently, a return into athletic footwear with Newton Running.

“I fought this one like a dog,” he joked.

Whatever the product, Fireman is now in a position where he has to evaluate whether companies with good ideas will, or can be, companies with a big brand and sales to match. Engineering growth, he has learned, takes the sort of vision that defies convention.

“Academics generally don’t succeed in business because they know all the reasons why not,” Fireman said. “Success comes from an irreverence for rules and resolve that resists conventional influence.”

Whether it’s in the world of golf, where Fireman has poured more than $130 million into developing the Liberty National Golf Club in Jersey City, N.J., or back in footwear, he’s seen a familiar game of piling on.

“Something gets hot, everybody wants in and they over-proliferate,” he said. “Innovation, engendered by competition, can change that.”

When Fireman began competing with the likes of Nike, Converse and Adidas, the U.S. sneaker market tripled from its billion-dollar level in just a few years. More recently, he sees the athletic footwear market as entirely too stable.

“Nike is so big they are monopolistic in many ways, and the others have surrendered,” Fireman said. “There’s peace, and peace promotes a period of no growth.”

Fireman gives Under Armour kudos for molding a great brand but doesn’t see the same innovation in its footwear as with the underlayer products on which the company was founded.

“Under Armour’s done an absolutely sensational job of branding, but from my vantage point, they haven’t figured out how to invest and build footwear,” he said. “I remember when we were spending $50 million or more on R&D. It’s the hardest money to spend, because most of the time you don’t know when you will see results.”

Like so much of the sports economy.

Terry Lefton can be reached at