Bjørn Rune Gjelsten, a wealthy Norwegian sports enthusiast, is moving back into the sporting goods business with the acquisition of an 80 percent stake in Sport 1 from its retail members through a combination of cash and new shares. Sport 1 is one of the two major buying groups that are challenging Gresvig in the Norwegian sporting goods market. Gjelsten, who made his fortune in the shipbuilding and fishing industry, owned Gresvig between 1991 and 1995 and another Norwegian company, Helly Hansen, between 1995 and 1997, cashing out with a capital gain in both cases. He also owned Brooks for a while in the early ‘nineties.
Founded in 1993, Sport 1 groups a total of 140 retailers who operate 160 stores. They had annual sales of about 1.3 billion Norwegian kroner (€150m-$200m) (before VAT) until they decided to split with the biggest member, Anton Sport, which had actually offered to take over Sport 1 earlier this year. Anton Sport, which operates 13 stores in the Oslo area, represented about 20 percent of the total turnover, but many members resented its competition.
Anton Sport is in fact opening a store in Moss, East of Oslo, where one of the members of Sport 1 has his own store and where the group has its new warehouse. Furthermore this very successful chain, which has special deals with certain brands, has indicated that it plans to set up shop in other areas where Sport 1 members operate.
With the departure of Anton Sport, which will operate independently in the future, the national market share of Sport 1 declines from 20 percent to 15-17 percent, but it will remain the biggest alternative to Gresvig, which controls more than 40 percent of the Norwegian sporting goods market through its own and affiliated G-Sport and Intersport stores. The other major contenders for this relatively small but highly technical and wealthy market are the XXL chain and Stadion, a cooperative of about 60 retailers formerly called Sport 25 that had sales of about 500 million NOK (€59.6m-$78.4m) last year.
With overheads that represent only about 3 percent of the members’ turnover, Sport 1 says it can offer better conditions to the brands that want to work with it than Gresvig. It is particularly interested in exclusive deals for the Norwegian market that can allow its members to be more competitive against Gresvig. Sport 1, which has been offering centralized invoicing and settlements since only two years ago, currently has non-exclusive deals with only 70-80 suppliers. While 110 of the affiliated stores sell a full range of products, 50 specialize in specific product categories such as winter sports products, outdoor products or bicycles.
The new controlling shareholder, Gjelsten Holding, wants to meet the group’s members before mapping out its future strategy, but it doesn’t seem keen on setting up company-owned stores or on making other acquisitions in the sporting goods sector in the near future. Gjelsen Holding has made most of its investments in real estate since it was formed in 2000, when Gjelsten himself set it up as an investment vehicle after resigning as chief executive of Aker, a company that merged in 1997 with his former holding company, Resource Group International. He is right now competing in the playoffs of the America’s Cup through his own boat, “Spirit of Norway.”
In general, the management of Gjelsten Holding and Sport 1 see the buying group developing in the Oslo area, which was occupied mainly by Anton Sport, as well as in smaller areas throughout the country on a franchised basis. They want to market more widely the Sport 1 banner, which is now used by only about 30 stores, capitalizing on its technical image. The other retail members trade under their own banners, but they use Sport 1 as a secondary logo.