Nick Carroll: What Might the Future of Rip Curl (And Pro Surfing) Look Like After Yesterday's Sale?
COASTALWATCH | NICK CARROLL
The Tide's Turning
So now an era really is over.
The sale of Rip Curl, a neat 50 years since Doug Warbrick and Brian Singer began making surfboards and wetsuits in Torquay under the name, is the divestment of the last of the Big Three — the core surf companies that grew up and blew up with modern surfing.
Claw and Sing Ding, along with everyone else at the Curl, were in lockdown yesterday as their purported new parent underwent a trading halt immediately following the announcement.
Me, I’ve been thinking all day about something Claw said to me months ago.
We were discussing professional surfing — specifically the huge amounts of money that the Big Three and their near-peers had poured into world tour events and pro surfer salaries over more than a generation.
People wig out over the amounts being invested by the WSL’s owners, but they pale next to the sums forked out by the surf co’s from the mid-1990s onward. The WSL has been dropping tens of millions, but before that, the Big Three’s bills woulda been closer to half a billion. Everyone from Kelly Slater to your local boardriders leaned on 'em.
Like everyone who’d signed the cheques in that time, Claw knew that from a pure business point of view, most of it was completely unjustifiable. At the same time, he didn’t regret it for a second. “It’s a bit irrational,” he admitted. “It’s based more on emotion than anything. We just thought, 'This is part of it, part of being in surfing.' It’s stuff we believed in more than the numbers would show.”
Claw agreed that the Curl’s steadfast original ownership, even through years of sale rumours, had kept it committed to the program like nobody else. Then he said, cryptically and perhaps a bit sadly: “Don’t expect this to go on for ever. It may not be like that in five years, in two years. It all might change. There’s no guarantee.”
There’ll be time enough down the track for stories of the grand old days, and for insights into how the sale — for a bit less than the founders were hoping for a couple of years ago — came together.
But if we want to picture the future of it all, let’s have a look at the buyer.
For Kathmandu, this is an aspirational purchase. You sense the drive of a relatively new CEO and his team wanting to put their stamp on the company. Their release to the ASX outlines this in some detail. The company sees Rip Curl partly (and perhaps a bit oddly) as a seasonal hedge — a summer beach brand compared with Kathmandu’s winter-wear profile. It also hopes to leverage Rip Curl’s presence in the US and Europe, markets where Kathmandu is currently lacking visibility.
Kathmandu’s origins are weirdly similar to the Curl’s. It began with an unlikely character from Victoria, obsessed with adventure and trying to find a way to make it into a living, if not a life.
In Kathmandu’s case it was Jan Cameron, a Melbourne uni student who loved climbing and began making cold weather gear after a trip to New Zealand. Cameron relocated to NZ where she formed a partnership with an NZ businessman named John Pawson — another near-bizarre coincidence. (Another John Pawson was one of Torquay’s best surfers of the 1970s. John died after being caught on the Winkipop button in 1984.)
After successfully expanding the brand into Australia, Cameron and Pawson sold out to private equity in 2006. Kathmandu then went public in 2009.
So far, so typical. It almost sounds like the arc of one of the Big Three.
But there’s a big difference.
Kathmandu has no record at all of athlete endorsement or support. And it’s only been involved in one sporting event: the New Zealand Coast To Coast “adventure race” — kayak, run climb etc — which it began backing two years ago.
New investors in the Big Three have notoriously struggled with their expenditure on surf teams and pro contests. What made passionate sense to the founders makes far less sense to people who’ve seen actual money made without the need for such expenditure. Hurley’s the only sizeable surf company whose purchase by a large parent didn’t result in a serious culling of teams and events — probably because that parent was Nike, who made athlete endorsement into an art form.
Kathmandu has undertaken considerable debt in this acquisition. Claw and Brian, among others, will carry some of this debt through shareholdings in KMD. But they won’t be making those million dollar decisions any more.
Of course Kathmandu won’t be wanting to pull the rug out from under this stuff right away. It’d be a clumsy call in the first year of ownership. But down the track?
This is a BIG shift. It’ll take some time to play out. But if I were involved in pro surfing, controlling CT licences say, or managing athletes on mega contracts, I’d be watching the clock.
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