CTE Revelation Deals Blow to Helmet Maker

While the NFL battles sagging ratings and National Anthem protests, there was still plenty of interest this year when one of its franchises went up for sale.

Not so much for the owner of helmet maker Riddell.

Faced with possible crippling damages from looming lawsuits filed by former NFL players - who claim Riddell knew about the risk of CTE from concussions but kept the info from them - the owner, private equity firm Fenway Partners has not been able to find a buyer after attempting to off-load the company for years.

The news on Tuesday that Washington State quarterback Tyler Hilinski was diagnosed with CTE - after he took his life at age 21 in January - will not help matters.

At WSU, Hilinski wore Riddell, America's most popular helmet.

At least 36 former NFL players have been diagnosed with CTE - which can be confirmed only after a person dies - and dozens more are thought to be afflicted.

Hilinski is believed to be just the second college player diagnosed with CTE.

At Fenway, which has controlled Riddell since 2004, the growing issue of concussions has put a severe damper on its sale process. Typically, PE firms buy and sell companies in five years.

But buyers are fearful of the legal liabilities, sources said.

There is a class-action suit against Riddell in Philadelphia on behalf of 4,500 former NFL players.

Fenway, after years of not getting a worthy nibble on Riddell, recently reached an unusual deal with Hollyport Capital, which specializes in buying assets at discounts from PE funds, to quiet Fenway fund investors.

The investors, after seeing Fenway sit on Riddell for 14 years, were getting antsy. Hollyport bought out most of the fund's investors, sources said.

In addition, Hollyport is offering Fenway fees and a percentage of the profits when and if Riddell is sold - if the sale price comes in above its current value, a source close to the situation said.

Fenway essentially now has a second shot to make money on Riddell - but the Hilinski news won't make a sale any easier.

Riddell sits on Fenway's lap despite being profitable and seeing revenue double, to roughly $200 million since 2002.

In 2013, Fenway tried combining Riddell with other sports equipment makers, forming Easton-Bell Sports. The strategy didn't work. The concussion lawsuit overhang turned suitors off, sources said at the time.

As a result, Easton-Bell sold its other brands, leaving Riddell, now a division of the renamed BRG Sports.

At Schutt Sports, the No. 2 football helmet maker, owner Platinum Equity Partners was able to unload the company to Chief Executive Robert Erb - but only after agreeing to finance a management buyout, the source said.

Traditional lenders won't touch it, sources said.

And Schutt, having gone through a Chapter 11 reorganization in 2010, doesn't even have the concussion overhang that Riddell has.

So Platinum is out of Schutt but still has a loan against the company that needs to be paid off.

Fenway did not return calls. Hollyport declined comment. Platinum confirmed the sale, but declined to comment on the financing.

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