Locker room to board room - Drew Pearson Cos - Making It - Company Profile

Nation's Business, Oct, 1995 by J. Tol Broome, Jr.

When Drew Pearson's National Football League career as an all-pro wide receiver ended prematurely with an automobile accident in 1984, he knew he wanted to remain associated with pro sports. His 11-year playing career included 489 receptions and a Super Bowl championship ring, and he was quickly hired by CBS.

After his CBS contract wasn't renewed following his rookie year in broadcasting, Pearson was hired as an assistant coach by his former team, the Dallas Cowboys. Still, he says, it wasn't the challenge he wanted.

Two friends, Kenneth W. Shead and D. Michael Russell, had been after Pearson to help start a sports-apparel venture. Pearson joined the effort, and today, according to the National Sporting Goods Association, Drew Pearson Cos. (DPC), based in Addison, Texas, is one of the leading makers of sports caps in the country.

Pearson, Russell, and Shead injected a total of $20,000, other investors put up $100,000, and a local bank provided a $20,000 loan. Nonetheless, says Pearson, the firm's CEO, "capital was a problem for us for quite some time."

The company generated first-year sales of $3 million by selling hats, shirts, and jackets to high-school sports teams and to the Dallas Sidekicks, a professional soccer franchise.

But DPC had to sue a distributor over a sales-contract dispute. Shead, Russell, and Pearson went without salaries during the first year, and the bank refused additional financing.

In its second year of operation, however, in 1986, DPC was licensed by the U.S. Olympic Committee to produce headwear for the 1988 Olympic Games in South Korea. "We've were stunned," Pearson says. "And we really didn't know what to do next. We were small and really didn't know how to source, fund, or market the deal."

A joint venture with another headwear company was the answer. Pearson had the much-coveted contract, while the other firm was able to secure a $5 million line of credit to finance the deal. "At the same time we were learning the business and developing our own track record," he says. DPC, which now has 175 employees and has shifted its focus to headwear only, has grown into one of the most successful minority-owned businesses in the U.S. (Pearson and Shead, the company's president, own 26 percent each; Russell, the executive vice president of sales and marketing, and David Briskie, the chief financial officer, own 22 percent each; outside investors own 4 percent.)

When DPC first sought to establish a bank of licensing arrangements with the likes of the NFL, Walt Disney Co., and Warner Bros., Pearson says, it found it didn't have enough resources to meet the minimum guarantees of royalty and sales levels required by the big licensors. "So we signed up other headwear companies to help with distribution," says Pearson, 44.

In recent years, DPC has come to rely less on other distributors. Gross sales doubled in 1992 and again in 1993, reaching $78 million. As a result, DPC was named company of the year in 1994 by Black Enterprise magazine, an honor Pearson compares to "winning the Super Bowl."

Sales dropped in 1994 to $65 million, a slide Pearson attributes primarily to the professional-baseball strike and the lock-out in hockey. Even so, DPC ranked 22nd on Black Enterprise's most recent listing of the country's top 100 black-owned businesses. (For more on minority business, see the cover story, on Page 18.)

The company has nearly 40 licenses with major sports leagues, entertainment entities, and black colleges and universities. Its caps feature logos for such teams as the Dallas Cowboys, the Orlando Magic, and the New York Yankees and such Looney Tunes cartoon characters as Bugs Bunny.

The hats are marketed under trendy brand names such as Jagged Edge, The Claw, and Super Highway, and DPC is known for its innovative designs.

"It's the flair and style that goes into every cap that makes DPC popular among the hotly contested preteen and teen market," says Carmine Lengua, a buyer for Foot Locker, the New York-based athletic-shoe and apparel company.

DPC hats have been selling well in Europe, Australia, South America, and China, and Pearson foresees continued international growth. He also hopes DPC will become a full-service sports apparel company. How will he accomplish this? With the help of his teammates, of course.

Pearson says he tries to create for his employees the kind of team atmosphere his former coach Tom Landry created with the Cowboys. "I give them the freedom," Pearson says, "to develop the strategies necessary to get the job done."

J. Tol Broome Jr. is a vice president of FirstSouth Bank in Burlington, N.C.