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JAMES H.WARSAW : Merchandising’s Big Leaguers : Sports Specialties’ Caps Have Made Fans Worldwide

Times staff writer

Sports Specialties Corp. is going through some pretty heady times as it rides the wave of international demand for American sports and sports products.

The Irvine company makes the popular Pro brand cap, authentic headgear that the pros wear. It holds licenses from all the major professional sports leagues and college associations, as well as the International Baseball Assn., which covers about 80 nations.

The international link has become a major factor in the private firm’s continued growth. Four years ago, the company was filling occasional orders from fans in foreign countries. Today it gets more than 10% of its $40 million in annual revenue from overseas sales. By the time the 1992 Olympic Games roll around, the firm expects to be generating 20% of its revenue in foreign trade.

Sports Specialties, founded in 1928 in Chicago by David Warsaw, introduced the nation to sports merchandising. Warsaw hawked a variety of sports souvenirs in Wrigley Field and Soldier Field. In the 1950s and ‘60s, the firm sold the popular spring-neck bobble-head dolls out of the Los Angeles Rams novelty shop.

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As his two sons, James and Robert, started to take roles in the company, Warsaw sold the novelties operations to concentrate on producing high-end caps. The firm now makes caps in three foreign plants and in Winslow, Ariz., using wool, corduroy, cotton twill, polypropylene and, catering to the fashion set, leather.

The Warsaws sold their firm to MacGregor Sporting Goods in 1986, but after an acrimonious year with the New Jersey company, they engineered the sale of their division to a New York investment firm. The family retained a minority interest in the unit.

As chairman, Robert A. Warsaw, 41, oversees production and distribution.

James H. Warsaw, the company’s 42-year-old president, heads up the company’s marketing efforts. He recently spoke with Times staff writer James S. Granelli about the company’s effort to cash in on foreign demand for Pro caps.

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Q. How necessary are international sales to your business?

A. I think it’s extremely important for our company’s presence to grow and flourish overseas. We are committed to being the leader in authentic, high-quality caps in world professional sports as we are in American professional sports.

Q. How did you get interested in the overseas market?

A. It goes back many years. When the O’Malleys (team owners) took the Dodgers in the late ‘50s and early ‘60s to Japan every year, my father would make that trip too. And later Sandy Koufax and Joe DiMaggio went down to Mexico on separate trips with American baseball organizations and became American heros. They were baseball heroes overseas. So that was kind of inbred in me growing up 25 to 30 years ago. However, I saw it as a definite asset from a business perspective at the American Bowl three years ago, when the Denver Broncos and the Los Angeles Rams played in London. More than 85,000 people in Wembley Stadium watched, and less than maybe 10% of the people attending fully understood what was going on. But they were totally involved in the hoopla of the bands, the cheerleaders and the big blokes, as they called them, hitting each other through the line. And finally, of course, I saw the merchandise being sold successfully, and the people getting enjoyment out of that. I felt that that was definitely a market to pursue.

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Q. Did you start in England?

A. Yes. Then later the NFL had games in Japan, and last year the (San Francisco) 49ers and the Rams played an exciting game in the Tokyo Dome. And this year we’re marketing our NFL goods in Japan.

Q. Long before you went to London, though, you had been filling small, personal orders for people around the world. Didn’t that indicate that there was a broader market for you?

A. Well, what has happened is that the satellite generation and the global economy have created a worldwide awareness of American sports. And this is not just on the field; it’s off the field. It’s the mannerisms; it’s the fashion; it’s the look; it’s the lifestyle that is America. That creates an opportunity for this company to be successful overseas.

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Q. How did you learn about foreign markets?

A. My brother and I got our training from our father, who started importing from Japan in 1936. He brought in the bobble-head dolls, the baseball gloves, the bats, the balls, the T-shirts, the whole line of American sports souvenir products and merchandise that this company pioneered. When we graduated college, he said it was time for his Ph.D. program, and that was to live overseas--my brother in Taiwan and myself in Hong Kong--for several years in the early 1970s. What we learned about developing foreign markets there has been very, very instrumental in our initial success in marketing overseas in the last few years.

Q. But foreign trade wasn’t the intent of this “doctorate” program, was it?

A. No. It was learning about the factories, the people, the business. The other thing that we learned then, that we feel is paramount now in our relations with other countries, is that their habits, their traditions, their mores, their customs are very important to respect and honor in our business relationships.

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Q. Once you decided to put that experience to work in foreign trade three years ago, what steps did you take to develop sales overseas?

A. Well, we developed it through our relationships with the (professional) leagues, simultaneously with the inquiries we were getting by fax, by telephone, by mail from overseas. I’d say we now average between 50 and 100 faxes a week, inquiries from all over the world. We’ve developed a very exciting market in Australia, partially because of TV exposure of the major special events in the United States, like (the) Super Bowl and World Series. This fuels excitement, enthusiasm, American lifestyle, American sports overseas. That is what we are getting in these faxes.

Q. In developing your international strategy, did you hire consultants or anyone else to help or did you believe you had enough experience to sell overseas?

A. Basically, the international experience has to be well coordinated with the leagues and the leagues’ consultants and the leagues’ experience. Their people sort of paved the way for a smooth overseas distribution of licensed products, including Sports Specialties caps. For example, we made a decision that we were not going to take our own people and our own warehouses and tell the people in Germany, Sweden, Switzerland, Italy or Spain how to do business with their own people. However, with the demand that’s been created with our advertising . . . and our point of purchase materials, we offered sales technique assistance that has been very beneficial. So as a team, we feel we could generate maximum results in local foreign markets.

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Q. Did you have to tailor either your caps or your marketing strategy for any particular markets or for overseas in general?

A. Well, it’s interesting. Last year, for example, we met with representatives in baseball from Bulgaria, Czechoslovakia, Yugoslavia and Romania. Dealing with their needs first had some political constraints. A year later, those problems have become a lot less severe with the opening up of the Eastern Bloc countries.

Q. So you had structural adjustments to make, but the caps--and the American sports culture that fosters their appeal--sell themselves.

A. Yes. One of the very important things that appeal to international interest and Sport Specialties is the International Baseball Assn.'s success in developing Olympic medal sport status for baseball, starting with the Barcelona games in 1992. That has fueled interest all over the world. Nigeria and Ethiopia started teams recently. Romania, Bulgaria and other Soviet bloc nations that never had teams before are being helped by the Olympic movement in baseball.

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Q. Are you supplying caps to IBA teams?

A. We’ve developed a sponsorship with the IBA about two years ago, and we have developed national team caps for 35 to 40 countries right now. We’ll be in the process next year of developing the balance of IBA’s membership, which is almost 80 countries. The other interesting thing to look at in this whole marketing segment is the cultural exchanges of professional sports teams and athletes. You have Yugoslavs like Vlade Divac, for instance, playing with the Lakers. Playing for professional sports teams here provides a tremendous impetus and demand in their native countries for U.S.-related sports products, including our caps, and team-identified merchandise.

Q. What caps are selling overseas?

A. The new polypropylene hats that we introduced a year ago are more accepted in Europe than they are in the United States. For example, the Pro workout polypropylene cap has very unique properties that help to keep you cool when it’s hot, warm when it’s cold and dry when it’s wet. Professional football players loved it last year in training camp because as much as they’d sweat it would dry off quickly. In conveying this to the American consumer, we had a more difficult time than we did overseas. It’s been very well accepted overseas, and we don’t have to mention the properties of the fabrics and how they work.

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Q. What merchandise hasn’t worked overseas?

A. We haven’t been as successful in Europe with our cotton twills, for example, probably because of the cold winters. We’ve been more successful in the heavy caps: the corduroys, the wools, the polypropylene. The cotton twill fabric is not as readily accepted as it is here.

Q. Have you found any other differences in marketing Pro caps in foreign countries?

A. This is very interesting. What we found out was that the most important factor was color. We’re selling colors. We’re in the fashion business, and our overseas marketing is ahead of our domestic marketing in that. It’s the fashion element. It’s the whole understanding that you don’t have to be a fan of this team to wear the cap because this is matching with an outfit.

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Q. Have you had to make any major tactical or marketing adjustments?

A. We’ve been very successful in promoting the authenticity of our caps. But we ran into a problem in some European and Scandinavian countries. Some countries did not want us to use their native tongue. They said this would be great in English and would promote the authenticity of the American sports. So where we had thought we would translate an American ad into a foreign language, we found it would be more effective, because of the cultural message we’re trying to convey, if we did it in English, which is often spoken by Europeans anyway.

Q. You also make and sell foreign team and university caps. Have you found anything different in selling those caps?

A. Yes. We make the official team caps for various countries, and we’re just begining to market those overseas. The names of all the teams, except for one, are in English. The only team that wanted its name in the native language is Italy. They wanted ‘Italia’ on their blue and white caps. I said to the head of the team, ‘Aren’t Italy’s colors different from blue and white?’ He said, ‘Yeah, but we saw the Dodgers.’ They took the blue and white.

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Q. How much time and money did you invest before you began to see any returns from overseas sales?

A. Well, ironically, the people were always there prior to a formal structure of our system. And this was because we wanted to have our structure carefully set before we went out and marketed both our products and our name--our brand name and our family name--overseas. So we had the ducks in the pond long before we were swimming.

Q. Wasn’t there a financial drain in doing this?

A. No, because the financing was there, and we had monitored the market looking for the right time to enter. And the right timing came in 1987.

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Q. Where did you go for financing?

A. We financed from existing cash flow in the company. One of the strengths of this company over the years has been cash flow. And once again, it came to our very good assistance in developing this market.

Q. So you hit a market ripe for your caps.

A. Yes. And there was another timing factor. The leagues themselves became more aware of the demands of the international markets. For example, Major League Baseball just formed a partnership called Major League Baseball International Partners with NBC’s London-based affiliate.

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