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The surf Industry Shakedown. |
| 07/10/2012 |
Surfing rides into a perfect corporate storm
The Australian http://www.theaustralian.com.au/news/features/surfing-rides-into-a-perf...
Australia's world No 11 Julian Wilson, of Coolum, gets some air during the Billabong Rio Pro this year. Wilson is sponsored by Nike.
WHEN bad-ass surfing bank robber Bodhi (played by Patrick Swayze) paddles out to catch a huge wave amid a "50-year storm" at Bells Beach in Victoria at the end of the film Point Break, his FBI-agent nemesis, Johnny Utah (Keanu Reeves), walks away, muttering, "He's not coming back."
The scene is symbolic of what is happening to the Australian surf industry, part of which was born at Torquay, the town adjacent to Bells. A 50-year storm, more intense than the slow-motion waves featured in the movie, is gathering.
The turbulence began on September 17, when news leaked that Rip Curl, the iconic multinational surf company founded in Torquay in 1969 and still mostly owned by surf buddies Brian Singer and Doug Warbrick, had been quietly placed on the market. Their subsequent press release gave only vague reasons for the sale. Requests from Inquirer for an interview were declined.
Three days later, in a reflection of the business world's appetite for equity in surf labels, one of two offers from venture capitalists for Billabong, the Gold Coast multinational struggling to pay off hundreds of millions of dollars in debt, was withdrawn. The other, from TPG, is half the value of a previous offer made earlier this year.
On the same day, New York law firm Levi & Korsinsky announced it was investigating "compensation to certain executives" at Quiksilver, another Australian-born surf label, now listed on the New York Stock Exchange.
On September 25, the Shareholders Foundation of California announced it, too, would investigate Quiksilver. It reported that while Quiksilver's net loss increased from $US9.68m in 2010 to $US21.26m last year, several key executives received considerable pay increases. Chairman, president and chief executive Bob McKnight received an increase from "over $US2.91 million in 2010 to over $US10.2 million in 2011".
To add to the industry's malaise, Nike and its surf-label subsidiary Hurley announced the next day they were pulling out of the richest surf contest in the world, the US Open at Huntington Beach, California, which they had sponsored for four years.
Ironically, this year the US Open had finally achieved what pro surfing had not done for 30 years. It had been broadcast on a major free-to-air network (NBC in the US) in prime-time.
Into this perfect corporate storm walked 11-times world champion Kelly Slater, to drop the biggest bombshell of all. Asked in a video interview if he was chuffed about the US Open cracking the prime-time Holy Grail, Slater, who looked comfortably prepared for the question, said: "My answer might surprise you. I don't actually care."
The video has gone viral across the surfing world, gathering mostly positive responses from surfers jaded by the over-commercialism of their hobby.
"I know what surfing is," Slater said. "Surfers know what surfing is. I actually don't care if surfing becomes the biggest thing in the world or disappears and there is no pro surfing.
"Basically our sport is run by the sponsors. Because of that, it becomes like a marketing project for these companies. Imagine Nike and adidas and Puma and all these companies coming together to run soccer or the NBA. It's not going to happen, and it shouldn't happen. But that's what we have in surfing."
The ASP seems unperturbed by Slater's disregard for its product. "We respect Kelly's opinions on all matters regarding professional surfing," spokesman Dave Prodan tells Inquirer. "The ASP regularly reaches out to Kelly for insight and opinion on a variety of topics."
Nike's withdrawal from the US Open does not mean it is withdrawing from surfing. In fact, the parting comment from Nike's head of action sports, Sandy Bodecker, suggests the company instead has plans to increase its involvement, with or without the ASP: "In the spirit of evolving, we are exploring new opportunities to help elevate the sport beyond the sand to new audiences around the world."
If that sounds like a slap to the sport's administrator, the lack of usual courtesies confirms it. "Nike did not inform the ASP of their decision to withdraw from the US Open before today's announcement," Prodan told Surfer magazine.
Having established a strong presence in the surf market, and having built a team of sponsored riders that includes the world No 11, Australian Julian Wilson, and 2011 women's champion Carissa Moore, Nike is conceivably preparing to take on the surf companies on another front: surf equipment.
In 2007, Nike reinvented the boardshort, with its Hurley Phantom, a stretchy, lightweight and quick-drying pair of shorts that overnight stole a huge chunk of the world market and forced existing manufacturers to play catch-up. If Nike does the same with wetsuits, the old surf companies will lose their last exclusive claim to legitimacy.
"Nike and Hurley are definitely giving wetsuits attention," Hurley's then marketing manager, Pat O'Connell, told this writer in 2007. "We've had some pretty bright people trying to understand just what a wetsuit does. Changing it, however, is a lot of trial and error. It could be a new material or a new cut. It's a big endeavour."
Wilson told The Australian earlier this year: "It's definitely something they are going to get into," adding that Nike had commissioned wetsuits for him from a Japanese company that uses "the best rubber in the world", making them thinner and warmer than those sold by the old surf brands.
Independent Californian wetsuit maker Ryan Buell says the storm is only just starting to blow. Buell makes custom team wetsuits for many of the big companies dipping their toe in the sport, and says the real battle for market domination will be between companies much bigger than Rip Curl, Quiksilver or Billabong.
"The surf world has lost a grip on its own industry," Buell says. "The big dogs are coming.
"You're only seeing Nike now, but I have an inside track because some people have already contacted me. I think we're going to see a lot more of adidas, Puma and Oakley."
Buell says the real prize for being seen as the definitive surf label has little to do with equipment and everything to do with clothes, particularly shoes.
"Shoes bring in so much money," he says. "How many people actually surf? Not many. How many people pretend to surf? A lot."
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| Posted by goatboy on the 08/10/2012 08:00 |
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| Posted by kevin on the 08/10/2012 10:03 |
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| Posted by david on the 08/10/2012 10:09 |
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| Posted by grant on the 08/10/2012 10:10 |
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| Posted by Jon on the 08/10/2012 12:12 |
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| Posted by tilt on the 08/10/2012 13:31 |
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| Posted by tilt on the 08/10/2012 13:40 |
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