BSN Sports Reassures Suppliers After Pushing Terms To Net-180 Days
With every vendor worried about their team dealer customers not paying their bills — not to mention trying to survive the upheaval caused by the COVID-19 crisis themselves – a letter sent in April by BSN Sports/Varsity Brands to all of its suppliers caused more than a little consternation.
The most concerning portion of the letter was a direct statement from Varsity Brands that “to ensure flexibility during this pandemic, we are implementing net-180 day payment terms.” This was in addition to asking the companies to inform BSN Sports if they were having “any disruptions that might be taking place in your business.”
Coupled with a report a few weeks earlier that Standard & Poors had lowered the debt ratings of Varsity Brands, the parent company of BSN Sports, Varsity Spirit and Herff Jones, based on the impact of the COVID-19 pandemic on school closings and sports, these vendors were understandably concerned about getting paid. (At the same time, however, Moodys, which is arguably more conservative in its ratings, kept Varsity Brands credit rating steady.)
BSN Sports has a plan to navigate this crisis, Varsity Brands CEO Adam Blumenfeld tells Team Insight Extra, and vendors should be confident in its strategy, despite the short-term pain.
“There are two things I fervently believe,” Blumenfeld says. “One is that our scale, diversity and financial backing from Bain Capital will allow both BSN and Varsity Brands to weather whatever storm may come.
“The second is that as long as I am sitting in this chair, we will pay 100 percent of every obligation we have to every vendor and supplier with whom we partner.”
Terry Babilla, president and COO of BSN Sports, in explaining that the company has been forced to create “a new baseline business plan to account for slow payment receipts and reduced sales,” echoes those sentiments.
“We are prudently managing our cash by matching our cash receipts to our expenditures to ensure we are able to meet our obligations to all of our partners. We have made a number of difficult decisions while implementing this plan, including delaying payments to our vendors.
“However,” he adds, “this decision is temporary and should not be misconstrued. As the market recovers, we will pay our vendors.”
Blumenfeld says that he fully appreciates that any vendor would be concerned about the state of affairs in team sports, but adds that “if I were a vendor, the only thing that would concern me more than the unknown of this pandemic is if anyone I was supplying was not taking prudent and responsible measures to manage their cash.”
Babilla recognizes the shared hardship that COVID-19 is having on the entire industry – customers, employees, student-athletes, vendors and other business partners – and BSN Sports is no different. “We have adapted in some painful and challenging ways to the reality of this pandemic and, although the situation is very fluid, we are maintaining an unwavering faith in the endgame and a commitment to prevail as a great company,” he says.
Babilla also provided some details on the BSN Sports policies going forward.
- There is no hard and fast rule concerning which vendor invoices are subject to the 180-day payment policy. BSN is working with all of its vendors on revised payment terms.
- BSN will continue to expect shipments from its vendors as its works its way through the crisis. “The vast majority of our suppliers see, first-hand, just how disruptive the market has been and are ensuring our supply chain continues in largely uninterrupted fashion,” Babilla says.
- BSN will look to continue partnerships with the vendors that support it during this crisis. “We firmly believe that those vendors who support us during this downturn will benefit greatly when the team sporting goods market returns to normal,” Babilla says. “And, it’s worth reiterating: our vendors will be paid in full.”