SAATCHI BROTHERS WARM UP; PAIR TAKES STAKE IN HEAD AS SPORTS GROUP READIES RENAISSANCE

By Published on .

Most Popular
LONDON-Maurice and Charles Saatchi are back in the sports business.

The brothers each have purchased 2.5% of the troubled Head sports equipment group, acquired this fall by their friend Johan Eliasch, a 33-year-old Swedish financier.

Mr. Eliasch said $120 million was paid for Head, including shareholder investment.

The brothers' M&C Saatchi agency is devising a global communications strategy for the brand. Mr. Eliasch said the first work is likely to appear early next year. He expects the marketing budget to total about $40 million.

Until now, the company has had no international agency and used local agencies as needed. Its communication strategy has been so low-key few people realize Andre Agassi, Gabriela Sabatini and other tennis stars are under contract to use Head rackets, Mr. Eliasch said.

He said his new strategy is to pursue "product rationalization, cost cutting and a new marketing philosophy....to shift toward more advertising and less promotion."

The sports equipment marketer, previously owned by Austria's state tobacco monopoly, will lose at least $100 million this year on sales approaching $500 million, said Mr. Eliasch, who owns more than 80% of Head stock. He expects the company to break even in 1997.

"It went horribly wrong," he said of the tobacco company's attempt to diversify from cigarettes into Head tennis rackets, Tyrolia ski bindings and Mares diving equipment.

His turnaround plans for Head-and the Saatchis' involvement-sound familiar. When former Saatchi & Saatchi Co. Chief Executive Robert Louis-Dreyfus left to turn around floundering German sports shoe company Adidas almost three years ago, he invited the brothers to join his investor group and pitch the Adidas account.

Mr. Louis-Dreyfus ended up having to buy them out for $40 million late last year when the brothers tried to turn minor stock options into a significant stake in Adidas. They since have split from the holding company (now called Cordiant) and formed their new agency.

In this article: