The first order of business was to hire a staff. We immediately had a need for a secretary/ Office manager and I hired Julie on the first or second day. Having never been involved in a start-up venture before, I was unaware of just how much of a start-up we were until I gave her the first task. The night before, I had written out three letters to be sent to potential suppliers...one to those people that Jack knew, one to those that I knew and a general industry-wide letter. I then marked up a Sporting goods directory with who were to get each letter and turned it over to Julie to execute. A few minutes later, she came back to my desk and asked, "um, what do I use to type these up on?" Uh, oh...we didn't even have a typewriter (this was before PC's took over). So, I sent her to Office Depot to buy a memory typewriter and thought that would resolve the problem. She arrived back with the typewriter and came back to my desk..."Where can I find the stationery?" Hmmm....we needed to sit down and make a list of all of the supplies that we needed to get rolling...Stationery, envelopes, general office supplies, business cards, copy machine, etc, etc, etc....yep we were REALLY starting from scratch! So, after putting Julie in charge of all of those details, I set out to hire a buying and marketing staff.
At the suggestion of Ann at Doner Advertising, I called Ellen (Brautigan) Stevens in Atlanta to come interview for the marketing manager position. I had worked with Ellen some years earlier in Atlanta and she had all of the knowledge and tools to set up the advertising function - especially the business side of the retail ad biz. It didn't hurt to know that she pined to move to Florida too!! So, with Ellen hired I continued the search for 3 or 4 Buyers. Realizing that we were creating a new kind of Sporting Goods environment, I wanted to hire Buyers from several retailing disciplines so that we could create our own culture - to hire from just the sporting goods arena would get us a culture of same ol', same ol'. So, I hired a diverse group...Jay from a Mass Merchant with Sporting Goods experience for hardlines, Joe from a small Sporting Goods Retailer for footwear, Kim from Burdine's Department Stores for Apparel and finally Dave for Fishing, Hunting, and Camping. We then added Debbie as an Assistant Buyer to handle the women's apparel. It must have been a pretty good crew, because nearly all of them (with the exception of Debbie who left to raise a family and Dave who left for family reasons) stayed, flourished and were promoted to even bigger roles over the years.
July 4th rolled around and with the initial staff in place, the computer system getting installed, the construction of the store commencing, we had only a short time to purchase the merchandise, develop the buying system, receive and price the goods and get the store open. By this time, it was becoming apparent that Dick Carter was going to be a short termer....once he got the store constructed, it was apparent that Jack was going to bring in one of his old cronies from Herman's to be VP of Store Operations. Dick's vision of the store was more of a warehouse view and we had spent considerable time and effort to convince the Industry that we were NOT a warehouse...but a large Mega Store with carpet under the apparel and a stack 'em high, let 'em fly merchandising philosophy for hardlines. Our trademark open blue ceiling came about because we found that it was going to cost an extra $20,000 to paint the existing ceiling white....and all of the first 30 or more stores ended up with that blue ceiling! Our low price image was going to be reinforced by "not to be beat prices" on commodities such as tennis balls, and golf balls and well positioned opportunity buys like the $10 all leather tennis shoes and the $9.99 wall of sweat clothes featured during the Grand Opening.
Jack and I continued to battle on many issues. As a matter of fact, after we sold the Company to Kmart in 1990 we held a dinner to celebrate the sale. At that dinner, Mitt Romney gave a terrific speech about the founding of the Company and addressed each of the principals. When he came to me, Mitt said, "The Board could never understand how Roy accomplished all that he did. ..Roy would propose merchandising initiatives and Jack would reject them..Roy would propose Advertising initiatives, and Jack would reject them...and then we realized how he pushed all of the initiatives through..." and then he presented me with a pair of heavy duty knee pads! (I still have those knee pads hanging on a wall in my office!). I like to believe that the tensions only helped the creative process and got us the best solutions!
Nonetheless, we DID accomplish a hell of a lot in a short amount of time. The multi-faceted advertising campaign utilizing billboards, television and radio reinforced our commitment to "Sell the sizzle...not the steak!" That is, we sold the concept of the store as the ultimate Sporting Goods destination rather than just advertising items at rock bottom prices. The television advertising featuring comic Louie Anderson as the very antithesis of an athlete was a resounding success. (An interesting tidbit is that the scripts were written with John Candy as the star...when he proved to be wildly too expensive, we decided to use little know Louie Anderson who was to become well know shortly thereafter!) The radio ads were breakthrough advertising and the billboards with a double entendre twist were a big hit. After working 7 days a week including many 15 to 18 hour days, we finally managed to get the first store open. Grand Opening week featured many star athletes including Sugar Ray Leonard, Dan Marino, Dwight Gooden, Tim Raines, and Reggie Jackson among others. The lines of people wrapped around the store and spilled outside onto the sidewalk.
When we started this venture, we projected the first store to do an annualized volume of around $8.7 million. People in the Industry thought we had lost our minds...the average Sporting Goods Retailer did around $1.7 million in volume...no way were we going to open a store doing over 5 times that! In the first year of operation, the flagship The Sports Authority Store did $10.5 million in volume...we were a success at the store level. Now we had to get a bunch of stores open to leverage the corporate costs we had put in place to grow the Company!
That's how it all started! We continued to grow, sold the Company in March, 1990, to Kmart Corporation (that is a whole other story), and really started a growth spurt. I along with the other 3 executives signed 2 year contracts with KMart....50% of our buyout was put into escrow until the end of 2 years. I actually stayed on for 3 years after the buyout and departed in April of 1993 to found KidSource...a baby megastore concept.
Those 7 years ( I count from the time we first started working on the Sports Newco project in 1986!) were some of the most exciting of my business career. I am indebted to Jory for that first phone call, to Scott for his encouragement and counsel and to Jack for the experience..but I am most indebted to all of those that worked with us to make it happen.
And The Journey continues........
Saturday, March 19, 2011
Wednesday, March 9, 2011
The Real Story, Part 4
What a position I had put myself in! I had agreed to join "Sports Newco" but had just told my boss that I was committed to my present job. Now I had to tell him that I was, in fact, leaving...after spending considerable time and effort convincing him of my loyalty. The apprehension was worse than the reality, though. My boss was disappointed but understanding and, much to my astonishment, supportive. Having recently uprooted his family to take the position of CEO at Child World, he understood the dynamic of having to "go for the brass ring." Gil's only request was that I stay for 3 to 4 weeks to help through the annual budgeting process and bow out of the management incentive trip to Key West. Done and done!
Meanwhile, there was work to be done for Sports Newco. First and foremost was the task of coming up with a name for the Company. There were many names floated...."Jack's" (it is obvious who that one came from), "Balls" "SportCity" and "AllSport" were all being considered. It was obvious to me that we needed help in naming the Company, so I contacted an Advertising Agency that specialized in Retail...W.B.Doner...out of Detroti, MI. I had positive experiences working with Doner at two other Companies. It didn't hurt any that one of my mentors from early in my career was Senior Vice President in charge of the Florida office! Ann Bergstrom had been VP of Advertising at Richway Stores and had taught me the ins and outs of retail advertising. So, I put them on the task of naming the Company.
A meeting was scheduled at Doner's offices. As Jack and I were still working out our notices, we flew in from multiple locations. Present at the meeting were me and Jack as well as representatives from the Investment group....Jory from Maurice Sporting Goods, Scott from Blair, Adam Kirsch from Bain Capital and Chip Ruth from Marquette. The night before the meeting, Ann and I talked and she informed me that they had not come up with a better name than "AllSport" and were going to make a presentation to us utilizing that name. However, Ann greeted our long white limo as it pulled up to the front of Doner's headquarters, hugged me and whispered in my ear "Forget our conversation of last night...surprise name coming!" Later, I was berated by Jack for daring to hug Ann...I was never sure if he really thought this was such an "unprofessional" act or if he was bothered by the impression that my relationship with the agency would preclude him from some measure of control.
As we entered the conference room, I noticed presentation books laid out at each seat...the title was "AllSport." Once the meeting started, it was explained that the creative group had worked on the name for some time but had not come up with a name other than the one that I had originally suggested..."AllSport." However, on a trip to New York the previous day, one of the members of the creative team had seen a sign at the airport...."New York Port Authority" and the name "The Sports Authority" immediately came to mind. No sooner did the words get out of the presenter's mouth that Jack slapped the table and declared, "Absolutely NOT...over my dead body will we have a name with that many letters." I, along with the others present, were stunned. The name said it all...it was a strong statement of what the store actually stood for. As we polled the room, all except Jack liked the name....he accused me of liking it only because "you hired these guys." He discounted any other opinions because "you are not retailers...you don't understand the cost of making the signs for the store with that many letters!" The discussion went on for several hours....Jack began to wear down and he had come to a realization that the rest of the room was not going to back down. So, he asked for a compromise...let's name the Company "AllSport" and have as it's tagline..."The Sports Authority." More discussion led to a tentative name of "The Sports Authority." It only became permanent after Jack tried it out on some other associates and friends of his and they all endorsed the name!
Jack and I met several times over the next few weeks...mainly as a two man team visiting key suppliers to tell them of our plans and to garner support for what, at the time, was such a radical departure from traditional Sporting Goods Retailing. We had developed a presentation whereby we laid out our plans...Huge Assortments, Everyday "Fair" Pricing, and Superior Customer Service in a MegaStore environment. Frankly, the idea of a large Sporting Goods store frightened many of the suppliers. We had to assure them that we would never lead the market down in price and would treat their merchandise with the respect that it (they believed) such richly deserved. In reality, they were scared that their present customers... Herman's, Oshman's and Foot Locker... would not be please that they had added The Sports Authority to the roster! We garnered assurances from Reebok, Adidas, New Balance, Wilson and many others during our road trip. But we made a terrible mistake....we didn't travel to Nike in Oregon....Nike had just begun to grow and it seemed on the surface that they would not be a problem. Oh, but we were wrong!!!
We had my daughter's Bat Mitzvah in Massachusetts the first week of June, 1987. Having sold the house, Connie and I bought a new one in Boca Raton over Memorial Day weekend and I set out for Florida the week after the Bat Mitzvah....the family was left behind to pack up and join me the first week in July. Arriving the first day at our temporary office ...an old Radio Shack storefront in the nearly defunct Lauderdale Lakes Mall...I found a skeleton crew consisting of the CFO, Chet Howard; the VP of Store construction, Dick Carter; and Kelly Conway, the IT manager. Jack would show up later in the week.
Having signed an employment agreement, I was required to purchase my founder's stock and promptly wrote a check for $21,428....which for me at the time, was a huge amount of money. I later found out that Jack was not required to invest any of his own money in the deal....his ownership participation was handled as a "loan" from the Company. My naivete and general lack of experience in these sort of deals caused me to invest my capital and yet receive significantly less stock than others that invested zero of their own capital! Live and learn!
Coming in part 5.....hiring the staff, laying out the store, buying the merchandise, and getting the store open!
And The Journey continues............................
Meanwhile, there was work to be done for Sports Newco. First and foremost was the task of coming up with a name for the Company. There were many names floated...."Jack's" (it is obvious who that one came from), "Balls" "SportCity" and "AllSport" were all being considered. It was obvious to me that we needed help in naming the Company, so I contacted an Advertising Agency that specialized in Retail...W.B.Doner...out of Detroti, MI. I had positive experiences working with Doner at two other Companies. It didn't hurt any that one of my mentors from early in my career was Senior Vice President in charge of the Florida office! Ann Bergstrom had been VP of Advertising at Richway Stores and had taught me the ins and outs of retail advertising. So, I put them on the task of naming the Company.
A meeting was scheduled at Doner's offices. As Jack and I were still working out our notices, we flew in from multiple locations. Present at the meeting were me and Jack as well as representatives from the Investment group....Jory from Maurice Sporting Goods, Scott from Blair, Adam Kirsch from Bain Capital and Chip Ruth from Marquette. The night before the meeting, Ann and I talked and she informed me that they had not come up with a better name than "AllSport" and were going to make a presentation to us utilizing that name. However, Ann greeted our long white limo as it pulled up to the front of Doner's headquarters, hugged me and whispered in my ear "Forget our conversation of last night...surprise name coming!" Later, I was berated by Jack for daring to hug Ann...I was never sure if he really thought this was such an "unprofessional" act or if he was bothered by the impression that my relationship with the agency would preclude him from some measure of control.
As we entered the conference room, I noticed presentation books laid out at each seat...the title was "AllSport." Once the meeting started, it was explained that the creative group had worked on the name for some time but had not come up with a name other than the one that I had originally suggested..."AllSport." However, on a trip to New York the previous day, one of the members of the creative team had seen a sign at the airport...."New York Port Authority" and the name "The Sports Authority" immediately came to mind. No sooner did the words get out of the presenter's mouth that Jack slapped the table and declared, "Absolutely NOT...over my dead body will we have a name with that many letters." I, along with the others present, were stunned. The name said it all...it was a strong statement of what the store actually stood for. As we polled the room, all except Jack liked the name....he accused me of liking it only because "you hired these guys." He discounted any other opinions because "you are not retailers...you don't understand the cost of making the signs for the store with that many letters!" The discussion went on for several hours....Jack began to wear down and he had come to a realization that the rest of the room was not going to back down. So, he asked for a compromise...let's name the Company "AllSport" and have as it's tagline..."The Sports Authority." More discussion led to a tentative name of "The Sports Authority." It only became permanent after Jack tried it out on some other associates and friends of his and they all endorsed the name!
Jack and I met several times over the next few weeks...mainly as a two man team visiting key suppliers to tell them of our plans and to garner support for what, at the time, was such a radical departure from traditional Sporting Goods Retailing. We had developed a presentation whereby we laid out our plans...Huge Assortments, Everyday "Fair" Pricing, and Superior Customer Service in a MegaStore environment. Frankly, the idea of a large Sporting Goods store frightened many of the suppliers. We had to assure them that we would never lead the market down in price and would treat their merchandise with the respect that it (they believed) such richly deserved. In reality, they were scared that their present customers... Herman's, Oshman's and Foot Locker... would not be please that they had added The Sports Authority to the roster! We garnered assurances from Reebok, Adidas, New Balance, Wilson and many others during our road trip. But we made a terrible mistake....we didn't travel to Nike in Oregon....Nike had just begun to grow and it seemed on the surface that they would not be a problem. Oh, but we were wrong!!!
We had my daughter's Bat Mitzvah in Massachusetts the first week of June, 1987. Having sold the house, Connie and I bought a new one in Boca Raton over Memorial Day weekend and I set out for Florida the week after the Bat Mitzvah....the family was left behind to pack up and join me the first week in July. Arriving the first day at our temporary office ...an old Radio Shack storefront in the nearly defunct Lauderdale Lakes Mall...I found a skeleton crew consisting of the CFO, Chet Howard; the VP of Store construction, Dick Carter; and Kelly Conway, the IT manager. Jack would show up later in the week.
Having signed an employment agreement, I was required to purchase my founder's stock and promptly wrote a check for $21,428....which for me at the time, was a huge amount of money. I later found out that Jack was not required to invest any of his own money in the deal....his ownership participation was handled as a "loan" from the Company. My naivete and general lack of experience in these sort of deals caused me to invest my capital and yet receive significantly less stock than others that invested zero of their own capital! Live and learn!
Coming in part 5.....hiring the staff, laying out the store, buying the merchandise, and getting the store open!
And The Journey continues............................
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