According to The New York Times and other sources, Vicis, the producer of helmets for star quarterbacks Russell Wilson and Patrick Mahomes of the Kansas City Chiefs, is running out of money.
The company has won more than $1 million in grants from the NFL but is now in serious financial trouble and has idled its workforce, at least until January 2.
Wilson, who is an investor in the company along with Aaron Rodgers, was informed in late November of the company’s cash issues. More than three-quarters of all NFL teams have a starter who wears a $950 Vicis ZERO1 helmet. At the college level, 180 programs have deals with Vicis, up from 125 last year.
“Our employees are currently furloughed and we need to raise capital in order to continue operating, or we may have no other option but to wind down all operations,” wrote Ralph Greene Jr., who took over as the new chief executive just days before, in a letter reviewed by The New York Times.
As the Times reports, this is a startling fall for a company which spun out of the University of Washington in 2014 and whose high-tech helmets have won industry-wide praise and which has raised more than $90 million in venture capital. The company’s board includes highly respected doctors, business executives and military advisers. The company has received $1.1 million in grants from the NFL although the league has no ownership in the business.
The helmet, which essentially has shock absorbers inside which have proven to reduce the impact of direct hits and limit the rotational energy absorbed by the head, has hit dire financial straits. With participation in youth and high school football declining, the helmet business is hurting. Other major manufacturers, like Riddell are suffering too with insurance costs rising.
The Times writes that the company sent a letter to its investors explaining that they would raise cash by selling shares in the company. The latest valuation though is about $5 million for a company that had been given a $90 million valuation only last year.
The company plans to cut operating costs and cut back on expansion plans, focusing its efforts on two football helmets only. Dave Marver, who co-founded the company and was its chief executive, was pushed out by the board last month with the company taking a new, streamlined approach in order to save itself.
Vicis’s price has been as high as $1,500 per helmet, almost double that of other high-end helmets. The company relied n the star power of players like Wilson and Mahomes to sell the product while targeting NFL and college teams that could afford the high price tag.
Helmets for XFL might not arrive for training camp
With an expected loss of $26 million this year and cash running out, Vicis has struggled to fill orders including an order of a few hundred to the XFL. That order has been delayed but according to one XFL official who spoke on condition of anonymity, the new league is hoping the helmets will arrive in time for the start of training camps early next year.
A spokesman for the company, Matt McKenna, released a statement saying that the company is seeking another round of funding.
With excerpts from The New York Times and the Geek Wire.