Andy Rubin, Deputy Chair, Pentland Group


The World Federation of Sporting Goods Industry (WFSGI) and McKinsey & Company have teamed up once again to present our third annual Sporting Goods Industry Report “Sporting Goods 2023 – The need for resilience in a world in disarray.”


Here we present the interview made with Andy Rubin, Deputy Chair of Pentland Group.

Andy Rubin

Deputy Chair, Pentland Group

Andy, thank you for taking the time. Looking back at the year 2022, what are your key takeaways? How do you feel about your business but also about the industry as a whole?

“I think the past couple of years have been very unusual for the industry. Obviously, the impact of COVID and the lockdowns around the world have been significant, and we’re still feeling that. Upfront, it was about the consumer impact that the lockdown had, but also about sporting activities as well. Team sports in many parts of the world had to shut down, and swimming pools were closed. On the other hand, the outdoor industry and cycling saw a boom because people were still able to get outside. And then, we went through supply chain challenges, with factories being shut down in many parts of Asia because of the lockdowns and shipping containers being in the wrong places, as well as shipping prices rising. And now the war in the Ukraine has obviously impacted energy prices considerably. So, we have had this very interesting intersection of consumer challenges and consumer preferences changing, while we have had to balance working through supply chains, which have been dramatically affected by macroeconomic and geopolitical events.”

What do you think the lasting changes are?

“I hope that there has been a realization through COVID and the lockdowns about how much personal health matters. I think there has been a big wake-up call to people around the world in terms of the importance of being healthy. I also hope that people have discovered activities for the first time that they will stick to – be it the ability to go out for a walk or to get on a bike.”

Coming to the subject of private equity in sporting goods, how do you see this space evolving?

“We as Pentland Brands have built our business over the past 30 years through acquisitions, and the market has changed considerably because of the amount of money available to investors. This has definitely impacted valuations and the way businesses are run. And what has changed is that you have a lot of PE firms that are buying brands or retailers in the industry, building them up, and then, after five to seven years, looking to exit. And the next PE fund comes in and buys it, and they do the same thing again. So as an industry player, it can make it a lot harder to invest in assets that we think we can add value to, because the valuations are frequently overinflated.”

PE firms usually just buy individual assets, which means you lose out on the opportunity for synergy and scale that you would get through a portfolio of sports businesses. What is your perception? Are synergies a nice-to-have or a must-have to be successful going forward?

“I think there are different business models that you can employ in how you create value. In our brand division, we create value by buying brands and then adding them to our platform. We can then give them access to our sourcing and distribution network around the world, adding our expertise in consumer behavior, product innovation, marketing, and communication. Private equity firms think less about synergies and more about growth in revenues and margins over the next five years. Both are viable models, but they are very different.

Is it possible to combine the two approaches? And why do PE firms not also buy a couple of brands in the sector to leverage synergies and scale?
Yes absolutely. Independent brands are looking to create value by accelerating growth, but we do it for the long term; let’s say on a 10–15-year time frame. This is very different than if you were looking to pump something up and make sure that you are maximizing the value at exit in five to seven years. So, it is a different way of working. The second point is, yes, a PE could group together brands in a sector and try to generate synergy. However, this is not easy, and it is much easier to sell firms on an individual basis than combined.”

Do you think there are types of businesses that are more open to the idea of being bought by a PE player than others?

“I believe there are sellers that are interested in what happens to their company after it is sold, particularly if they retain an equity stake, and there are sellers that are not. We have had a couple of businesses that we have invested in because the seller wanted to sell to an owner that was thinking long term, that cared for its people, and that was going to invest in its future. So, I think there are certain advantages to sell to a strategic buyer that operates for the long term, but it might mean that some value will be lost in the transaction compared when you sell to other players, particularly PE.”

Given the rising interest from PE funds and investors in the industry and their short-term views, do you think this has influenced the evolution of the industry and shaped certain trends?

“I’m sure the answer must be yes. If you are constantly buying businesses, pumping them up, and selling them after five years, are you going to make investments in those key areas of sustainability that a longer-term holder would? The answer is probably no. Thus, there’s probably a detrimental effect to the industry of short-term owners of assets.”

Now, looking at the long-term macro trends in the industry in the next three to five years, what do you think are the biggest opportunities?

“For the sporting goods industry, I think there is a significant opportunity to grow our businesses in very interesting ways. There are interesting developments to tap into. For example, we’ve seen people starting to casualize what they wear. And what we must do as a sporting goods industry is to innovate and create products specifically for activities or sports and then separately for people to wear casually. The second key theme is how we can minimize the impact on our planet, so sustainability has become critical and should be on the top of every leader’s agenda. The third key theme is inspiring people to move more, to be healthy and to try to combat the problem of obesity. Lastly, there’s the inequality issue – how can we help more people to have access to facilities, to coaching, to sport kits, and to be able to participate wherever they are in the world.”

About World Federation of the Sporting Goods Industry (WFSGI)

The WFSGI is the world authoritative body for the sports industry officially recognized by the International Olympic Committee (IOC) as the industry representative within the Olympic Family. The WFSGI is an independent association with no objective of economic character for its own gain and formed by sports and sports-inspired leisure brands, manufacturers, suppliers, retailers, national/regional federations, industry and trade associations and all sporting goods industry related businesses. Our purpose is to represent and inspire the industry, to invest in innovation, promote physical activity, support free trade, and do business in an ethical and sustainable way. As part of our mission, we facilitate legally permissible communication and cooperation to enhance competitiveness and innovation. We seek to positively influence the way our products are manufactured, with a focus on people involved in the manufacturing and the environment. Our members are steering the direction of the industry. The future of the sporting goods industry begins with the professional networks that we support.


McKinsey is a global management consulting firm committed to helping organisations realise sustainable, inclusive growth. We work with clients across the private, public and social sectors to solve complex problems and create positive change for all their stakeholders. We combine bold strategies and transformative technologies to help organisations innovate more sustainably, achieve lasting gains in performance, and build workforces that will thrive for this generation and the next. McKinsey teams work in more than 130 cities and 65 countries. McKinsey was founded in 1926. Global Managing Partner is Bob Sternfels since July 2021.