Granite Bridge shaping Winning Streak into hard-goods ‘building block’
Fanatics has consolidated the sports licensing industry and grown to be a billion-dollar-plus company by acquiring an impressive amount of manufacturing capabilities, brands, retail and property rights, primarily affecting the apparel side of the business. So, when we’re invariably asked about the business, our response for some time has been, “It’s a Fanatics world, we’re just living in it.”
Still, the non-apparel, or hard goods, side of the business is a sector that Fanatics Chairman Michael Rubin has consistently termed a low priority. So the question occurred, is there room for a hard-goods rollup in sports licensing? Upon further review, it seems that there’s one already in the works.
Winning Streak is a Lenexa, Kansas, hard-goods licensee renowned for its wool, commemorative sports banners and pennants. It has nearly every domestic sports license, and its retail price points (generally $30-$100) along with product quality and design exceeds that of most hard goods, derisively termed “trinkets and trash” long ago. Private equity firm Granite Bridge Partners acquired Winning Streak in 2017 with the intention of growing by acquisition.
“This was a bit smaller than our usual deals,’’ said Granite Bridge partner Michael Goodman, “but we liked their margins, loved their products and saw it as a building block.’’
Terms of the purchase were not disclosed. Granite Bridge’s holdings include about a half-dozen other firms, ranging from a maker of pet treats to a firm that manages and maintains medical equipment.
Attractive products with enviable margins do not necessarily mean a company is up to date. Only recently did Winning Streak start selling directly to consumers and using digital marketing. If you received an email touting a commemorative championship banner minutes after Virginia won the NCAA title, yeah, that was a first for both the Cavaliers and Winning Streak.
Nonetheless, Winning Streak is debt free and, with Granite Bridge behind it, well-capitalized, making it largely unique within its competitive set. No retailers or leagues want to administer a multitude of hard-goods licensees, so the idea is to expand distribution, develop new products, add entertainment licenses — like the classic Disney characters and Star Wars — and acquire other hard-goods companies, transforming Winning Streak into a company that can offer retailers a unified hard-goods selection.
“We want to eventually offer a ‘wall of fandom,’” said sports marketing veteran Chris Lencheski, brought on within the past month by Granite Bridge as CEO of Winning Streak, receiving some equity with the new title.
Compared to many in the space, Winning Streak’s product is high end. WinCraft is the unquestioned licensed hard-goods leader, in terms of its collection, retail relationships and logistics mastery. Winning Streak hopes to compete for different customers.
“I have massive respect for what WinCraft has built, but from a price-point perspective, we’re very different,” Lencheski said. “The issue with hard goods isn’t that they don’t sell; it’s that there’s too much of the same — the market’s oversaturated.”
Winning Streak’s leaders feel the same way about licensed apparel as Rubin and Fanatics feel about hard goods. “I just don’t see us chasing soft goods,” said Lencheski, who once represented the “Izzy’’ character for the 1996 Olympics. “Too many very able competitors.” Including Fanatics, of course.
As for the rollup? “Owning the wall is our obvious direction,” Goodman said. “Whatever we acquire, it won’t be something like a company that makes mugs or another commodity product. We have to maintain quality. … I want this to be a nine-figure business at minimum and we clearly see a path there through organic growth and acquisitions.’’
Goodman and Lencheski both told us that calling what they’re building “Fanatics for Hard Goods” is hyperbolic. OK, we understand the order of magnitude difference between Winning Streak and Fanatics.
“We definitely have capital available, but not that much,” laughed Goodman, who has more than 20 years of experience in private equity. “Would we like to be thought of as a miniature version? Sure, maybe with one or two less zeroes to start.”
Terry Lefton can be reached at firstname.lastname@example.org.