New TapouT owner details ‘roll up’ strategy
In 1992, Jamie Salter and a partner saw an opportunity in a new sport called snowboarding and formed Ride, an…
In 1992, Jamie Salter and a partner saw an opportunity in a new sport called snowboarding and formed Ride, an apparel and equipment company that would go on to become the No. 2 brand behind Burton. Eighteen years later, Salter, who’s handled brands like Polaroid, Linens ‘N Things and Halston purchased the Tapout and Silver Star brands.
Loretta Hunt: There have been industry rumors that ABG could be purchasing as many as three additional MMA clothing brands as well. Is that still a consideration?
Jamie Salter: We don’t comment on our acquisition strategy, but it’s safe to say that we’re looking at other things.
LH: Could you describe the mechanics of what yourself and ABG do, in particular to these MMA brand acquisitions?
JSr: It’s a roll-up strategy with a distribution plan with a cross between retailers and wholesalers. The one thing that retailers and wholesalers want to know is that you have a sold distribution plan in order for them to make their margins. It’s a well thought-out distribution strategy: How do we cover the market from the mass to the mid-tier to the specialty and making sure that everybody doesn’t bump into one another and we have clean distribution.
The other reason why we do it this way is obviously to spread the different people that work for the company across multiple brands. Obviously from an overhead standpoint, there’s a brand manager for Tapout and there’s a different one for Silver Star and a different one for Hitman. But from a back-office standpoint, we don’t have to have three CFOs. We just need our CFO. It’s the same thing from an operational standpoint, including customer service and other shared services behind the scenes.
LH: As a businessman, what lured you into the MMA industry?
JS: The first person that drew me into the industry is my 21-year-old son, who has trained a few times with Sam Stout in Ontario where he goes to business school. For the last three years, he’s been telling me that this business is the fastest-growing sport in the world, that it was great, and that I really needed to look into it. I said no and that went on for three years.
There was a fight in Montreal (UFC 113 in May) and my son said, ‘Look, I really want you to come, Dad, to this UFC thing. This is something that you’re really going to want to get involved with and you have the expertise for because you come out of the action sports, the sporting goods business and it’s very similar.’ So, I went to Montreal with him and his eight friends.
LH: What happened next?
JS: I called the CMO of the UFC, Brian Johnson, who’s a friend that had worked for me in a prior investment, Ride Snowboards. I told him my son thought I should get involved and I told him I wasn’t getting involved but I was coming anyways. I went there and met Dana and Lorenzo and Brian and everybody. The more I got acquainted in the business, the more I felt there was an opportunity to do the roll-up strategy and that a lot of the companies were under-capitalized. With capital invested in these businesses and a good business plan, I felt really strongly that we’d be able to put together a nice collection of brands.
Tapout kept coming up as very strong brand, if not the No. 1 brand in the world in the space. And Silver Star was coming up as the great lifestyle brand, not only in the MMA space but also in the action sports space. If you go back to my Ride Snowboard days, I understand the action sports space, so that very much intrigued me.
