I am bored already with the end of season rumors (except the ones I can't divulge) so today's post is part rumor, part rumination.
On the JT front I've heard confirmation of the original confounding rumor but it doesn't go quite as far as giving an official closure date. And multiple sources suggest there's been at least one failed dialogue with respect to selling the company within the industry. (It could be an effort will now be made to keep it afloat long enough to prove it has value in ongoing efforts to sell.) And it seems the sale of JT Europe--to Cybergun--hasn't been finalized yet but within this process some wondered how it would effect MAXS (a large Germany-based European distributor & paintball dealer) as there has been speculation that JT also owned MAXS (or a share of it.) (While the speculation was apparently wrong this part is important to my ruminations below.) (Wow, back to back parenthetical statements--no, wait, triple parens, I think that's a new record!)
In recent months much of the industry has made changes that included personnel changes. One target has been sales forces and their salary structures and it has occurred in big companies and small. Kingman made their move late summer for example around the same time Procaps altered part of their Euro distribution scheme, particularly in France. And lately similar rumors have swirled around Dye Europe. One camp seems to think it's a pull back and reduction, the other a consolidation of Dye's Euro resources into the UK. Of course from the outside the two might look about the same and essentially serve the same basic function so ... call it what you like I suppose. Everyone is looking for ways to economize--which isn't exactly a shocker, is it?
In the Procaps case rumor has it that the distribution change was brought to a head by the size of the debt the distributor had accumulated due to Procaps advancing credit. While a commonplace practice offering credit terms in a contracting market runs a number of risks. One is that the size of the debt will alter the relationship between the creditor and the debtor, creating a shifting leverage imbalance (among other things). Put simply when you owe a man a thousand dollars he becomes impatient for repayment, when you owe him a million dollars he takes a great interest in your continued good health on one hand and how he can parlay the size of the debt to his advantage if repayment isn't forthcoming on the other.The Procaps bind was a guy who owed a lot of money but who couldn't generate more income without more product but he owed a lot because he hadn't paid off on the credit already advanced.
That is the situation those speculating incorrectly about MAXS and JT Europe thought might have existed in a scenario where JT Europe took over part or all of MAXS based on outstanding prior debts.
This is interesting because it isn't uncommon, particularly of late, and because it has application up and down the paintball food chain. It bears a resemblance to the way stories claim NPS gobbled up smaller paintball enterprises back in its heyday and fits in with some stories currently making the rounds about MAXS, for example. The stories claim MAXS has used similar situations to gain an interest in (control of?) a number of retail paintball sites and there is--as of this morning--a related thread on pbhub.de about a field operator who refused to play ball. (The situation isn't identical to the debtor/creditor scenario but the results are.) And while I'm not wringing my hands at how big fish eat little fish there are also very subdued, whispered rumors of similar things going on here, particularly industry accumulating shares or ownership of local retail stores and fields in an effort to recover value on outstanding debt. Unreceived and unlikely to be recovered accounts receivable is a big problem and no telling how much some of the industry has had to write off in recent years but making vertical moves is one way to ameliorate at least part of the problem.
Depending on how widespread this practice is, how often it is happening, it may very well be silently altering the nature of the industry as a whole and it is very likely just delaying the problems of the present by pushing them a little further down the road and in the pocess changing the face of retail competition.