sgb weekly 1149

DECEMBER 5, 2011

The Weekly Digital Magazine for the Sporting Goods Industry

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FINANCIALS 4 COLLECTIVE BRANDS Sees Payless Struggle Again in Q3 but Wholesale Brands Surge 5 BROWN SHOE Lowers Fiscal Year EPS Guidance; Will Shutter Retail Door GENESCO Shows Solid Earnings Growth and Comp Sales Gains in Q3

NEWS 6 POWER BALANCE Files For Bankruptcy Protection Under Lawsuit Pressure NSGA Creates New Industry All-Star Awards Program 7 MOVERS & SHAKERS

FEATURES 8 THE NORTH FACE Talks Tech – The Outdoor Giant Plans To Use A Strong Athlete- Based Marketing Strategy To Further Highlight The Technologies It’s Bringing To Market. 12 SGMA Youth Team Sports Participation…At The Heart of it All

RESOURCES 18 JOB CLASSIFIEDS

The Weekly Digital Magazine for the Sporting Goods Industry

DECEMBER 5, 2011

8Page

ISSUE 1149

ON THE COVERThe North Face Athlete Conrad AnkerPhoto courtesy of The North Face

Editor In ChiefJames Hartford (704.987.3450 x104)

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Contributing Guest EditorNeil Schwartz

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Katie O’Donohue (704.987.3450 x110) [email protected]

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VP Research & Development, Gerry AxelrodManager Database Operations, Cathy Badalamenti

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4 SGB WEEKLY DECEMBER 5, 2011

Collective Brands, Inc. reported a loss of $114.3 million, or $1.91 a share, in the third quarter after charges totaling $151.4 million for lease termination costs and tax valuation reappraisals tied to its Payless division. Adjusted net earnings were $37.1 million, or 61 cents per share, down 22.1 percent from adjusted earnings of $47.6 million, or 75 cents a share, in the year-ago quarter.

Revenues inched ahead 1.4 percent to $894.4 million due to strong growth in PLG Wholesale segment and new store growth in the Payless International segment. Comps declined 3.7 percent, primarily impacted by the Payless Domestic business.

Payless Domestic net sales declined 5.1 percent to $520.9 million and same-store sales decreased 4.5 percent. The decline was driven principally by a high-single-digit percentage comp decline in August after a lackluster buy-one-get-one event. Aggressive pricing actions in response helped drive month-to-month improvements in traffic and same-store sales in September and October. Reduced year-over-year customer traffic, lower athletic sales, and lower sales of sandals led to a decline in footwear units sold. Strong performance was achieved in boots and accessories. The Payless Domestic segment recorded an operating loss of $8.9 million after charges of $4.9 million in the period against income of $35.3 million a year ago.

On a conference call with analysts, LuAnn Via, president and CEO for Payless ShoeSource, said results at Payless Domestic improved sequentially within the quarter across a variety of measures, including comps moving from a negative high single-digit percentage to nearly flat, customer traffic improving from down high-singles to down mid-singles, and conversion rates shifted to positive. Reduced ticket prices helped re-engage the budget conscious consumer to

the chain while strong on-trend merchandise led to positive sales in platform pumps and boots, as well as growth in the key categories of running and slip-resistant footwear. Other key categories including fitness, basketball and sandals underperformed.

Beside markdowns in the near-term to reconnect with budget conscious consumers, Payless is introducing more tiered pricing at more moderate levels, expanding its Incredible Value Every Day (IVED) program, and continuing its Hot Deals Of The Week program. Other efforts include expanding localized assortments, enhancing its loyalty program, improving direct marketing to new customers, and through store remodels. All the chain's stores in the Houston market were renovated earlier this month with "very positive" initial results.

Payless International segment sales increased 1.2 percent to $119.9 million in Q3, as seven net new stores more than offset the impact of a 1.4 percent comp decrease. Segment same-store sales increased in Latin America and decreased in Puerto Rico and Canada. Payless International's operating earnings dropped 55.0 percent to $8.2 million due to pricing actions and higher product costs.

PLG Wholesale sales increased 27.3 percent to $180.3 million, led by Sperry Top-Sider growth across virtually all product categories, distribution channels, and customer segments. Saucony, Stride Rite, and Keds also delivered higher sales. Saucony's growth was driven by minimalist and lightweight models and strong growth in international markets. Operating profits climbed 30.1 percent to $9.5 million as operating margins improved after two declining quarters.

PLG Retail revenues increased 0.7 percent to $73.3 million due to higher sales at new and existing Sperry retail stores. Segment operating profits dipped 7.0 percent to $6.6 million.

COLLECTIVE BRANDS SEES PAYLESS STRUGGLE AGAIN IN Q3 BUT WHOLESALE BRANDS SURGE

FINANCIALS


Brown Shoe Co. lowered its EPS guidance for the current year due to plans to exit some of its wholesale brands, IT implementation expenses, and eroding sales trends at retail. The company also revealed plans to shutter about 13 percent of its Famous Footwear store base and license out its Buster Brown, Sam Edelman and Avia wholesale children’s brands.

Adjusted earnings rose 10.6 percent in the quarter to $21.9 million, or 51 cents per

share. The adjustments primarily reflect the sale of the And 1 basketball brand for $55 million in cash to Galaxy International. And 1 added $19.1 million to actual sales to the quarter and $24.6 million, including the gain on the sale, to operating earnings. Sales in the quarter dipped 0.3 percent to $713.8 million.

BROWN SHOE LOWERS FISCAL YEAR EPS GUIDANCE; WILL SHUTTER RETAIL DOORS

Famous Footwear segment revenues slid 1.3 percent to $416.2 million in the quarter as toning sales fell 55 percent. Comps slid 0.4 percent versus a 10.6 percent gain in Q3 2010. Excluding toning, comps would have been up 2.6 percent in the latest quarter, Brown Shoe management said on a conference call with analysts. Gains were seen in running footwear, up 33.4 percent; sandals, +17 percent; and boots, +3.9 percent.

On the call, company SVP and CFO Mark Hood said while same-store sales at Famous from August to mid-September improved 1.7 percent, weakness was seen in the back half of September and October, and BTS continued to be pushed later into the season.

Operating earnings at Famous were down 11.8 percent to $28.4 million as gross margins eroded to 42.8 percent from 44.3 percent.

Brown also said it reached an agreement in the quarter to license its wholesale children's business for Buster Brown, Avia, and Sam Edelman to BBC International. It is also discontinuing its licenses for Marvel, Barbie and others kids franchises, and is exiting some private label brands.

On the retail front, 70 to 75 Famous stores are being closed, both this year and next, for a total of 145. Famous ended the quarter with 1,121 stores. In addition, 20 Brown Shoe Closet and F.X. LaSalle locations, which are part of its Specialty Retail results, are being closed. Finally, Brown last week revealed plans to close its retail distribution center in Sun Prairie, WI. In total, these steps are expected to reduce annual revenue by approximately $200 million and result in more than $80 million in annual SG&A savings.

Looking ahead, Brown now expects adjusted EPS of 73 to 85 cents for 2011, down from a range of 85 cents to 97 cents provided in late August.

Touting high single-digit to double-digit comp gains across its chains, Genesco, Inc. reported earnings soared 54.1 percent in the third quarter. The company also raised its full-year earnings estimate to a range of $3.64 to $3.69 a share from its increased August forecast of $3.35 to $3.42 a share, representing a 33 percent gain over 2010.

Signaling continued momentum, Genesco indicated that comps in the first three weeks of the current month through November 19 were up 11 percent.

"While we do not expect to maintain comparable sales at this level for the balance of the quarter, we are optimistic about our ability to meaningfully expand our top and bottom line over the same period a year ago," said Bob Dennis, company chairman, president and CEO, on a conference call with analysts.

Excluding charges primarily related to legal matters and network intrusion expenses this year as well as asset impairments in the prior year, earnings on an adjusted basis reached $1.21 a share, up from 77 cents a year ago and ahead of Wall Street's average estimate of 96 cents a share. Sales jumped 32.6 percent to $616.5 million with companywide comparable-store sales ahead 12 percent.

Lids Sports Group sales advanced 21.5 percent to $185.5 million, driven by an 8 percent comp gain and the acquisition of 48 Sports Avenue stores late in the third quarter last year, which contributed to

an 11 percent square footage increase over the past 12 months. Lids operating earnings jumped 54.8 percent to $18.9 million, with operating margins improving to 10.2 percent from 8.0 percent a year ago.

Dennis said the drivers of the Lids hat store business have not changed since the first half of the year. The NFL business remained "good" and has not been impacted by the league's temporary strike.

Lids Locker Room "had a very strong quarter," with the MLB playoffs and the start of the NFL and college football seasons making the beginning of the third quarter the most significant part of the year for the business, said Dennis.

The Lids Team Sports business "continues to improve" as Genesco integrates the three businesses - Anaconda Sports, Brand Athletics and Impact Sports - acquired in the last few years. The integration included relocating a large portion of the production process to Indianapolis.

Journeys Group sales rose 16.4 percent to $251.5 million in the third quarter. Operating income jumped 32.1 percent to $18.9 million. Operating margins improved 140 basis points to 11.3 percent. The Group's 15 percent comp gain in Q3 was driven by a 15 percent comp increase at the Journeys stores, a 12 percent increase at Journeys Kidz and a 25 percent comp increase at Shi by Journeys. The Group's e-commerce business was up 47 percent.

GENESCO SHOWS SOLID EARNINGS GROWTH AND COMP SALES GAINS IN Q3


NSGA CREATES NEW INDUSTRY ALL-STAR AWARDS PROGRAM

The National Sporting Goods Association (NSGA) has created a new way for the industry to recognize outstanding accomplishments and contributions with the launch of its All-Star Awards program. The All-Star Awards program is meant to recognize the most outstanding efforts made within the sporting goods industry throughout the previous year.

In 2012, four awards will be presented during the inaugural All-Star Awards Luncheon at the 48th Annual NSGA Management Conference & 14th Annual Team Dealer Summit.

THEY INCLUDE:• Community Collaboration All-Star Award - Recognizing

retailers and team dealers that go above-and- beyond in their support of community activities, organizations and/or events.

• Retailer/Team Dealer All-Star Award - Recognizing outstanding retailers and team dealers for their contributions to the sporting goods industry.

• Vendor Partner All-Star Award – Recognizing vendors who practice a strategic and collaborative partnership with retailers and team dealers, and for their contributions to the sporting goods industry.

• Industry Catalyst All-Star Award – Recognizes companies that continually give back and support the sporting goods industry by sharing their discoveries and best practices, taking risks and expanding the way they do business in new and creative ways.

According to NSGA President & CEO, Matt Carlson, "The NSGA All-Star Awards program is meant to provide an opportunity for companies doing outstanding work to be recognized by their peers and colleagues. There are some tremendous achievements and contributions being made in the sporting goods industry that we should take time to celebrate."

Nominations must be made by an NSGA member before Friday, January 27, 2012, though winning companies need not be members of the association. Awards will be presented on Monday, May 7, 2012 in San Antonio, TX at the NSGA Management Conference & Team Dealer Summit.

Nomination forms are available on the NSGA website – www.nsga.org/allstarawards. Additional information may be obtained by contacting NSGA’s Special Projects Coordinator, Erin Goodchild, [email protected] or 847.296.6742 (x 132).

POWER BALANCE FILES FOR BANKRUPTCY PROTECTION UNDER LAWSUIT PRESSURE

Power Balance, LLC, the maker of Power Balance bracelets worn by NBA players and celebrities, filed for bankruptcy protection in federal court in Santa Ana, CA. The filing is the result of numerous lawsuits that allege misleading advertising about the hologram-embedded rubber bracelets, Power Balance said in a statement.

The Laguna Niguel, CA-based company said in its statement, "Due to the unauthorized marketing tactics of an independent distributor in Australia and the proliferation of counterfeit operations of which we obviously have no control, Power Balance has become the target of a number of class action lawsuits. Although we find the lawsuits to be baseless, they have cost the company millions of dollars in legal fees and continue to threaten the core business. The company has gone through extensive efforts to ensure that its marketing messages are supportable and compliant with local laws. However, lawsuits continue to surface against Power Balance at a tremendous cost to the organization."

"Power Balance cannot wait for these issues to resolve themselves or to go away. After many months of extensive legal analysis and exhaustive research, the company has determined that the only viable option at this time is to seek assistance available to us through bankruptcy laws and the protection of the courts."

Advertisements claim that the wristbands improved balance, strength and flexibility. Power Balance, founded in 2007, sold its silicone bracelets for $30, which were worn by professional athletes including Kobe Bryant, Lamar Odom, David Beckham and Drew Brees, as well as numerous celebrities.

Kobe Bryant is listed among the biggest creditors in the Chapter 11 court filings.

NEWS

MOVERS & SHAKERSRichard Adler, owner of Adler Sporting Goods in Cleveland, passed away at the age of 79. Adler began his career in the family business in 1958. He and his wife, Adele, opened a store in 1975 at Golden Gate Plaza in Mayfield Heights, OH and were among the original tenants at Beachwood Place. They operated both locations for a few years until closing the Golden Gate location. He retired in 2008. The Finish Line announced that its Chief Administrative Officer and Corporate Secretary, Gary Cohen, will retire from the company effective March 29, 2012. Salomon has appointed Jake Fuller to the position of Salomon USA Alpine product category manager. Body Glove appointed Mike Vavak as sales manager for the Surf, Wake, and Dive categories. Line Skis & Full Tilt Boots appointed Jake Anderson as its new U.S. Sales Manager. Isis, the women’s active outdoor apparel brand, announced the appointment of Nicole Rock as its new director of design and development, Courtney Lewis as its new product manager, Tricia Hoke as product developer and Lyn Edwards as product designer. New members who joined recently appointed Brand VP, Kelly Gorder, and existing Product Designer, Lyn Feinson to complete the Isis product and design team. The appointments follow parent company American Rec's decision last spring to move the women’s active outdoor apparel brand from Vermont to Boulder, CO. Kimberlee Viera has joined Icebreaker U.S. the outdoor merino wool apparel company headquartered in New Zealand, as their U.S. finance director. Acorn, a division of Totes/Isotoner, has hired Patricia Babka as director of business development. Babka joined the Acorn team from Franklin Retail Solutions. Waboba, the maker of beach gear, appointed Dale Marx as the new president of its USA division. Asics America signed American World Champion freestyle wrestler Jordan Burroughs. Most recently, Burroughs earned Gold at the 2011 Pan America Games in Guadalajara, Mexico at 74 kilograms (163 pounds).

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The North Face brought out many of its star athletes – Diane Van Deren, Xavier de Le Rue, Jimmy Chin and Renan Ozturk– to an event it held in New York City in early November to showcase its latest technologies to the top ski and outdoor specialty dealers in the Northeast. The event also showed a subtle marketing shift for the outdoor mega-brand to focus more strongly on its athletes and solutions.

"If you look at the last three years, we've spent a lot of time, money and energy marketing The North Face," said Todd Spaletto, The North Face president, Americas, in an interview with SGB Weekly. "We've marketed our manifesto, we've marketed our brand and we'll continue to do that to tell people who we are and what we stand for. But on top of that, we're going to layer specific technology stories."

Spaletto said the shift is designed to underscore that the The North Face innovation ideas "aren’t manufactured from a focus group." They come from conversations with its athletes to address their needs as they face some of the harshest conditions in the outdoor world. In addition to putting on upward of 15 expeditions a year, The North Face sponsors more than 70 athletes around the world, including endurance runners, skiers, snowboarders and climbers. The roster is believed by the company to be by far the largest in the outdoor space.

"Our brand stands for solving athletes' needs and this concept of 'Athlete's Tested, Expedition-Proven' has been the grounds for which we've developed these new technologies," said Spaletto. "The

whole reason we have an athlete team isn't to wear our clothing. We have an athlete team because they go out and do what they do and they discover problems. It's those moments when they discover problems that they come back and talk to our RD&D team and we create solutions. Our technologies directly come from their needs."

Indeed, the event was filled with the athletes' inspiring and often harrowing tales of battles they braved in the outdoor elements.

Ultrarunner Diane Van Deren discussed what she endured becoming the first woman to finish the 430-mile Yukon Arctic Ultra, considered the world's coldest, most extreme race. Facing minus 52-degree winds, Van Deren explained how she had worked with The North Face RD&D team to engineer an attachment for her glove to prevent her eyelids from freezing.

Pro snowboarder Xavier de Le Rue discussed how wearing an ABS pack saved his life in an avalanche four years ago from working with The North Face team to integrate technologies into vests and backpacks. Climbers Jimmy Chin and Renan Ozturk talked about their aborted attempt in 2008 with world-renowned mountaineer Conrad Anker to climb Mount Meru in India’s Garhwal Himalaya. The failure inspired the group to ask The North Face's product team for a better synthetic to handle the cold and soggy conditions. In October 2011, the three successfully climbed the central pillar of Mount Meru and reached the 20,700-foot summit.

THE NORTH FACE TALKS TECH

The Outdoor Giant Plans To Use A Strong Athlete-Based Marketing Strategy To Further Highlight The Technologies It’s Bringing To The Market.

By Thomas J. Ryan



DIANE VAN DERENWorld-Class Endurance Runner

Favorite Book - In Pursuit of ExcellenceHome - Sedalia, COCareer Highlight - Finalist for the 2005 “Outdoor Person of the Year” award featured in “Hooked On The Outdoors Magazine”

XAVIER DE LE RUESnowboarding World Champion

Home - FranceBrother - Bronze medalist Paul-Henri de Le RueCareer Highlight - Won the Nisson Xtreme in Verbier and the Freeride World Tour for the third time in a row

RENAN OZTURKMountain Climber

Favorite Destination - HimalayaFavorite North Face Product - Catalyst Jacket Ambition - Alpine style free ascent of an unclimbed giant rock spire

CONRAD ANKERExtreme Alpinist

Most Recent Epic - The Salathe Wall in a dayFavorite North Face Product - Optimus Down JacketProduct Moment - Seeing the Khumbu Climbing School take off

JIMMY CHINRemote climber, Ski-mountaineer and Explorer

Favorite North Face Product - Redpoint Optimus Jacket “because it’s perfect”Words To Live By - “Trust in the cosmos but tie your camel”Favorite Places to Travel - Home

HILAREE NELSON O'NEILLBig Mountain, Back-Country Skier

Favorite Destination - Hanalei, KauaiFavorite North Face Product - Women’s Aconcagua JacketProudest Moment - Crawling into Camp II on Choya after summiting and skiing

THERMOBALL, inspired by the Mount Meru trip, is an insulation technology that is fabricated as small individual balls of synthetic fibers instead of traditional continuous-filament synthetic insulation. Mimicking the clustering of down, ThermoBall offers the lightweight loft, warmth and compressibility of down with the wet-weather insulating performance of synthetics. When utilized with the brand's new, patent-pending triangular baffle system, it facilitates high loft and even distribution throughout the garment. The North Face said the triangular baffle, enabled by ThermoBall, is seeing promising internal test results. Note: Testing continues on Thermoball with no release date at this time.

FLASHDRY is a new garment technology that helps regulate body temperature, by quickly wicking moisture away from the skin to facilitate rapid drying. The application promises to dramatically improve drytime and/or breathability of a textile by way of a micro-porous, particle additive introduced to a pre-yarn polymer or ‘printable’ layer on laminated textiles. Particularly unique is that the technology is applicable to multiple textile platforms from knits, to synthetic insulation, to waterproof breathable laminates, head-to-toe and in all layers. This is the first time a company in the outdoor industry has achieved the incorporation of one-and-the-same technology in all garment layers.

ABS PATROL 24 is a backpack equipped with an airbag to protect wearers in an avalanche. It was exclusively developed for the North American market through a partnership with the developer of the system. Once activated, the ABS system equalizes the volume and density of the victim (relative to the surrounding snow) by adding 150 liters of volume to help the avalanche victim end up on top of the avalanche. The technology is also being developed and tested in a vest.

Stormy Trail Jacket featuring FlashDry

ABS Patrol 24 Prototype Design

▲▲

▲▲


Thermoball synthetic insulation

Their stories set the stage for The North Face to present three break-through technologies for Fall 2012.

▲▲

Also speaking at the event was Philip Hamilton, VP of product, The North Face, who noted that the company recently committed to a team of product innovation experts at its San Leandro, CA headquarters solely dedicated to break-through advancements in a bid to further its commitment to innovation. A dedicated innovation center is being set up in its new headquarters in Alameda, CA that The North Face will move into this Summer. Focusing on providing physiologic solutions in three areas: load control (equipment), impact control (footwear) and climate control (apparel); the team will work "unshackled" from meeting typical in-season commercial product timelines to further intensify the focus on innovating the experience for its athletes.


Hamilton believes The North Face commitment to addressing the athlete's fierce challenges gives the company its competitive advantage in the marketplace.

"For Diane (Van Deren) who may run 430 miles into the Yukon, a marathon is just a morning training run," said Hamilton. "The point being that where the other brands finish is where The North Face starts. It puts a whole other approach on what it takes to develop product, and what standards it takes to drive innovation."

Hamilton also feels that overall, the brand does not get enough props for its innovation.

"All these beautiful stories make us this hard-core achiever brand and you'd almost forget we are also an almost $2 billion powerhouse that sells Resolves, Ventures and Denalis," said Hamilton. "Some consumers may think that's maybe all we bring to market but we have done this for 44 years. It's never stopped. We've always had this focus and the focus is only going to intensify as we move forward. What we arguably haven't done so well is tell these stories to consumers in the marketplace because those franchise silhouettes bring us that $2 billion. But it's these stories that make us a priceless brand."

Hamilton described the ThermoBall story as "just a milestone on a road we call the 'future of feather' " as The North Face's product team seeks out the technology that could ultimately mirror down and solve its inherent wet issues. FlashDry offers a re-thinking of moisture-wicking technologies over the past 10-to-15 years with an application that's able to reach every layer of a garment, down to the gloves. The ABS story should also equally resonate with consumers who have long recognized the benefits of airbags in their cars.

Beyond being used to inspire innovation and appear in ads, The North Face's athletes are counted on to provide the images for its campaigns. The North Face does not utilize photo shoots. Athlete voiceovers are also used in their ads, including one heard at the event featuring Corey Richards, who was recently named among National Geographic's 2012 Adventurers of the Year. With a multi-million dollar media budget and its ability to reach more than 1.4 million Facebook fans, The North Face said it will be looking to use its scale to tell its stories.

Todd Spaletto admitted that advanced innovations such as ThermoBall were "not easy stories to tell" and that was the reason certain premium technologies would be sold only through outdoor specialty and ski specialty stores. Those shops have the trained staff to walk consumers through the applications and "bring these stories to retail," he said. "The brand is counting on dealers to help us deliver those messages to the hard-core enthusiast to not only drive growth but to inspire a much larger stream of people to discover the outdoors.

"Our goal is not just to sell ThermoBall or FlashDry," said Spaletto. "Our goal is to get more people skiing, snowboarding, running and climbing. It's not a transactional effort around these technologies. It's through an educational exercise where you outfit people in the right product and get them interested in new sports, building our industry and hopefully building your business for the next generation of outdoor explorers." ■

Hilaree Nelson O'Neill, Cordillera Real, Bolivia

Jimmy Chin, Grand Tetons, WY

Conrad Anker with son, Isaac Lowe-Anker en route to "the ridge" of the Bridgers ©Jenni Lowe-Anker


By Neil Schwartz

YOUTH TEAM SPORTS PARTICIPATION…AT THE HEART OF IT ALL


Every week around the country, children and young adults from ages 6 to 18 are out on recreational fields and indoor facilities playing one or more team sports from coast to coast. According to the annual SGMA Sports, Fitness and Recreational Activities Participation Study, 28.7 million individuals 18 years and under play one or more team sports on a regular basis. The term “regu-lar,” refers to those individuals who are engaged in team sports in either a formal or organized setting. While there is no denying that there is plenty of “casual” or “pick up” play going on, from a tracking and analysis perspective, the report focuses on those participants who play in some form of organized or formal play. They are the young people who make up the core of youth team sports participation. Chart 1 shows team sports participation by age groups where youth participation makes up 54 percent of all team sports participation at the core participation level.

For generations, team sports have been a major part of the fabric of American culture. They bring us together as young children, teaching us to socialize, solve problems, resolve disputes, experience the benefits of hard work, understand different personalities, gain self-confidence and direction. As we transition into adulthood, team sports remain a significant part of life for many of us on a variety of levels, indirectly through video games and fantasy leagues, and more directly through participation as fans at live sporting events through our media consumption and, most importantly, through continued participation for fitness and exercise.

The SGMA has a variety of data confirming that individuals who participate in team sports as children are more likely to continue this trend into adulthood. With the country facing a serious obesity epidemic (the current obesity rate among adults is approaching 34 percent and expected to increase), the case is often made that regular activity is one antidote for the problem. According to statistics published by the U.S. Congressional Budget Office, 40 percent of all health care costs in the United States are directly related to three specific issues; smoking, obesity and inactivity. If we factor out smoking and only pay attention to obesity and

CORE TEAM SPORTS PARTICIPATIONBY AGE GROUP

Chart 1

inactivity, these two issues account for over $2.2 trillion of the total annual health care expenditure in the United States alone.

Youth participation in team sports does not happen by accident. Children don’t wake up one day and say that they want to play Tackle Football or pick up a Lacrosse stick. There are a number of motivating factors, including economic concerns, and environmental conditions. Data from this year’s “U.S. Trends in Team Sports Report” from the SGMA clearly demonstrates that children participating in active lifestyles outside of a team setting are also more likely to participate in team sports on an organized level later in life. Part of the explanation for this tendency is the correlation to general physical fitness and an enjoyment of any type of play centered on physical motion and activity. It is this orientation that also drives participation in a diverse mix of activities. Studies show that adults who are team sports participants enjoy physical education more as school children, were involved in health club activities or were simply exposed to running or jogging as a child. This pre-disposition to activity and team sports are strong indicators of activity levels later in life. To gain a greater understanding of motivators driving youth team sports participation, it is essential to break them into smaller sub-sets that reflect the mindset of the team sports participant.

Chart 2 shows a distribution breakdown in team sports participation by age groups ages 18 and under.

Between the ages of 6 and 11, it is all about trial and sampling. According to the annual participation study, the average 6 to 11 year-old plays three different team sports in one form or another over the course of a one year. The influence of parents, professional or college athletics on television, and other adult influencers such as teachers and coaches, plays a significant role in this process for young athletes. At the early ages it is all about establishing a comfort zone that fosters participation going forward.

If we take this one step further, we can see specific differences in the way each generation participates in team sports. While taking into account age and other variables, each has their own idiosyncrasies when it comes to team sports participation. In addition, the availability and the growth in popularity of youth team sports has also been a function of the increased availability of a wider variety of sports, more teams to play on, and more chances to play at an organized level. According to data from the participation study, Baby Boomers, the largest of the generations, showed a strong affinity for team sports participation when they were younger. Their Gen X counterparts show a slightly higher affinity, but this is more a function of availability than anything else. The number of occurrences is actually less.

The Gen Xers are considered more of the “me” generation, and this focus has gone a long way toward stimulating the growth of sports like running and individualized fitness activities. Team sports are still important to this group but to a lesser extent than to the Baby Boomers.

The Gen Y'ers or the "Millennials," as they are sometimes referred to, are more inclined to participate for one important

reason—they are the most social of the three groups. Everything we have seen from team sports growth to the increase in class-based fitness programs, are the result of the characteristics that the Gen Y group exhibits. According to Jonathan Casper, Ph.D., Associate Professor at North Carolina State University, Gen Y'ers have had a different, more social environment to facilitate their involvement in team.

Sports like Soccer have grown tremendously since the Boomers and Gen X'ers played them in their youth because the Gen Y'ers like to play in groups and it is all about the social experience when it comes to their preference for sports participation. While the Gen X'ers tend to be all about “look at me,” their Gen Y counterparts are more about “come join us.” It is this generation that is, of course, the main thrust behind the growth of Facebook and other social networking sites. Facebook was originally created for the generation that was currently attending college in mind; however, Facebook and social networking alone cannot claim all of the credit. The saturation of sports on TV and other media outlets also have had a huge influence on this generation.

According to Matthew Yellin, a 15-year-old high school student from Delray Beach, FL, “I played at the 'rec' level and also travel teams for the better part of my elementary school years. My father had the biggest influence on my choices to play a specific sport. I felt there was a tendency for him to point me in the direction of team sports that he played as a kid. I essentially played what he played. Now my friends have a greater influence on what sports I play.”

Young adults between the ages of 12 and 14 are making their own decisions which also has implications for sports-related

18 AND UNDER TEAM SPORTS PARTICIPATIONCORE PARTICIPATION LEVELS

Chart 2


businesses. As they age children start to define themselves, and whether to participate in one team sport or another is a big part of that process. According to Dr. Casper, “These young teens and the even younger ‘tweens,’ represent a huge growth opportunity for everyone who relies on this particular target market. Product relationships and loyalties are formed here and this age group cannot, and should not, be ignored. Everyone should ask themselves, ‘what does a 12-year-old have going on at the moment of truth when it comes to deciding what sport they might want to play', or other decisions like 'what brand of baseball glove or sneakers do they want to wear?'"

Significant slips in team sports participation levels start around these ages and often establishes a pattern. Chart 3 represents this clearly. During the younger years, sports like soccer, baseball and flag football are in what is referred to as “heavy trial mode.” Then, there is a significant drop-off in play for these three sports after age 10. Football players, if they plan to stay with it, transition to Tackle Football; others try new sports like Volleyball or Lacrosse.

In middle school, children start to think for themselves and make their own decisions when it comes to their sports participation preferences, it becomes less about the parents, as they decide for themselves and we see big participation swings. However, while there are some swings in participation from sport-to-sport or activity-to-activity, the overall level of participation remains solid. Middle school-aged children enjoy their sport and seek out a place to play. The big challenge, based on reports in the media, is that middle school sport's budgets are being cut to almost nothing. As

a result, there will be fewer choices and fewer spots on teams for those that want to play their chosen sport.

This is partly the reason why we see mainstream sports like Tackle Football and Basketball finding growth at the middle school level, while other sports like Wrestling and Soccer facing a more difficult time maintaining participation levels. Soccer, at the same time, offers a number of play alternatives where the growth is occurring. The same can be said for Lacrosse, which is growing for both boys and girls. So while middle school soccer participation is sliding, these players are heading to travel and other elite player programs to continue their desire to play. Wrestling, on the other hand, offers no alternative play options for the most part, which goes a long way to explain why Wrestling is losing participants at an accelerated rate. What will happen to some of the smaller participation sports when school budgets are pressured and there are fewer spots available on teams?

The answer is that “niche” team sports will grow. According to Tom Cove, CEO and President of the SGMA, “It is great to see sports like Lacrosse, Rugby and even Ultimate Frisbee starting to make significant gains in participation. In the latest SGMA study on Sports Participation, Track and Field and Gymnastics are also enjoying nice numbers, albeit from a smaller base. Everyone needs a place to land when it comes to their desire to play a team sport.”

According to Dr. Casper, “The growth of these “non-traditional” sports is much like the growth in any product category. The question is, can sports participants find sports that satisfy their needs from among the many alternatives they have to choose from? There is

TEAM SPORTS PARTICIPATION BY AGE 18 AND UNDER

Chart 3


also a tie-in with spectatorship where these sports are gaining more and more attention. The key is for them to be unique and to stand out from the crowd for continued success in participation. It is also important for organizers, and even equipment manufacturers, to understand who is playing their sport and to learn more ways to keep the momentum going. Things don’t just happen by themselves.”

While overall youth team sports participation is growing, there are also contradictions which present interesting marketing challenges. Chart 4 shows this very well. This chart focuses on venue of play.

One sport that highlights this inconsistency is Tackle Football. While Tackle Football continues to see strong school-based participation, after elementary age, there are fewer venues for middle school and high school-aged children to play the game if they are not on the school team.

Tom Cove added, “For parents, the decision to encourage their children to play sports, and especially team sports, should be one that needs little discussion. For young children in particular, team sports offer so many benefits, aside from the obvious health and fitness benefits. Young kids who participate in team sports perform better at school, enjoy enhanced socialization and problem solving skills, and are just better adjusted all around. Somehow, the various associations and commercial businesses engaged in youth team sports participation need to drive this message to the parents who are making the important decisions

for younger or elementary age kids.The benefits of team sports far outweigh any negatives. We continue to drive home this message on Capitol Hill.”

It is clear that youth participation in team sports remains an important factor in this country. Whether it is a group of young children running around on the soccer pitch for fun and exercise or a group of high school football players in full uniform, the story remains the same. The landscape for youth participation in team sports is one that keeps growing, thanks to a changing and supportive environment.

However, if this trend is going to continue, parents and children will need help. Dr. Caster added, “More needs to be done at the federal, state and local levels with the goal of changing policy and providing the right environment to grow team sports participation for the youth of America. If we want to increase participation for every child it needs to start at the top. For example the ‘Let's Move’ campaign and the 'NFL Play 60' are great for enhancing awareness and communicating the problem across the U.S. But we also need community level initiatives to make anything happen.”

If we get more children engaged and keep them engaged, this country will have a better chance of reversing the growing trend toward obesity, children will have a better chance of growing up more well-adjusted, and more children, now and in the future, will have the opportunity to have fun playing team sports.

Chart 4

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