What Happened to Nutmeg Mills? The Forgotten Story of a Sports Apparel Pioneer
In the 1990s, Nutmeg Mills redefined gaudy NBA T-shirts and the broader sports apparel business. Then NAFTA happened.
We start with the names of two brothers and the mostly forgotten company they created. Marty and Dick Jacobson. Nutmeg Mills. Sports fans of a certain age will certainly remember Nutmeg's style, which was ubiquitous on schoolyards and playground courts in the 1990s: big, bold fonts and illustrations that made sports stars look like comic-book heroes.
You want Michael Jordan jauntily bringing the ball up from the backcourt? Nutmeg. You want Horace Grant clutching a basketball above his head, playing keep-away like Gollum with the Pearl? That's Nutmeg. How about just a hideously ugly Houston Astros logo plastered from your shoulder blade to your abdomen? That, friends, is extremely Nutmeg.
But evidence of the Jacobson brothers' sports-apparel company, as recognizable and unique as it was at its pre-internet era peak, is hard to find in 2016. There are a few random press clippings from Google News searches and Ebay listings for various Showtime Lakers and Michigan football T-shirts, but not much more.
While the shirts may be artifacts now, Nutmeg's story was less difficult to uncover than I had expected. Instead of months of dead ends and flickering leads, I made one phone call to the University of Massachusetts-Amherst, where a few years back Marty Jacobson donated $2.5 million for a new football stadium press box. The UMass press office gave me his phone number. Two days later, we spoke on the phone for more than an hour.
It turns out Jacobson is happy to talk about the apparel juggernaut he created. It's just that not too many people care to ask anymore.
"Our time was just as the internet was coming out," Marty Jacobson said over the phone. "Back in the 80s and 90s, there were an awful lot of stories on Nutmeg. One year we were the second fastest growing company on the New York Stock Exchange."
Jacobson made time to talk, from his home in North Carolina, between golf games. He has another home in Florida. He plays a lot of golf these days, and has the easygoing manner of a man who's had it pretty good for a long time. In 1994, he and Dick sold Nutmeg Mills to VF Corporation, one of the largest clothing conglomerates in the world, for more than $350 million. Jacobson still hobnobs with coaches like John Calipari and executives from Nike. I didn't ask how much he's worth, and he's too well-mannered to bring it up. But it's apparent the guy is pretty fucking rich.
This was not always the case. In 1967, Jacobson graduated from UMass and went to work for his father's company, Mr. Panels, a window siding and, yes, paneling company. While working with their father, Marty and Dick learned the ins and outs of purchase orders, stocking, and selling.
By the mid 1970s, the business had opened retail outlets all along the Eastern seaboard, including Florida, and the Jacobson family sensed a changing landscape for big retail. Americans were more focused on price and convenience than ever before, and the brothers saw an opportunity to cash out before Home Depot could eat their lunch. As it very often was, the Jacobsons' timing was excellent.
The Jacobsons took their proceeds from selling Mr. Panels and put it to work by making venture capital investments. One of their purchases was a women's and junior sports apparel business in Tampa, Florida. The business had cut-and-sew capabilities on site, and took contracts from large retailers to stock shelves. One large order after another came in, but the brothers were unimpressed with the company's leadership; in short order, they bought out the founding team, took control, and started to implement new ideas. One idea was bigger and newer than the others: Could they take fashion design principles and merge them with sports apparel?
In the 1980s, the economic landscape of college sports apparel was still largely haphazard. If a consumer wanted a shirt from their favorite college team, their best bet was to drive to campus and go to the bookstore, where they'd be able to select something from a limited supply of sweatshirts, tees, and sweatpants. The state of the industry was somewhere between Completely Decentralized and Actual Wild West; many schools had trouble just policing their trademarks.
The Jacobsons approached the Collegiate Licensing Company, which administers licensing and merchandise programs for schools, and offered up sports apparel that could be sold at retail. The brothers were offering not only royalty payments but a scalable model to sell more apparel and get colleges a larger slice of the pie. "Nutmeg was one of the first to really build a business around getting licensing," said former CLC Senior VP of Marketing Kit Walsh. "Nutmeg had an impact on places like Starter," the sportswear company.
Title IX had allocated more funding to women's sports, and the brothers bet that their experience in junior and women's apparel in Tampa might help them get in the door. Jacobson wrote a letter to the University of Florida, positing that it could be mutually beneficial for his company and the school to work together. The school agreed, and the Jacobsons had their first customer. The letter still hangs on the wall of Jacobson's house in Tampa. They decided to name their nascent company Nutmeg Mills, after their home state of Connecticut.
The brothers began hiring ex-athletes to pitch Nutmeg apparel to their alma maters. It was a winning strategy from the start. Suddenly schools like UF, Florida State, and Michigan were selling sweatshirts, tees, and other gear—and turning solid profits. "The thing just took off," Jacobson said. "In our second year we were the highest royalty payer to colleges in the country. Once we had that success we said, 'Let's take that and go to the pros.'"
The NBA became Nutmeg Mills' first professional sports league partnership in 1981. It's hard to imagine now, but NBA Properties, the league's marketing and licensing division, earned $10 million that year (for comparison, the NBA earned $679 million in sponsorship revenue in the 2013-14 season). Nutmeg was one of the earliest companies to partner with the league to grow revenue through branded team apparel. "Marty was very very bright. [He] had a lot of foresight," said Bill Marshall, former VP and general manager of NBA Properties. "He had the ability to understand what the league would need."
In addition to other offerings, Nutmeg provided official gear to a very visible group that sat courtside at every NBA game night after night: the stat crew. These fashion moguls monitored the hardwood in cotton rugby shirts. Today it looks extremely goofy, but at the time it was pretty damn fly.
"The goal is to bring in somebody who is doing something completely unique," Marshall said. "And that is what Nutmeg was doing."
Marty played the role of the affable sales guy, always quick with a smile and a pat on the back, while Dick worked more behind the scenes. "My job was to put together the sales team and the marketing, getting the right licenses and then implementing them," Marty said. "I'm more of a people person. I guess I'm used to rejection. Dick was the behind-the-scenes guy. He was beloved by the people that worked with him but he wasn't somebody that day in, day out wanted to go out and do what I did. So it was really a perfect complement."
After proving their success with the NBA, the company quickly forged licensing deals with Major League Baseball and the NHL. A few years later, the NFL came aboard. "I told Marty that if he could come up with something different, and could stand alone, we could give him a license, and he did that," says John Bello, who was running the licensing department for the NFL at the time. "He used a lot of stitching and had a unique and refreshing look and a more upscale feel. I assume he's playing golf all day now."
As it happens, Bello is absolutely right.
Nutmeg employed around 40 designers and gave them plenty of room. One former employee remembers walking through the office one day and smelling the distinctly pungent odor of marijuana. "What're they doing in here?" he asked a co-worker in the department. "They're creating!" came the enthusiastic reply.
In the late 1980s, Nutmeg Mills went public and by the early 90s, the company was making hundreds of millions of dollars per year in revenue. In 1990, they brought in Philadelphia entrepreneur Bennett Oltman, CEO of McBriar Sportswear. He had connections to Chinese manufacturing companies and helped Nutmeg find cheaper labor. The company still maintained manufacturing plants in the U.S. but outsourced production of some items, like its polo shirts. Of course, like many other companies of its ilk, the deal made executives like the Jacobsons rich but would ultimately strip many working-class Americans of jobs.
The brothers had a sales strategy in place, large retail partners, and an established brand name, but they sensed a changing climate. Once again, they were right. In the early 1990s, the U.S. government began laying the groundwork for what would become NAFTA. The trade deal shattered any protections that existed for companies that manufactured domestically, and made it much easier and cheaper to set up a factory in Mexico and ship products back to the U.S. without paying taxes on them. While Nutmeg stood to profit from this arrangement, so did its larger competitors, including a certain athletic apparel giant in Oregon.
Nike was the biggest player in the industry by a wide margin and shaking up the industry in different ways. When they decided to start playing rough, things got complicated for their smaller competitors.
Sonny Vaccaro had been paying college coaches to wear Nike sneakers for years, and by the mid-90s the company began paying schools ample sums to outfit their entire program. "They went to a place like Michigan, and said, 'Let us give you the uniforms and we will pay you to do it,'" Walsh said. "That changed everything. All of a sudden universities realized they could go sell these rights, and get the product they needed."
The Jacobsons saw the writing on the wall, and knew they could sell and turn a huge profit. VF Corporation, meanwhile, was looking to expand their apparel empire—their purchase of Bassett-Walker in 1984 had not turned their sports apparel business into a boon, and they wanted a bigger piece of the pie. By late 1993, discussions began; in January 1994, Nutmeg Industries was sold for $352.2 million. That was the same month NAFTA officially went into effect.
Though Marty Jacobson is loath to say a bad word about anyone, you can tell the sale of Nutmeg still brings up mixed emotions. "It's sad," he said. "It's probably like seeing a child get married or at least go to college because you know it's never going to be the same."
It never was. Prior to the sale, Oltman remembers the company bringing in pizza and sodas for the employees during big printing runs, like the night of the Final Four championship. Once the winner was crowned, Nutmeg workers, fortified on pepperoni and Cokes, would stay up printing shirts until the early morning hours. That sense of camaraderie didn't seem to make it over to VF Corporation.
"I don't think it was the same. I don't think there was the closeness," Oltman said. A lot of the designers didn't want to work under the VF umbrella and left the company.
As VF grew, it bought other apparel companies with similar profiles to Nutmeg Mills. The Jacobsons were long gone when VF decided Majestic, which provided Major League Baseball with its uniforms, would be its flagship sports apparel company.
"Are there things that Dick and I would have done differently? I'm sure there are, but that wouldn't be fair to them," Marty said. "Once they bought the company, they could take it in any direction they wanted."
By 2000, Nutmeg Industries was consolidated into another division of VF, and Nutmeg Mills basically ceased to exist. Just a few months ago, VF Corporation moved to rid itself of the last vestiges of Nutmeg, and announced that it was putting its entire licensed sports group up for sale. In general, analysts lauded the move, noting that VF had moved more toward rugged outdoor apparel and envisioned limited growth for licensed sports.
Marty Jacobson is not one to lament the past. He's got it pretty good, hitting the links on golf courses around the world. He's in regular contact with Dick and a few other colleagues from his Nutmeg days. If the world has turned and forgotten Nutmeg Mills, you get the sense that's OK with him.
"Once our time passed," he said, "it was somebody else's."
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