Rawlings Sporting Goods Co., Inc.

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Rawlings Sporting Goods Co., Inc.

1859 Intertech Drive
Fenton, Missouri 63026-1926
U.S.A.
(314) 349-3500
Fax: (314) 349-3588

Public Company
Founded: 1887
Employees: 1,420
Sales: $147.6 million (1997)
Stock Exchanges: NASDAQ
Ticker Symbol: RAWL
SICs: 3949 Sporting Athletic Goods, Not Elsewhere Classified; 5091 Sporting & Recreational Goods & Supplies; 5941 Sporting Goods Stores & Bicycle Stores

Rawlings Sporting Goods Co., Inc. is a leading supplier of baseball, basketball, and football equipment and team uniforms in North America and, through a licensee, of baseball equipment and uniforms in Japan. The company also was, in 1997, manufacturing and distributing hockey equipment, volleyballs, and soccer balls, and various sports accessories, and licensing its name for numerous products, including golf equipment, athletic shoes, activewear apparel, socks, and sports drinks. Rawlings’ own manufactured products accounted for about one-quarter of its net revenues in fiscal 1997. The company also owned four factory outlet stores stocked with its own products and those of other parties.

Sporting Goods Pioneer, 1887-1967

The company was founded in 1887 by George and Alfred Rawlings, brothers who opened a small store in St. Louis. Its first catalogue characterized the company as “Dealers in Fishing Tackle, Guns, Baseball, Football, Golf, Polo, Tennis, Athletic and General Sporting Goods.” The store soon went up in flames, so the Rawlings brothers got into manufacturing in 1898 in partnership with Charles W. Scudder, who put up the money.

Rawlings Manufacturing Co. introduced the first shoulder pads for football players in 1902, a fiber-and-felt model it named, for an executive, “Whitley’s Armor Clothing.” It designed the first all-weather football, began outfitting baseball’s St. Louis Cardinals with team uniforms in 1906, and first provided baseballs to a professional league in 1907.

Bill Doak, a Cardinals pitcher, designed the first modern baseball glove in 1919, when he separated the thumb and forefinger with a few strands of rawhide to form a deep pocket. Doak took the idea to Rawlings, which manufactured it and made it a bestseller for more than 25 years. Harry Latina, who joined the company in 1922, was dubbed the “Glove Doctor,” for devising such models as the Deep Well Pocket (1930), Trapper (1940), and V-Anchored Web (1950). He took out some 30 patents for features such as adjustable thumb and pinky loops, the V-anchored web, and the “Edge-u-cated” heel. Latina’s son Rollie assumed his father’s job in 1961 and retained it until 1984.

Rawlings was the fourth largest sporting goods concern in the United States in 1954, with sales of about $12 million. The following year it was sold for $5.7 million in stock to A.G. Spalding & Bros., Inc., the second largest sporting goods company in the nation. At this time Rawlings was producing—aside from baseball gloves, balls, and shoes, and protective football equipment—equipment and supplies for badminton, basketball, bowling, boxing, golf, softball, tennis, track, volleyball, and wrestling.

In 1957 the company introduced the prestigious Rawlings Golden Glove Award to recognize fielding excellence for the best major league baseball players at each position.

Following a review of the Spalding acquisition, the Federal Trade Commission charged that the deal represented a violation of antitrust laws and in 1960 ordered Spalding to divest itself of Rawlings. Spalding took the case to court but lost and in 1963 sold the firm—which had been renamed Rawlings Sporting Goods Co.—to a group of private investors for about $10.3 million in cash and notes. John L. Burns, the new chairman and chief executive officer, said Rawlings’ sales had exceeded $20 million in 1962 and that the company had not lost money in any year of its existence.

Now renamed Rawlings Corp., the company was the only privately owned sporting goods manufacturer in the United States. It retained headquarters in St. Louis and had eight factories, including three in Puerto Rico. Most had been built within the last decade. Rawlings discontinued athletic footwear in 1967 after losing business to more advanced German molded-shoe models. Also a factor was a ban placed on the importation of kangaroo hide, which the company had been using to produce cleated athletic footwear. Rawlings had been making cleated shoes since the 1890s.

A-T-O/Figgie Unit, 1967-94

Rawlings had annual sales of about $20 million and six manufacturing plants—four in Missouri and two in Puerto Rico—when it was sold in 1967 to Automatic Sprinkler Corp. of America, which changed its name to A-T-O Inc. in 1969. This conglomerate made the company a division under its prior Rawlings Sporting Goods name. In 1970 12 major league teams were wearing Rawlings-made uniforms, including the Pittsburgh Pirates, clad in the division’s newly introduced doubleknit nylon and cotton uniforms. The American Basketball Association was using Rawlings’ red-white-and-blue ball. A-T-O said that in just one year Rawlings had become the largest manufacturer of quality hockey equipment in the United States. Rawlings also was making golf and tennis equipment.

Early in 1971, A-T-O acquired Adirondack Industries, best known for its baseball bats but also an important producer of toboggans and winter toys as well as archery bows and hockey sticks. The Adirondack operation was combined administratively with the Rawlings division. Rawlings’ earnings slumped in the early 1970s but recovered following a restructuring in the middle of the decade that stressed advertising and marketing. The company claimed to have achieved 20 percent annual sales growth between 1975 and 1978. Rawlings Golf was established in 1976 as a separate A-T-O division. Its products consisted of clubs, balls, shoes, bags, gloves, and Toney Penna custom equipment.

Rawlings raised its baseball profile in 1977, when it replaced Spalding as the supplier of baseballs to the major leagues. This contract amounted to 30,000 dozen Haitian-produced balls a year, not counting additional special ones for the World Series and the All-Star Game. In addition, Rawlings was, in 1979, the chief source of baseballs for the amateur market, accounting for about one-third of the annual sale of some 1.2 million dozen baseballs. Rawlings also had taken the lead from Wilson Sporting Goods Co. in the baseball glove business, with a market share between 28 and 30 percent and more than 50 percent of the gloves sold to professional players. Adirondack bats were less prominent, because of the longtime dominance of Hillerich & Bradsby Co.’s Louisville Sluggers. Nevertheless, Adirondack bats held 15 to 20 percent of the (strictly wooden bat) professional market and 25 percent of the amateur market.

A-T-O was renamed Figgie International, Inc. in 1981. By 1983 Adirondack was no longer making toboggans. The Rawlings Sporting Goods division had added soccer balls to its line of products. Rawlings Golf was manufacturing and distributing clubs under both the Toney Penna and Rawlings brand names, and it was also distributing balls, bags, shoes, and gloves. This division had been discontinued, however, by 1986.

Baseball equipment was accounting for half of Rawlings’ sales in 1985. It was still the sole supplier of major league baseballs, which were still being hand-stitched in Haiti. The bats (now renamed AdirondackRawlings bats) were being made (as well as Sherwood hockey sticks) in Dolgeville, New York, from timber in the Adirondack Mountains, with the plant heated from wood shavings. Most U.S.-sold baseball gloves were now being manufactured in the Far East, but Rawlings maintained three plants in Missouri, plus a Tennessee facility that produced leather for some of the gloves and covers for the baseballs.

By 1990 Rawlings was one of only two companies manufacturing baseball gloves in the United States. Hides from steers raised in Missouri were taken to a Chicago leather company, where they were tanned and sorted. Each animal yielded two hides, one from each side, with each hide providing enough material for almost four gloves. From Chicago the hides were being shipped to a Rawlings plant in Ava, Missouri, where all of the company’s professional baseball gloves, most of its baseball helmets, and most of its footballs were produced.

Rawlings resumed manufacturing athletic footwear in 1989, with made-in-Taiwan baseball, softball, and football shoes featuring both metal and rubber cleats for natural and artificial surfaces. The top-of-the-line series came in kangaroo hide—again legal for some species—while two lower-priced series came in leather and synthetic material. Rawlings dropped the football shoes in 1991, however, because of poor sales. The company opened a baseball manufacturing plant in Costa Rica in 1987 and closed its Haitian factory in 1990 because of political instability. It had discontinued Haitian-based production of baseball gloves in 1986 and clothing in 1989.

In 1987 Rawlings was designated the “Official Uniform and Protective Equipment Supplier to Major League Baseball,” the first company to earn that recognition. Its five-year contract as the supplier of team uniforms for major league baseball and licensed apparel such as replica jerseys and T-shirts was not a success for the company, however, and was not renewed. Also in 1987, Rawlings balls were selected as the “Official Basketball and Football for NCAA Championships,” and the company became the exclusive licensee for a complete line of NCAA retail basketballs, footballs, and accessories.

Company Perspectives

To produce high quality, innovative products that enhance the performance of athletes around the world. Rawlings’ “The Mark of the Pro” represents our commitment to customer satisfaction for all ages and levels of play.

Rawlings’ net revenues dropped from $145 million in 1991 to $135.8 million in 1992. Although the company had record net income of $7.1 million in the latter year, industry observers said it was experiencing manufacturing and distribution problems that made it unable to develop and market goods to sports retailers on a timely basis. The end of the major league baseball licensed apparel contract was a blow to Rawlings’ clothing division, which accounted for about one-fourth of company sales and had been targeted for growth to offset the flat sales of hard goods. In an effort to turn things around, the company appointed its fifth president in the last six years—and the ninth in the last 11 years—in 1992.

Public Company, 1994-97

Sales remained stagnant and profits dropped in the next two years. Rawlings executives later blamed a lack of investment by parent Figgie International, Inc., forcing the firm to limit production of certain products and to cancel certain customer orders. In 1994 Figgie put Rawlings up for sale to the public, collecting $127 million, including a one-time cash dividend. The newly independent company assumed debt equivalent to 60 percent of its capital. Another new chief executive officer, Carl Shields, assumed the helm that year and vowed to make changes. Figgie, he said in the March 1995 issue of Bobbin, had been “a metal-bending, heavy manufacturing-type company that never did understand how to operate in a consumer goods industry.”

Accordingly, Rawlings fielded a new management team whose objective was to emphasize apparel, tripling sales in this category during the next three years without investing in new facilities. During this period the company began selling “hotel wear”—spruced-up sweatsuits and similar items that athletes might wear hanging around a hotel or traveling to a game. Rawlings did not neglect its traditional baseball market, however, renewing its contract to make major league baseballs through the year 2000 and, in 1994, becoming the exclusive supplier of baseballs to the 18 minor leagues through 2000.

To increase sales in Canada, its largest foreign market, Rawlings in 1997 purchased Daignault Rolland, primarily a manufacturer of hockey equipment, although it also made baseball equipment for Canada only. Later in the year Rawlings also purchased the Victoriaville line of hockey equipment, used by more than 150 professional hockey players, from California Pro Sports Inc. for $14 million. Rawlings had reentered the hockey business previously by contracting with other companies to make pads and some kinds of gloves endorsed by St. Louis Blues star Brett Hull. The company also announced that it would soon resume offering products for volleyball and soccer.

In 1998 Rawlings started production, in Taiwan, on Radar Ball, a baseball with a built-in microchip and display unit for measuring the speed of a pitch. It also introduced a new aluminum bat less prone to dents and cracking and had developed one that could be customized by adding up to eight ounces of weights and counterweights. Some analysts, however, contended that the company remained overdependent on baseball, a stagnating source of revenue whose sales in fiscal 1997 (the year ended August 31, 1997) came to $80.8 million—$7.5 million less than the previous year. Annual net revenues for the company as a whole during fiscal years 1995 through 1997 ranged between $144.1 million and $149.7 million, while net earnings ranged between $4.6 million and $5.5 million. The company’s long-term debt was $32.6 million at the end of fiscal 1997.

Perhaps most important for Rawlings’ future was a five-year contract it signed in 1997 with Host Communications Inc., the nation’s leading sports marketer. Host vowed to raise the company’s visibility in the marketplace by such comparatively inexpensive means as working its contacts with coaches’ organizations and the amateur sports contests that Host was sponsoring around the world. Bull Run Corp., a holding company that owned 30 percent of Host, had acquired ten percent of Rawlings’ stock and had purchased warrants to buy an even larger share of the company.

In 1997 Rawlings believed itself to be the leading supplier of baseballs, baseball gloves, and baseball protective equipment in North America. It was offering 14 types of baseballs and more than 125 styles of gloves, ranging in retail price from $5.99 to $159.99 for the Heart of the Hide series. Rawlings also was selling 20 different types of basketballs, 22 types of footballs, and football shoulder pads, other protective gear, and accessories. The acquisition of the Victoriaville hockey business added hockey sticks and protective equipment to supplement the full line of protective hockey equipment the company had developed in 1996. Rawlings also had licensing agreements with 16 companies in the United States to use the brand name on various products and with the ASICS Corp. in Japan for use of the Rawlings name on all types of baseball equipment, team uniforms, and practice clothing.

Rawlings was manufacturing, in 1997, baseball gloves, batting helmets, footballs, and injection-molded accessories in Ava, Missouri; wooden baseball bats in Dolgeville; apparel in Licking, Missouri; tanned leather in Tullahoma, Tennessee; hockey sticks in Daveluyville, Quebec; hockey protective equipment in Montreal; and hockey goal tender equipment in London, Ontario. The balance of its products (accounting for three-quarters of net revenues) was being manufactured by third parties in various Asian countries and Mexico.

Of Rawlings’ net revenues in fiscal 1997, baseball equipment accounted for 55 percent; basketball, football, and volleyball equipment for 19 percent; apparel, 11 percent; international, five percent; licensing, four percent; and miscellaneous, six percent.