Sports Specialties Acquired by N.Y. Firm

The year-old marriage of giant MacGregor Sporting Goods and Sports Specialties Corp., an Irvine marketer and distributor of the successful Pro brand baseball caps, has ended with the sale of Sports Specialties to a New York City investment fund for $19 million.

The sale, to a subsidiary of the Oppenheimer-Palmieri Fund late Wednesday, also ends litigation that the former owners of Sports Specialties had brought against MacGregor to undo last year’s merger.

As part of the sale to OPF Stock Holding Corp., former Sports Specialties owners David Warsaw and his sons, James and Robert, will regain some of their ownership interest in the firm. The companies would not disclose how much stock the Warsaws will own.

“This should be a happy marriage for our family and our company,” said James Warsaw, president of Sports Specialties.

The Warsaws sold their 59-year-old company to MacGregor last year for $10.4 million in cash and $6.8 million in stock, but the Warsaws said the merger quickly became a nightmare.

“MacGregor had cash-flow problems, and there were so many breaches (of the merger agreement) that it got to the point that we had to sue or suffer severe consequences,” Warsaw said.

MacGregor’s management style also clashed with the Warsaws’ style, he said, and the family influence on the company was waning. Under OPF, he said, his family “will have full operating authority of the day-to-day operations and management of the company.”

The Oppenheimer-Palmieri Fund is a private joint venture between the Oppenheimer & Co. investment banking firm and Victor Palmieri, a New York financier who specializes in boosting sluggish firms and in rescuing failing companies.

The fund’s interest in Sports Specialties will be primarily as an investor, said Douglas Lehrman, the fund’s president.

Sports Specialties holds the license to market and distribute caps embroidered with team logos from major league baseball, the National Football League, National Basketball Assn. and National Collegiate Athletic Assn. It also sells caps to a number of teams in all four divisions. It has exclusive manufacturing arrangements with facilities in Arizona, South Korea and Costa Rica.

MacGregor put Sports Specialties and two other companies it acquired under the ownership and control of its MacGregor Team Sports subsidiary in February.

MacGregor Team Sports recently arranged to sell the three companies to OPF for $74 million, but Warsaw said his family obtained an Orange County Superior Court order on Saturday blocking that sale. Sources in New York said the sale had been intended to raise funds to help MacGregor pay off obligations and give it some breathing room.

Although the Warsaws opposed the sale of all three MacGregor units to OPF, they approved a settlement Wednesday evening that enabled MacGregor to sell only Sports Specialties.

OPF’s purchase of the other two units is being held up, however, because three creditors with claims totaling about $340,000 filed a U.S. Bankruptcy Court petition last week in New Jersey to force MacGregor into a bankruptcy reorganization.

MacGregor, served with the petition Tuesday, was in court Thursday to fight the bankruptcy action.

Lehrman said that OPF still plans to buy the other two MacGregor units but is waiting on a decision on the bankruptcy petition. He said he does not expect the Sports Specialties purchase to be affected by that proceeding, however, because the Team Sports subsidiary that sold the Irvine firm was not named in the petition.