Limited Profitability: Nike Sells Bauer Hockey

Mike DoyonCorrespondent IFebruary 21, 2008

Declining profit margins have to be the only explanation for why Nike would sell off a company. Especially a company like Bauer.

The sale is reportedly worth $200 million to a U.S. private equity firm, Kohlberg & Co. The Montreal-based Bauer has been around since 1927 and has been at or near the top of the hockey world for as long as I can remember.

That's why it's kinda shocking to see them discarded like this.

I do recall some rumblings about a possible sale a few months ago, but never really thought Nike would drop the axe.

"It was a tough decision but one that was in the best interests of Nike and Bauer as we each look to maximize our respective growth opportunities," Nike CEO Mark Parker said in a statement.

So basically, they weren't making enough money for the head-honchos behind the Swoosh. Like they need more...but hey, business is business and if there's one thing Nike does well, it's maximizing their profits by making intelligent business decisions.

But, this announcement is not necessarily bad news for Bauer. Even though RBK squeezed themselves into the hockey space by dumping a boat-load of money into the NHL with the tight-fitting jerseys and all of the equipment, Bauer and its brand have remained near the top of the market. There's a reason they've been around for 90 years.

The underlying reason why Nike bought them in 1995 was because of their massive presence in the hockey marketplace. Nike wanted a piece, but didn't want to have to launch their own line of equipment.

Quick fix: Buy a powerful brand and market it as their own.

They've had their fun, built up a presence in the sport, and now they're out.