In less than a decade, Jamie Salter and his team at Authentic Brands Group have created a $9 billion-plus business by licensing names from Elvis Presley and Marilyn Monroe to Juicy Couture and Aéropostale.
Now Salter has a new name in his stable — Sports Illustrated — and equally ambitious plans for it: Nothing short of building it into the next ESPN. After all, sports and business have been the building blocks of his success. The 56-year-old Toronto-born founder and chief executive officer of ABG started his career in sports marketing and was the cofounder of Ride snowboards in the early Nineties.
“That was my claim to fame,” he said with a laugh.
After that company went public, he and Fanatics’ founder and executive chairman Michael Rubin created Global Sports Inc., which eventually became GSI Commerce. Once he exited that business, he turned his attention to licensing, creating Hilco Consumer Capital. Then in 2010, he formed ABG, whose brand portfolio also includes Nautica, Prince, Spyder, Greg Norman and Neil Lane.
Here, Salter discusses his journey, his plans for continued growth, how he’d like to buy Reebok, and if there ever might be a Sports Illustrated men’s swimsuit issue.
WWD: Talk about your background and why you decided to create ABG.
Jamie Salter: I had this idea to go buy brands and we did that with Hilco. I became the ceo of Hilco Capital, which was a company that Jeff Hecktman and I started. I owned one-third, he owned two-thirds and after around four years, I realized that this should all be one platform. In those days, we were doing it one by one. We had Caribbean Joe, Ellen Tracy, Polaroid, Bombay, Linens ‘n Things and Sharper Image, but all of those assets had different partnerships and it was very difficult to manage them. So I finally went to Jeff and said I’d like to buy all the assets and put them under one roof. I think we had around $225 million [invested] in all the brands we had bought. I offered them $450 million and they turned me down. Not only did they turn me down, Jeff let me go. That was in 2010. I left and went out and told my story and ended up partnering with Leonard Green. And here we are 10 years later.
WWD: How large is ABG today?
J.S.: We own 50-plus brands — 30 that are global and 20 that are North America-based. What we learned early on is it’s important to make sure you build a platform and a foundation. Me coming out of the wholesale business and my partner Nick [Woodhouse, ABG’s president and chief marketing officer] coming out of the retail business are two really key components. Nick is technically the buyer and I’m the seller. Today, ABG is close to $10 billion in revenue and what is really different about our model versus other models is that it’s all about branding and distribution and store design and marketing. We break marketing down into social media, influencers, out of home, POP in-store, digital and, most importantly, data.
Today, ABG has close to 300 million social media followers among all of our brands and has a system that’s called Cerebro that crunches our data and helps us understand the consumer behavior and what they’re buying. Most people don’t change their spots and it’s taught us a lot about what to make and what the trends are. Geo-targeting for our licensees and partners around the globe is incredibly important. We don’t get it right all the time, but we get it right a lot more often than not and our partners don’t make as many mistakes, which reduces markdowns and excess inventory, very key parts of success.
WWD: How big is the business now? And how are the numbers calculated?
J.S.: The trailing 12 months pro forma is $9.6 billion. It’s calculated off the retail sales of all of our partners from around the globe. In some markets, it’s 3-times of wholesale, in others 2-times or 4-times — every market is different. Europe has higher markups than the U.S. So it’s on out-the-door retail sales.
WWD: You’ve had a relationship with Leonard Green for close to a decade. Do you partner with anyone else?
J.S.: We’re partners with Simon Properties and Brookfield. They have a minority stake in ABG and in an operating company called ARC, Authentic Retail Company, that has Nautica and Aéropostale retail, wholesale and e-commerce. This teaches us a lot about what’s going on in the retail world and having them as strategic partners helps us understand the market in America and other parts of the world. Between all of our partners, ABG has 4,930 stores on a global basis, and those are either full-price, outlets or shops-in-shop. Sixty percent of ABG’s business is domestic, 40 percent international, which is broken up into Latin America, the Pacific Rim and EMEA, which is Europe, the Middle East and Africa.
WWD: Didn’t General Atlantic invest in ABG as well?
J.S.: General Atlantic came in about 1.5 years ago. I’ve always been a big believer in low leverage. I know that sounds a little strange coming from the private equity world, which usually works on higher leverage. Companies are so pressed to hit more volume and it makes you push your distribution downstream. That’s not the way ABG has built the company. When we buy a company, we stay true to the DNA of the brand and, more importantly, we cut distribution. With all our brands, we try to produce the true demand and let them grow based on that. We’re super aggressive at more territory and category expansion, but if you can only sell 1 million ski jackets, don’t make 1.2 million, make 900,000 and sell out. That’s been my theory growing up. Reorders will equal cancellations. You may get caught short with that attitude, but this is not fine wine. ABG’s strategy is to make sure we don’t oversupply the market. If you can find the same product at every retailer, then it’s going to be a race to the bottom.
WWD: What types of retailers do you sell?
J.S.: We sell some of the mass stores, but mid-tier and above is probably 90 percent of our turnover. That’s by design, not by choice. When we came into the market, you had Iconix and others that were doing a lot of business with Walmart and Target so even if we wanted to do business with them, which we did, we couldn’t. We had to go after mid-tier, which was harder because they ask for a lot more services than mass stores. So that pushed us even harder to build out a platform that was all about branding and servicing our wholesale and retail partners. It cost more money to do that. We didn’t make the kind of money in the first few years that these other companies made, but today we have the best margin in the industry because of the platform we built.
WWD: How does the business break down?
J.S.: Apparel is 41 percent of our business, footwear is 15 percent, entertainment is 25 or 30 percent, media is 13 percent. We’re in live events and short-form content and long-form content, we’re in the movie business. We’ve done [What’s My Name: Muhammad Ali], an HBO documentary on Elvis, we’re on our second Hallmark movie on Elvis Presley at Graceland, we’re shooting a movie with Baz Luhrmann — it’s a $120 million motion picture along the lines of Queen or Elton John, a biopic of Elvis’ life. [It was revealed last week that Austin Butler will play Elvis in the film.] We did 22 live concerts with Elvis Presley and the Royal Philharmonic Orchestra. That’s part of building brand value. It’s one of the reasons we bought Sports Illustrated. Not because we want to be in the publishing business, but the digital and live event business, the network business and we want to create the next ESPN.
WWD: That’s an ambitious goal.
J.S.: We’ve got a long way to go to do that, but when you look at Sports Illustrated, it’s the most trusted name in sport and look at the categories we can expand into with legalized gambling coming in state by state and the digital short-form deal we did with the Maven Group. We’re in negotiations on a deal for long form as well as on a network. Why is that important? Well, it really helps us understand what’s going on in the media and entertainment space and we’re building a platform for not only our brands but other people’s brands to play on and that helps us build our business. Today if you look at Disney, which in my opinion is one of the best companies out there, they’re in the merchandise business, the movie business, the event business, the content business, educational business. They kind of do it all and they give it to you in all forms. Look, we’ve got a long way to go to catch Disney, but I think we have the attributes and the pillars to do what Disney is doing.
WWD: Where does e-commerce fit into the ABG picture?
J.S.: Our e-commerce business today is under-penetrated, it’s probably about 15 percent of our total business, between our dot-coms and third-party dot-coms. But it should be substantially higher than that, between 20 and 30 percent of our total revenue. That’s a big “to do,” how do we build a real marketplace and a real loyalty program among all of our brands and we’re in current discussions with some pretty major players on how to do that. At the end of the day we think we have a lot to offer. Not only will we do well financially by doing this, but the data is really important to understand the consumer. The more we understand, the more information we can give to our wholesalers and retailers to make them smarter.
WWD: What are the most successful brands in your portfolio?
J.S.: Nautica is the biggest brand, but define success. Success for me is where was the brand when we bought it and where is it today. It’s not always the biggest brand, it’s which has had the most growth. Marilyn Monroe is at the top of that list. It was probably the second or third brand we bought but it’s had incredible success. So has Muhammad Ali; Spyder has grown beyond any of our expectations; Aéropostale has been a home run, and I have to thank Simon and Brookfield because they had the vision on how to do this. I don’t think ABG would be where it is today without their vision.
Today, ABG, Simon and Brookfield have a very successful operating company that will do close to $1.3 billion this year. It has the right rent structure, but it’s making good decisions and it doesn’t have an enormous amount of debt, it can make long-term strategic decisions. It doesn’t have to worry about making its next bank payment. That’s important. I can say this because we’re private, but there are too many decisions being made on the public decision of where your stock’s going to go. The public has every right to give an opinion — they’re buying your stock so they expect you to perform, but the problem is that you’re making decisions for the quarter, not for the brand. Long term, that’ll bite you in the butt.
WWD: Have you ever acquired any unsuccessful brands?
J.S.: Oh yeah, but it was strategic. When we bought Tapout, we took out all the small companies: Silver Star, Sinister and Hitman. We still license them for small categories and collect some royalties on them, but that was the strategic decision. When I look at what we own today, I can honestly say, I don’t regret any deal we’ve done, but I would probably structure a few differently. We don’t make the same mistakes twice. When we started out, we bought smaller brands. Today, most of the brands we buy are big and there are smaller brands that come with them. So we didn’t buy Bandolino, we bought Nine West. We didn’t buy CC Corso Como or 1.State, we bought Vince Camuto. Frederick’s of Hollywood is an interesting one. It’s relatively small but it’s tripled in size since we bought it so I’m happy with it. Nature will tell you that Nautica should get more attention because it’s 20 times the size, but if you want Frederick’s of Hollywood to be the same size as Nautica, you have to put in the same effort.
WWD: What categories or brands do you see as becoming more important in the future? You made a deal in January with Tilray, the cannabis company.
J.S.: The Tilray deal was a joint venture that put us in the CBD business. We couldn’t go in that business without partnering with one of the top three companies in the world. They understand the space, the legalities and how the business works. Tilray being the largest medical cannabis company, Nasdaq listed, it made sense for us to partner up. What it’s taught us is that there’s a lot of white space out there, whether it’s on the AI side or the e-gaming side or media, we continue to look much farther than the traditional companies.
We bring people on that understand those spaces and it’s not about label slapping but building brand authority and authenticity. When we looked at that space, we felt we could offer better services to our partners because we understand the merchandise business and packaging and distribution, so why not be in a space where, if we work with a Coty or a Revlon or an Arden, they’ll think ABG is smart because we’re going in with a company that understands what’s going on.
WWD: How do you determine what brands to add to the portfolio?
J.S.: While the standard criteria we look for in a brand includes a rich history, strong DNA and global awareness, we’re now placing a great deal of importance on diversifying our business with every acquisition. For instance, acquiring Volcom, with its operations in the U.S., France, Australia and Japan, provided a platform for international expansion across the portfolio. The addition of Sports Illustrated added an entirely new vertical to ABG and supercharged our growth in entertainment, live events, long-form and short-form content and gaming.
WWD: How do you choose your licensing partners?
J.S.: We look for best-in-class manufacturers, operators and retailers from around the world. Our strategic partners are experts in their respective industries and share our vision and approach toward building brand value. Some include Shinsegae, a key partner in expanding Juicy Couture’s presence in South Korea; Liberated Brands, the core operating partner for Volcom, and leading mall owners Simon Property Group and Brookfield Properties, which have been instrumental in growing the presence of Aéropostale and Nautica, as well as other ABG brands.
WWD: Let’s talk more about your plans for Sports Illustrated.
J.S.: It’s not just about Sports Illustrated but how can it successfully help penetrate our other brands. Should Shaq or Greg Norman have a podcast on SI? Should Dr. J have a TV show on SI network? The answer is yes. Should Frye work closely with Sports Illustrated and Ford to do the Frye truck, in the same leather as the boots? Does it make sense for Volcom, who is putting out an enormous amount of content on a yearly basis, for SI to share in that content? Yes. You start thinking about how these brands work together. We do mash-ups with ourselves. Last year, we did 300 collaborations among all our brands, some with our brands, some outside. When you look at the entertainment and lifestyle business, it’s all colliding: music, merchandise, events, social, digital — you have to offer the consumer all of it and if you don’t, you take a risk of losing your consumer to another brand.
WWD: The magazine for Sports Illustrated is what started it all.
J.S.: Yes, in 1954.
WWD: So what’s the plan for the magazine?
J.S.: We’re going to print the magazine. Right now we’re doing two issues a month and I think we’re talking 36 issues for the next 12 months. Do I believe the issues will come down over a period of time? Yes, I do. But where’s the Taschen SI book, where is the SI Classics magazine? When you look at what Sports Illustrated has in the archives, it’s pretty special. So from a print standpoint, as long as people continue to read print — and I think they do, people still read books — that physical piece is important. But I think if we go to a less frequent issue, maybe once a month or twice a year, it’s going to get a lot thicker, there’s going to be a lot more information and more substance, which I think will help the circulation, which right now is 2.8 million, with 30 million uniques a month on digital. Still very strong numbers. Should there be Swimsuit male? I think so, but I’m not the publisher, I’ll leave that up to Ross Levinson. We live in a different world today and we have to be smart, zig when people are zagging and stay true to the world we’re living in today.
WWD: You seem to have an appreciation of Sports Illustrated’s history.
J.S.: We can‘t forget where we came from and what Sports Illustrated stands for, which is honest stories on the greatest athletes of all time, but we definitely need to localize it a lot more and that’s something that’s going into effect right away. And we have to digitize it a lot more and provide great information to consumers fast. It’s the old story — who gets there first usually wins. By localizing SI a lot more, our stories are going to be closer to the field or the locker room and the consumer. The other reason local is so important is that I’m only interested in the Raptors, not Golden State and when you’re putting out a national publication or a worldwide publication, some of the information you’re putting out people don’t care about. If every time you go to SI.com you only focus on the Toronto teams, we’re going to feed you with all the information on Toronto. If you want to read about UCLA or Penn State, you can do it, but we’re going to feed you what interests you. People only want to be fed the information they want and they’re used to that. They don’t want to go through 10 stories to get to the one they want.
WWD: Why Maven instead of Meredith?
J.S.: Meredith was always just a short deal, it was only a two-year deal. The deal [to buy SI] came very fast and I said to Meredith, “I want to do this deal but I haven’t talked to anyone about short-form digital or long-form digital.” The nondisclosure agreement I signed said I couldn’t talk to anyone, so I was prepared to do this deal, but they had to agree that ABG had two years to find a partner that wants to do short-form, long-form, print. So we immediately took live events, marketing, archive files, the photos to license out — anything ABG does today we took right away. The things we don’t do, which is short-form, long-form and print, we left with Meredith.
WWD: But then Maven came into the picture?
J.S.: I didn’t think it was going to happen as quickly as it did, but they were running against us to buy the company. We didn’t know that at the time, we knew about Junior Bridgeman and another group but not Ross Levinson and the Maven guys. Three days after we bought it, they called and said they wanted to do a deal with us. We said, the only way I’ll do this deal is if you pay me what Meredith is paying me but not for two years, but 10 years. So you’ll have to pay me $15 million, or 15 percent, whichever’s greater, and we want the first three years upfront to make sure you’re all in. On the flip side, I need you for short-form digital but also on the gaming side. If you do that, we’ll give you certain percentages back for what we bring to the table. Live events will have to live on the site, so if we’re doing a live event and Budweiser is our key sponsor, they’re going to want it to be all over the site. They said, we agree, and we worked out a transaction.
WWD: So you believe there’s a bright future for SI.
J.S.: Look, there’s lots of wood to chop but we’re really excited because the most important part of SI is the digital short-form news content that sets the platform for everything else. That was a key component of doing this under the ABG umbrella. We’re keeping the team: some of the people are moving here, others are moving under Maven and we’re going to transition the business over the next 90 to 120 days and we’re working with Meredith to do a smooth transition as swiftly as possible.
WWD: Where is the future for ABG? More entertainment, more media, more fashion or a combination?
J.S.: I’d like to be 50 percent domestic, 50 percent international and if it was 60-40, that would be OK, too. I want to continue growing around the globe: we’re in 146 countries now. ABG today has five offices around the globe: Mexico, Latin America, London, Shanghai, Los Angeles and New York. Today, the entertainment business is roughly 25 or 30 percent of our total turnover. I’d like it to be 50 percent media and entertainment and 50 percent lifestyle. We’re going to continue to push the envelope in digital — e-gaming and AI are big areas for us — and tech and we want to enter the kids business. But when we get in, we really get in so it would have to be some serious properties and we’re looking at some stuff now. We think that’s a growing space especially with the Millennials.
WWD: What other brands would you want to buy?
J.S.: My partner Shaq beat me to the punch in mentioning it a few weeks ago — I’d love to buy Reebok. Maybe one day Adidas will let it go.
WWD: Who do you view as your biggest competition?
J.S.: It’s a mixture of everybody. Smaller people in the traditional licensing business like Marquee, maybe Disney, but we don’t play totally in their world. Other big brand owners like PVH, but they’re our customers, too. Maybe WME [William Morris Endeavor Entertainment]. I really believe we touch so many different areas. We’re trying to build a model that is really different. ABG is the first really global branding company that lives in the cloud. We’re Uber, we’re Airbnb, we’re Alibaba. I know those are big names, but you look at our business model and we’re running the business start to finish but we don’t make the inventory and we don’t design and source the product. It’s a different model. Michael Kors or Gucci or any giant brand does what we do, the only difference is they make their core products and we don’t; we license that part out.
WWD: You mentioned Disney a couple of times. What other companies do you respect?
J.S.: I love Disney a lot, I really respect Ari Emanuel from WME, I’m interested to see what happens with his IPO. WWE has done a really good job. The reason I keep referring to Disney is because Disney is doing it all. We’re doing it all too, just on a smaller scale.
WWD: How do you describe your management style?
J.S.: I would say I’m very strong, hard-headed, don’t like the word no, but I respect when someone tells me no if they have a really good reason, then I agree to it. People would say I have no finish line, that I move the goal posts when we get to the end zone and score the touchdown. I say, great job, now what are we going to do tomorrow? I think people would say I’m very fair when it comes to sharing. I believe sharing is caring. ABG has done extremely well and there are a lot of wealthy people inside ABG. But I think most people would tell you they respect ABG and Jamie because he works as hard as anyone in the company, he’s not scared to get his hands dirty, he doesn’t fly at 30,000 feet and he loves to see people succeed.
WWD: Who do you consider your mentors?
J.S.: Jon Sokoloff, one of the owners of Leonard Green, one of my most favorite people in the world who is not only a mentor, he’s a friend and a partner; Michael Rubin, one of my better friends who is ceo of Kynetic, which owns Fanatics, Rue La La, the 76ers and a bunch of other things — he’s taught me they’re only zeros, don’t get nervous. And Jerry Sprackman, a real estate tycoon I’ve known since I was a kid. And my newest mentor is David Simon.
WWD: What do you do for fun when you’re not working?
J.S.: Fun for me is four boys, their wives or girlfriends, my new granddaughter Livy and most important, my beautiful wife Sheryl of 32 years. Family for me is everything. When I’m not at work, I’m with my family and sometimes I have a little extra time and I like to spend it with my friends, but it’s hard to do it all. My most enjoyment is to go to the cottage on Lake Muskoka where I have a lake house and my kids and my friends come up and I get to enjoy three days together. We do that all summer long, every week. I love to snow ski, barefoot water ski, tennis, golf and my most favorite thing is going to the best restaurants and traveling the world, and learning.
WWD: So what’s the end game for you? Any plans to go public?
J.S.: Not any time soon. We’re slowly cashing out our limited partners over a period of time. Leonard Green owns 30 percent now but used to own 70 percent. So we’ll be bringing on new LPs as the old ones move out. And will continue to do over-the-top deals.