Milchan Adds a Shoe Business to Show Business

For film producer Arnon Milchan, there’s no business like the shoe business.

The prolific maker of such movies as “JFK,” “A Time to Kill” and “Heat” is spending about $80 million for a 12.5% stake in the German athletic footwear and apparel company Puma, with an option to buy an additional 12.5%.

Milchan, who lost out recently to financier Kirk Kerkorian in a bid to buy the Metro-Goldwyn-Mayer studio, is hoping to leverage his influence and contacts in Hollywood to boost Puma’s meager market share in the United States, hopefully creating a more glamorous image for the brand and luring sports stars to endorse it.

“You are dealing in sports today with a star system,” Milchan said. “What we bring to the table is that we work in the star system.”

Despite being well-known internationally and having about $800 million in global sales, Puma is nearly invisible in the U.S. in part because of past financial problems. With $40 million in domestic sales, Puma ranked 20th with a market share of just 0.58%, according to Sporting Goods Intelligence, a newsletter in Glen Mills, Pa.

Milchan said that the low market share is even more puzzling given that surveys have shown Puma’s name recognition is as high as 68% in the U.S.

Monarch/Regency Enterprises, a holding company Milchan controls with a stake of 60%, bought the 12.5% of Puma from Proventus Handels, a financial concern that has been restructuring Puma, based in Herzogensurach, Germany. Proventus owns the other 12.5% that Milchan has the option to buy. The remaining 75% of the shares trade publicly in Germany.

John Horan, editor of Sporting Goods Intelligence, said that Puma could be poised for a major turnaround now that Proventus has improved Puma’s financial fortunes.

“It was dead. Now it’s profitable again,” he said.

He added that Milchan’s move into sports-related businesses is in line with recent trends, such as Walt Disney Co.’s move into professional hockey with the Mighty Ducks and into baseball with the Angels.

“A lot of people see the sports and entertainment businesses merging. A lot of entertainment companies are looking at the sports businesses as something they need to develop a presence in,” Horan said.

Milchan’s company, which supplies movies through Warner Bros., is one of the most productive companies in Hollywood. His investors include Australian billionaire Kerry Packer, German TV baron Leo Kirch and Korean electronics giant Samsung.