Helmet Manufacturer Remains Unsold as Investors Fear “Possible Crippling Damages”
The ongoing threat of potential lawsuits by NFL players related to brain trauma has prevented Riddell owners from selling the manufacturer of America’s most popular football helmet. Riddell is profitable (on $200 million in revenue), but prospective buyers remain fearful of “possible crippling damages” from future suits. It must be noted there is also a CTE-related class action suit currently pending against the company. That lawsuit was filed on behalf of 4,500 former NFL players.
Howie Long-Short: Fenway Partners acquired control of Riddell in 2004 near the height of the NFL’s popularity and recently sold many their investor’s shares, so it would seem as if Riddell was a losing investment for the firm; but, a deal with Hollyport Capital has given the P.E. firm a 2nd chance to turn a profit on the company. Should Hollyport Capital sell Riddell above its current intrinsic value, its agreed to pay Fenway a percentage of the profits. Of course, there’s no guarantee Hollyport is going to be able to sell the company anytime soon; there’s no financing to be had, traditional lenders are avoiding the helmet manufacturing industry like the plague.
Looking for a publicly traded football equipment manufacturer? XTECH Protective Equipment is utilizing military grade XRD foam to create state of the art shoulder pads. The 6-year-old company manufactures and distributes pads marketed as the lightest weight, most protective product on the market. Super Bowl Winning Coach Brian Billick is an investor in the company, which now boasts of players on 29 NFL teams (and 250 college teams) wearing its product including; Khalil Mack, Von Miller and Le’Veon Bell.
XTech has an exclusive contract with XRD Impact Protection for use of its foam in NFL, college and youth football pads. XRD is owned by Rogers Corporation (ROG), a technology company focused on creating innovative solutions for power electronics, advanced foams for cushioning and protective sealing, and high frequency printed circuit materials. It should be noted that ROG shares have declined -37.5% ($114.72), since reaching a 52-week high in mid-January.
Fan Marino: Following an annual laboratory study to assess helmet performance, the NFL recently announced a list of 10 helmets (from SG, Rawlings, Schutt and Riddell) that will be eliminated from the game. New players and those who didn’t wear the helmets in ’17, will be prohibited from wearing those 10 models this season; a full phase out is expected following the 2018 season. It’s been estimated that +/- 200 players wore the now banned models last season. The study determined that of 34 helmets tested, VICIS ZERO1 “best reduces head impact severity.”
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