This is the second part of the interview with Nick, where we discuss the future of Mongoose. The first part can be found here: http://custombats.co.uk/cbforum/index.php?topic=31853.0Moving on to the final area where people have an interest, the future for Mongoose. This is split between expanding opportunities to buy Mongoose kit in the Southern Hemisphere, how you market the brand and where do you see the greatest potential growth for the brand.Let’s start with where you see the greatest potential growth.So coming back to where we are at the moment, 20% of our sales are done through Sports Direct and Amazon. The majority is done on line but through independents, so Romida, Barrington, Cricket Online, etc.
We do consistently £320,000 to £400,000 of stick sales each year. Where we’ve realized that we make a lot of money is the softs. Now I’ve mentioned that 50% of our bats are sold to kids, but we completely and utterly sell out of all our softs. We have the largest selling bags in the UK. The softs are made in China and we can’t get them over quick enough to be perfectly honest.
We’ve spent a lot of time talking about what we do to expand the business beyond the core product range, and that for us is quite important. If we see stick sales grow 30% next year, we’re not going to see huge revenue expansion and we’re quite ambitious with this.
We have a contract with a large Australian company and we’re quite interested in the Big Bash League (BBL). It’s drawing significant crowds and network television has just paid $100mn for the BBL rights for the next five years. It’s a very exciting market. We’ve been told that we need to have a logistics distribution operation in Australia, rather than containers travelling the world, and that requires cash.
An equally big retailer in South Africa have said, with how well Ram Slam is doing as well, that they’d like to sell our bats, but we have to sign a South African player. All of this requires cash.
What we’re looking to do at the moment is bring on partners who can work alongside us. At the end of the day (and we’re not trying to sell out ourselves), we need a partner to take it forward because it doesn’t make sense to have a collective of bankers who all have day jobs and other lives, managing this business.
We are working on a variety of structural deals and are very open to any suggestions that your readers might have and we’ve touched on the idea of doing crowd funding, which we’ve been approached by a crowd funding website.
If any of the people who are likely to be reading this manage sports retail outlets or sports manufacturing business and believe they can do something in this, we’d be interested to hear from them because there is real potential here to extend and expand beyond both core markets and core product range.
If you look at how successful Underarmour, North Face, New Balance, Spartan and Billabong have been expanding from their core markets, it’s clearly possible.
People love the idea of the Mongoose brand, with its long tail, a vicious little animal and the way in which we’ve done the logo and the patents that we have globally for this it has some value. If you look at American Football players and Under Armour in 1996, it started with a single training shirt and is now they have a $1.5bn company including all sports. Spartan are very, similar. An inflatable ball manufacturer that got into rackets and then cricket, they’re worth $10mn in Australia. It’s the kind of thing, if done prp[erly, can take this and move in to apparel ranges and be able to make the transition that we just don’t have the luxury of time or skillset to do.
The brand has a uniqueness. We are ranked 63rd in the world in the Social 100 list, were second in the cool brands award 2013/2014 for sports retail just behind Nike. We have won many awards, including AOC Best Bat, Best Bag and Most Innovative Product. There is genuinely something here and a fantastic opportunity for someone to come in and help us take it further.
The advertising campaigns that have run have all been edgy [for cricket equipment] in what is a very staid world: “Let loose the ‘goose”, “”Seek and Destroy” and “See it smash it”. We are looking for partners to come in alongside us. If you look at IPL, BBL, Ram Slam, T20, the future is in the youth market and this is the biggest youth brand in cricket.
One of the questions we were asked relates to this point. Our readers are all “Cricket Badgers” and keep a close eye on both ongoing games and the kit people use, and have commented on the lack of Mongoose in T20. Are there any plans to increase visibility in this segment?We have consciously moved away from what the market (and not us) saw as a gimmicky bat and we saw our future in making quality bats using similar technology. This comes back again to brand extension. As I’ve said before, MMi3 is only 20% of bat sales now. Three years ago it was 100% of our sales.
Should we have more presence? Yes, but it’s incredibly expensive. It’s what took the business down originally. We’ve been quite parsimonious in how we use our player bill. We have lots of players, and they’re normally on deals around clothing, or bats. They are not straight out cash amounts.
The way Reebok and Spartan are going about it at the moment, they are throwing cash at it.
Like a Woodworm?They are looking like a Woodworm and they killed themselves and came back as a much smaller business. Spartan have the funding because they are an extension of a sports business already and they have the luxury of a core business which allows them to be able to spend the money on cricket. No-one ever made money throwing cash [at players] for one or two seasons. The problem is that Mongoose are no longer the new kid on the block. This is Reebok and Spartan.
We are a brand, all be it one that got into the top five, that is now competing with the likes of Millichamp and Hall and Newbery. Adidas and Puma pulled back, as you know. Our bat sales are excellent. It’s just a very, very narrow market.
Some of the research work we’ve done is that during the recession, the average duration that a Saturday/Sunday club cricketer owns a bat has extended by about a year from 1½ seasons to 2½ seasons. Almost a full season extension.
I don’t know how that has come back this season, but we have the Lord’s show on the 18th September, we’ll find out more. It is a market that is shrinking with some big names leaving.
Nike is the most interesting potential player. We've looked at them and they at us. They have this cool “6.0” brand for minority sports like BMX and Cricket. I wear Nike clothing when I play cricket and it’s excellent. I think they would be the most interesting one to come in, but it’s a question of margins again. New players come in and throw money at it but the top sales go to GN and Gunn and Moore. Until someone comes in with a lot of money and the business stability with it, and says, “Here’s £5mn to spend on players”, with the likes of Alastair Cook and Joe Root, only then will there be any ceding of control from the top two at the moment.
We’ve certainly found that our quality is very high. We also see the “Avon Lady” way of selling bats. I remember when I was at school I used a GN Scoop because the captain of cricket got given one by GN. That kind of marketing is where the sales of bats really takes place. If I had a blank check to do this I’d create an Avon Lady like network for distribution in Australia, South Africa and England where a guy turns up at a game with a boot full of bats and says have a go at this.
I spoke to Andy Caddick, and he was talking about the concept of the national distribution model for sport. The dominance of the online retailers means there is a diminishing try before you buy market. Unless you go to purist cricket shops, there is no money in independents having a selection of bats.
We have a couple more questions. Are there any new models planned?Having just launched Rebel this year there aren’t any plans for a further model. We’re happy with the stable we have with the two full length bats in Rebel and ToRQ, the hybrid in CoR and the MMi.
Are there any further innovations planned?We have some ideas, but we can’t talk about these just yet.
Are you concerned about losing the young players that you have?No. We don’t want to lose any of the young players that are absolutely the lifeblood of what we do, but my front and centre objective is to find the right partner to work with. Strategically, I need to find the right partner to take Mongoose forward.
If any of your readers have suggestions that lead to results, we’ll provide them with the full Mongoose kit range.
Thank you for a very frank and open interview.
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Topic: Interview with Nick Lawson, majority shareholder in Mongoose - Part 2 (Read 11878 times)