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BRASS EAGLE: GREAT BALLS TO FIREIf you thought paintball was just for gun-crazy, camouflage-clad kids, think again. Wayne K. Loek, 43, a nurse anesthetist in Woodridge, Ill., has been playing it for four years. ''If you play it right, there's a lot of strategy involved,'' he says of the sport, in which players chase each other around a field and shoot guns loaded with colorful, gel-filled balls. Adds Douglas J. McKeown, 48, a lawyer in Joliet, Ill., who plays with his two sons, daughter, and wife: ''I would not hesitate to recommend it to anybody.'' The growing mainstream appeal of a previously fringe sport helped propel Brass Eagle Inc. (XTRM), which markets the guns, accessories, and paintballs that players use to blast each other, to No.39 on the BUSINESS WEEK Hot Growth list. Since splitting from air-gun maker Daisy Manufacturing Co. last year, the Rogers (Ark.) company has become the key player in the $250 million industry. Thanks to Daisy's established retail ties, Brass Eagle has been the only paintball equipment maker to crack such mass merchants as Wal-Mart Stores Inc. and Kmart Corp. By yearend, its stuff will be sold in 3,500 such outlets, as well as major sporting goods chains. That's all the more impressive since Brass Eagle is new to the party. Recreational paintball has been around for some 15 years, and Daisy had made paintball guns to mark trees and cattle for commercial purposes starting in the 1970s. But it didn't get serious about tapping the sports market until 1993. When market research showed the game's potential, Daisy linked up with tiny Canadian paintball company Brass Eagle through a royalty arrangement. In 1995, it bought the company's name, patents, and other assets. Then, to help finance its growth, Brass Eagle became a separate, publicly traded company last November. Its stock opened at 11 a share; it now trades at about 16. By applying Daisy's expertise in high-volume manufacturing, Brass Eagle made cheaper paintball guns, with retail prices starting around $35. A popular semi-automatic sells for about $100, vs. $250 for similar guns several years ago. ''It's a new product category. It has tremendous potential,'' says E. Lynn Scott, 44, Brass Eagle's CEO. Scott, a Mississippi native who began his career as a Kmart management trainee, was Daisy's vice-president for marketing and sales when Daisy and Eagle split. He has had no qualms about leaving well-established Daisy for Brass Eagle. ''We started with basically nothing,'' he says. ''It's an opportunity to participate in literally building a business.'' With his increased marketing efforts, which have led to paintball coverage on ESPN and MTV, the company's sales for the past three years have grown at an annual rate of 147%, to $36 million in 1997. Profits leaped at a 341.5% annual rate during that time, to $3.6 million. But Brass Eagle's dependence on one sport raises the question: Is growth sustainable? John P. Hughes of Dain Rauscher Wessels, a division of brokerage Dain Rauscher in Minneapolis, which co-managed Brass Eagle's initial public offering, sees revenue growth slowing to 44% this year, and profit growth to 78%. ''Like any extreme sport, [paintball] could go in or out of favor,'' he says. Scott, who predicts Brass Eagle can grow at least as fast as the industry's estimated 25% rate for the next few years, sees plenty of untapped territory. He's trying to expand in international markets, which accounted for 5.2% of 1997 revenues, particularly in Europe and South America. He also aims to expand the sport's appeal by marketing a paintball-field setup that can be used in amusement centers, carnivals, and other urban settings. Down the road, he doesn't rule out diversifying. But for now, chasing this market is enough of a thrill.
By Wendy Zellner in Rogers, Ark. RELATED ITEMS
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Updated May 21, 1998 by bwwebmaster
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