January 12, 2009
It can be difficult to put a value on "cool." When talent management company The Firm acquired the rights to the Pony brand back in 2001, roughly $3 million was the figure floated to assume the rights to the dormant sneaker trademark. The most compelling attribute of the asset was its novelty to sneaker connoisseurs who remembered the brand from the 1980s when Pony shoes were linked to stars such as Pele, Muhammad Ali and Reggie Jackson. In just two short years - after an infusion of cachet - The Firm sold the company for a reported $50 million, underscoring that prominent brands can thrive in any market.
"It wasn't brain surgery," David Baram, the former president and CEO of The Firm tells Mergers & Acquisitions. "Using entertainment can be an effective way to build and maintain brand equity - that's what we could bring to the equation."
Baram, of course, is describing the odd marriage between the talent management company and its former sneaker subsidiary. The Firm wasn't necessarily going make Pony sneakers the most innovative shoe on the market, and under The Firm's stewardship, Pony didn't have the wherewithal to line up endorsement deals to rival the hundreds of millions of dollars companies like Nike and Adidas can dole out to star athletes. What the company did have, however, was insight into and an influence on pop culture, allowing the Firm to extend what it did for musicians and actors to its new sneaker label.
If the move into sneakers sounds like a reach, it was an even bigger gamble back in 2001, after the tech bubble burst and consumers, similar to today, began reevaluating their purchases. In fact, the acquisition came just a few months after rival Converse went bankrupt. But Baram, who concedes it was a "very risky" play for The Firm, notes that in his mind, the divide separating the two markets - stars and sneakers - was not all that great.
"At the end of the day, we spent our time trying to reach certain consumers, whether it was to get them to watch TV shows or buy CDs. We figured we could use that same skillset, and at the same time capitalize on our relationships in the entertainment industry," Baram says, describing the foundation behind the acquisition's premise.
Prior to buying Pony, The Firm toyed with the idea of launching its own, original brand of shoes. The appeal of Pony, though, was that it had a heritage that would off the bat attract older consumers. The trick, though, was for the buyer to reach the MTV crowd, many of whom may not have even been born when Pony disappeared from the scene in the early 1990s. The Firm initially went through the traditional channels to rebuild the Pony brand, with an ad campaign that included print and online ads. The Firm then had to get creative in order to gain exposure "to the tastemaker community."
"The days of sticking a bottle of Gatorade into an athlete's hands are over," Baram says. "It's not that effective and it's too pricey for 99% of the companies out there." He adds that it's also not that easy to simply pass along freebies to celebrities, describing that his own office is filled "every new apparel or beverage product you can possibly imagine."