Big 5 Founder to Buy Majority Stake in Firm
One of the original founders of Big 5 Sporting Goods stores 42 years ago is expected to announce today that he and his son will acquire a majority stake in the company for about $250 million.
Robert W. Miller and his son, Steven G. Miller, will buy the region’s largest sporting goods chain from Leonard Green & Partners, a Los Angeles buyout firm that has owned Big 5 since 1992.
Once the financing, expected to be a mixture of debt and equity, is complete, the Millers and 200 employees will own a more than 50% stake. Big 5 has 202 stores in nine states and more than $400 million in annual revenue.
The deal to acquire Big 5 comes at a time of increasing consolidation nationwide in the sporting goods retail industry. Last week, Denver-based Gart Sports Co. purchased Wheeling, Ill.-based Sportmart Inc. And Tuesday, trading was halted in Oshman’s Sporting Goods Inc. of Houston after its stock shot up 49% on takeover rumors.
While the sporting goods retail industry has been dominated in recent years by large superstores, the Millers believe small is better for their industry.
In a throwback to the days of traditional neighborhood stores, the Millers plan to continue the company’s small-store format (the average is about 10,000 square feet) and challenge the large superstore concept promoted by companies like Sportmart.
“They are certainly going against trends in the sporting goods industry--we’ve seen incredible big-box growth in recent years,” said Andy Bernstein, news editor of the New York City-based newsletter Inside Sporting Goods. “This big-box trend may be reaching its peak, however. The way the industry has gone is either you are big box or very, very small specialty.”
Still, the Big 5 chain’s low-price, low-overhead approach has served it well in past decades and helped it grow into an industry leader in Southern California.
“We’ve been around in this business for a long time. We’ve handled competition from the beginning and will in the future,” said Los Angeles native Robert Miller, 74, chief executive at Big 5.
“Our business is people. People and our customers. We’ve developed a name people know that offers consistently the best values in the sporting goods industry,” he said.
The Millers believe that customers want convenience and low prices when they buy sporting goods. People often go to a sporting goods store just to pick up one or two items, not load up on a year’s supply of sporting goods. Big 5, which currently operates stores in California, Oregon, Washington, Idaho, Nevada, Arizona, Utah, New Mexico and Texas, will open eight more stores this year. It plans to open 15 to 20 new stores next year.
“We’re going to continue to grow the company the same way we have for the past 42 years,” said Steven Miller, 45, Big 5’s president and chief operating officer, who began working at the sporting goods company before he graduated from UC Berkeley.
Big 5 was started in 1955 by Maurie and Harry Liff and Robert Miller.
At first, they called the company United Merchandising Corp. and sold World War II surplus, tents, sleeping bags, air mattresses, housewares, hand tools and other items. As sports became more a part of American life--and an even larger part of the lives of outdoor-loving Californians--they began stocking sports merchandise.
In 1963, they changed the name to Big 5 Sporting Goods.
“We didn’t know what to call it, and we finally decided to call it the Big 5 stores, just because we had five stores,” said Robert Miller. “If you take care of your name by delivering value and service to your customers, you will be successful.”
Big 5 was purchased by Thrifty Corp. in 1971. It changed owners again in 1992, when Leonard Green bought Thrifty. Miller has stayed with Big 5 throughout its many transformations.
Leonard Green’s original $28.5-million stake in Big 5 is now worth more than $110 million, plus interest, said Jonathan Sokoloff, a partner with Leonard Green, which will retain a significant minority stake of about 35% in Big 5.
“Big 5 management has always run the company as if they owned it. Now they can say they do,” said Jennifer Holden Dunbar, a partner at Leonard Green and one of Big 5’s five-member board of directors.
Big 5 has about 4,500 employees, many of whom have been with the company 20 or 30 years. The average tenure of its merchandising and district supervisors is 16 years, and the average for its store managers is nine years, both high numbers for the retail industry. Big 5 focuses on retaining and training its employees, Miller said.
