Prince Sprorts Case

In 1976 Howard Head, an aircraft engineer and original developer of a lighter more efficient ski, purchased Prince Sports Manufacturing Company with the intent to create a lighter more efficient tennis raquet. Prince was founded in 1970 as a small manufacturer of tennis ball throwing machines. Head planned to use the company to make and market his new tennis raquet design; an all-metal, oversized tennis raquet to replace the traditional small, wooden tennis raquet. Critics were initially entertained with Head's new raquet. Very large, metal, and apparently clumsy, the raquet looked silly and out of place among tennis fundamentalists. Just as Head's aluminum skis had changed the sport of skiing, the new raquet was designed to change the game of tennis. The first professional to use Head’s new raquet design, 16-year-old Baltimore native Pam Shriver, became one of the youngest players ever to advance to the U.S. Open Tennis finals. That achievement renewed Head's international fame and established the integrity of his oversized raquet invention.

Prince captured 30% U.S. market share and nearly 25% global market share during the late 1970’s and early 1980’s by selling its line of 108-inch raquets. In addition to generating more sales from raquets than any other manufacturer in the world, Prince was able to generate some of the highest profit margins in the industry because its raquets were protected by a patent. In addition to its aluminum raquet, Prince was able to boost profit margins by introducing 108-inch raquets made of unusual materials like magnesium (selling for $115 in the early 1980s), graphite ($250), and high-strength boron ($450). By 1980 Prince was generating revenues at a rate of more than $30 million annually. Sales for 1981 surpassed $35 million before leaping 60% to nearly $57 million in 1982. In 1983, Prince's revenues stabilized some, rising 13% to about $64 million. http://www.fundinguniverse.com/company-histories/prince-sports-group-inc-history/

In 1987, Prince Sports Manufacturing Co. was purchased by members of its senior management team. Under management ownership, Prince continued to increase sales and profits during the late 1980s, despite uninspiring growth in the tennis industry. To enhance tennis raquet sales during the period, Prince expanded its offerings to include footwear, apparel, raquet strings, sport bags, ball stringing machines, and other raquet-related gear that could be marketed under the respected Prince name. Most notable was Prince's entrance into the racquetball equipment industry with its Ektelon line of raquets and related gear. Prince also penetrated the golf market with golf shafts sold under the Grafalloy brand name. The Prince video included a player wearing Nike apparel. Shouldn’t it be “all about the brand” when showing the public your equipment and apparel? Nike received free advertising on Prince’s dime.

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