The brands are household names, even if their new owners are not. Sports Illustrated, Brooks Brothers, Forever 21, Juicy Couture, and even the likenesses of Marilyn Monroe, Elvis Presley and Muhammad Ali. All these brands and more are owned or controlled by a company with a relatively generic moniker: Authentic Brands Group. They buy distressed brands, many in bankruptcy or close to it, with the stated goal of growing and expanding their reach.
Critics say they are predatory and are taking advantage of brands weakened by the pandemic’s chilling effects on brick and mortar retail sales. These detractors claim that Authentic Brands Group (ABG) is milking the brands and diluting their overall brand equity, and point to their licensing of the Sports Illustrated brand for protein powder, bathing suits and a CBD-infused “Limited Edition Recovery Cream” as evidence.
It’s notable that one of the two partners in ABG is David Simon, CEO of the Simon Property Group, which is the largest mall owner in the U.S. Many of the retail brands purchased by ABG are tenants of Simon’s company. By purchasing these companies, the Simon Group is able to work out rent concessions to keep their businesses alive and the malls they are inviable.
So is ABG a vulture or a savior? Perhaps a little bit of both, but survival of the brands they own is certainly in their best interest.
It should be the owner’s prerogative to do what they want with a brand. Sports Illustrated has already been weakened by the overall struggles of the printed magazine industry. Gaining value from the brand in other markets is arguably quite shrewd, even if it seems odd or opportunistic. (And, honestly, no one is going to get rich from Limited Edition Recovery Cream no matter what brand is on it.) Brooks Brothers was already on the ropes when ABG bought it out of bankruptcy.
ABG is not the only company with a business strategy of buying distressed brands and reestablishing their value in the marketplace. Dormitus Brands owns the rights to Cingular Wireless, Underalls, Brim, Slice, AIWA and Coleco, among others. They have even reimagined the old Bud Light mascot, Spuds MacKenzie, as a dog food product line that donates a portion of its profits to pet rescue programs. While ABG mostly buys active brands that are in trouble, Dormitus specializes in bringing dormant brands back to life. It claims to be close to re-launching Underalls in the women’s hosiery marketplace.
If Rolex suddenly licensed its brand for a line of rollerblades (get it?) they would be generating a short-term gain that would likely damage its equity as a luxury brand over time. But companies like ABG and Dormitus have a vested interest in growing the value of their brand portfolios, even if one-off licensing agreements seem like a stretch. Certainly, most of these salvaged brands haven’t made it back to their previous heights of glory. But they do serve as proof that even a bankrupt company can retain equity in its brand and bring value to its owners.