Hillerich & Bradsby, the venerable makers of Louisville Slugger baseball bats, have agreed to sell their 131 year old brand to Wilson Sporting Goods for a cool $70 million. For someone who lives in Louisville and has been around baseball for over forty years, the news hit particularly hard. Louisville Slugger made bats for Babe Ruth. They made bats for Ted Williams. When I attended "Bat Day" during the 70s heyday of my beloved Cincinnati Reds, it was Louisville Slugger who provided the beautiful black, George Foster autographed model that my brother and I carried back home and used to threaten neighborhood property values.
What struck me about this deal at first was the magnitude. $70 million seemed like a HUGE number—especially for a product brand facing such stiff headwinds. Usage of Louisville Slugger bats among major leaguers has declined to just 60% and wood bats are basically ignored in youth baseball where aluminum and composites dominate. The Emerald Ash Borer is threatening the supply of U.S. ash and H&B faces stiff competition from Canadian and Asian bat manufacturers better situated to produce bats from maple, birch, and bamboo. Anyone who has visited the wonderful Louisville Slugger Museum and Factory—and knows his way around a computer-guided lathe—can make a baseball bat as good as a Louisville Slugger wood bat. So, what is Wilson buying for its $70 million? Simple: brand equity.
It's difficult to quantify the awareness, history, and loyalty Louisville Slugger commands among consumers but Millward Brown, a market-research company, claims that brands account for more than 30% of the stock market value of companies in the S&P index. Brands are the most valuable thing that companies like Apple and McDonald's own and are often worth more than property or machinery. They signal quality and build emotional attachments that endure.
All I know is that when I was a kid, I wanted to swing the same bat as my Big Red Machine heroes. That was a Louisville Slugger—made in a factory just a hundred miles down the road. It looks like Wilson has 70 million reasons with which to agree.