Thirteen years after acquiring Bauer and making bold promises it would transform the hockey business, Nike has put its Nike Bauer unit up for sale...
OTTAWA — It was just a little swoosh.
But when Nike added its logo to gear by Bauer, a longtime Canadian maker of hockey equipment, “there was resistance,” said Terry Bovair, owner of the Fontaine Source for Sports in Peterborough, Ontario. “Some people did not buy the product.”
Apparently, that kind of reaction was not confined to Peterborough, a small city northeast of Toronto that is something of a hockey hot spot.
Thirteen years after acquiring Bauer and making bold promises it would transform the hockey business, Nike has put its Nike Bauer unit up for sale, a rare bit of comeuppance for one of the world’s powerful brands.
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Though Nike Bauer remains a market leader, many analysts predict Nike will find it hard to recover even half the $395 million (U.S.) it paid for Canstar Sports, Bauer’s Montreal-based parent, in December 1994.
“It was one of Phil Knight’s ideas,” said Brady Lemos, an analyst with Morningstar, referring to Nike’s chairman. “Perhaps they were too optimistic.”
The shedding of Nike Bauer, with annual sales around $160 million, is not expected to affect Nike’s financial reports significantly. The company posted revenue of $16.3 billion last year; it does not break out profit by unit.
But the decision to step away from hockey at the same time Nike is increasing its presence in soccer shows that financial muscle and marketing power do not always give it the ability to dominate the field, or the ice.
“Nike has been a good competitor,” said Denis Drolet, chief executive of Groupe Drolet, which owns Sher-Wood, a major hockey-stick maker in Sherbrooke, Quebec. “Bauer is a great name, they have a great line of skates. But the hockey market is not growing.”
Drolet’s pessimism about his industry is widely shared, but that was not the case when Nike entered the hockey business. Participation in the United States, the world’s second-largest market, after Canada, was rising. An expansion by the National Hockey League into several American cities had fueled expectations.
Perhaps most attractive to Nike was the popularity of in-line skating in the mid-1990s. The company hoped that by promoting hockey played on Rollerblades rather than skates, it could overcome a significant obstacle to the sport’s development in the United States: a lack of ice rinks.
After buying Canstar, Nike followed a pattern that had brought it success in other sports. It sponsored prominent players and became the official jersey supplier to the NHL.
It closed Bauer factories in Ontario and moved their production to Asia, while the unit’s head office left Canada for New Hampshire. (Currently, Nike Bauer operates a research-and-design center in St.-Jerome, Quebec, where it also manufactures a high-end skate model and two varieties of helmets.)
While the Bauer name was retained, Nike used its own for the unit’s premium products.
In a sport where skates come in pretty much any color provided they were predominantly black, Nike introduced models with white boots and bold graphics.
The vivid styling that had worked for Nike in basketball did not score on the ice. Players, other than those sponsored by Nike, shunned the white boots, a color associated with women’s figure skates.
And unlike sneakers, Lemos of Morningstar said, boldly styled hockey skates were never purchased by the fashion-conscious as casual footwear.
Critics also say Nike’s attention to product design did not extend to the performance of the skates, which were priced at a premium of several hundred dollars and, among other things, were unusually sized for North American feet.
“Their high-end skate was cutting people’s heels and causing blisters,” said Bovair, a former professional player with the Peterborough Petes. “It was a bad, bad launch.”
Even Nike competitors acknowledge the company eventually sorted out the performance issues and toned down its styling. “They brought in new materials and new processes for manufacturing,” said John Pagotto, president of TPS Hockey, a Canadian maker of sticks and protective gear.
But it came too late to save Nike as a stand-alone hockey brand, forcing the compromise that resulted in a logo with Nike’s swoosh but Bauer’s name.
Not all American newcomers to hockey have been humbled in such ways. Easton, a maker of aluminum baseball bats, came to dominate the hockey-stick market by introducing models made from carbon fiber-reinforced plastic rather than wood.
With their emphasis on exotic materials, Nike Bauer and Easton succeeded in raising prices for hockey equipment. While $400 had once seemed the limit for skates, Nike Bauer managed to find a market for $750 pairs by using lightweight, high-performance material.
Spokesmen for Nike declined to make anyone available to speak about the decision to sell the hockey unit, which it calls profitable, without providing details.
Most analysts anticipate Nike will find a buyer, if at a fire-sale price, before its self-imposed deadline of the end of May.
“Who knows?” Pagotto of TPS Hockey said. “Maybe Bauer will come back to its Canadian roots.”