New Era IPO: Everything you need to know about New Era Cap Co.

What do we know about the New Era Cap IPO?

New Era Cap Co. is exploring the possibility of listing on the New York Stock Exchange in an initial public offering. An undisclosed source told Reuters the company is receiving pitches from investment banks and law firms for involvement in the listing.

Spokespersons for the company have declined to comment on the possibility of an IPO, but the company is expected to make its stock market debut in early 2024.

The IPO market has stagnated since 2021, but successful debuts for companies like Klaviyo, Birkenstock and ARM could change things. However, at the time of publication, share prices for those companies and other recent IPOs have all fallen below debut levels.

Whether these newly public companies can rebound or not may influence New Era’s decision to list.

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What is New Era Cap?

New Era Cap Co. is a Buffalo, New York-based headwear and apparel company that holds licensing agreements with American sports leagues such as the National Football League (NFL), Major League Baseball (MLB) and National Basketball Association (NBA). The company produces and sells ball caps and other apparel emblazoned with team logos.

The company was founded by Ehrhardt Koch, no relation to the Koch brothers family, in 1920. The company has grown to become the leading apparel designer for American sports leagues. Its 59fifty model cap is the official on-field cap of Major and Minor League Baseball; the design has become synonymous with the image of a ball cap. It is also the official sideline hat of the NFL and NBA.

How much is New Era Cap Co. worth?

New Era Cap Co. could be worth as much as $4 to $5 billion following its IPO, an insider source told Reuters in September. An official valuation has not been made public.

Additionally, New Era has recently raised more than $775 million of debt ahead of its possible IPO. That breaks down to a $525 million loan and $250 million of revolving credit.

Is New Era profitable?

While full New Era Cap Co. earnings reports are not publicly filed, we can speculate on the company’s profitability with some other, public figures. For 2022, New Era Cap revenue reached about $1 billion, with a $3.9 million operating income and $9.7 million net profit according to Bloomberg.

What is New Era’s business model?

New Era’s business model focuses on developing apparel for its official-licensed partnerships with sports brands like the MLB and NFL; the company has also made recent deals with luxury brands like YSL and Fear of God.

Recently, New Era has expanded its partnerships outside of the US. In 2019 the company became the official outfitter for the Canadian Football League starting with the 2019 season, a merchandise partner for the 2021 Rugby League World Cup and, most recently, the technical sponsor for Japan's Shibuya City FC for the 2023 season.

Beyond official team and league deals, New Era Cap creates headwear, apparel and accessories for international men's and women's leagues, college teams, motorsport and golf. New Era products are sold on their online site and in athletic and accessories retailers including sporting goods chains, hat shops and team gift shops.

Who are New Era’s competitors?

New Era’s competitors include many sporting goods manufacturers and retailers, especially those with brand partnerships like Nike, Adidas, Puma, Asics and Under Armour.

Of those publicly traded companies, New Era’s projected valuation of $4 to $5 billion would come under all of them except for Under Armour whose market cap is $3.1 billion. Check out the chart below for a full comparison of public competitors.

Other publicly listed competitors include league-specific apparel companies like Topgolf Callaway Brands (MODG) and sportswear-focused retailers like Foot Locker (FL). Both companies are useful for evaluating New Era Cap's market potential because of their narrow scope in products and apparel types.

Topgolf Callaway manufactures and sells golf equipment such as clubs, balls, bags, gloves and caps. The company is also a major sponsor of golf tours and holds numerous endorsements with professional players. However, as the name indicates, Callaway acquired Topgolf in 2020 and the sports entertainment company now accounts for almost 40% of the company’s revenue.

Foot Locker is similar to New Era in that the company produces and sells specifically one type of athletic apparel product. The global sportswear retailer has brokered numerous league sponsorships past and present. Foot Locker has been a publicly listed company for over 100 years, and in that time, it’s made significant business expansions to make it a Fortune 500 company such as acquisitions of numerous athletic retailers.

Both companies provide examples for New Era Cap to expand business opportunities. Topgolf Callaway has a market cap of $2.41 billion and a share price of about $13, down $4 from this time last year. Foot Locker has a market cap of $1.97 billion and a share price of $21.66, down from $30.81 one year ago.

Who owns New Era?

New Era Cap Co. is owned by its founding family, the Kochs, with several private equity firms holding minority stakes. The largest of these is Acon Investments, a Washington DC-based PE firm that bought a 15-20% stake in the company in February 2022. In August of 2022, Acon increased its holdings through a $700 million deal that included investments from the MLB, NFL and NBA.

New Era executive team

Fourth-generation owner Chris Koch recently stepped down as President in the fall of 2022, but he remains CEO of the company. In his stead, New Era executives Jim Grundtisch and Jim Patterson serve as co-presidents. Kevin Wilson serves as EVP and CFO.