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Kit Menkin's
Leasing News www.leasingnews.org
Monday, August 12, 2002 Accurate, fair and
unbiased news for the equipment Leasing Industry ( posted daily at www.leasingnews.org and sent by e-mail
by subscription with the Day
in American History signature .) --------------------------------------------------------------------------------------------- Headlines--- Sales
Tax on "Doc Fees" and " Discounting Lease" FDIC
subpoena of the lobbying activities of the Patton Boggs LLP law firm
Housing
prices may indicate bubble Stock
Market Scares Consumers from Seeking More Credit Baseball
players to set strike this afternoon? Redesigned
football helmets tackle concussions, comfort ------------------------------------------------------------------------------------------------ The Week Ahead Aug. 12-16, 2002 August 12 Monday International Monetary Fund opens three-day seminar on
globalization at its headquarters, including sessions on income
inequality and capital flows. American Bar Association annual meeting continues through
Tuesday at Marriott Wardman Park. August 13 Tuesday President Bush hosts economic forum at Baylor University,
Waco, Tex. Participants include Vice President Cheney and Cabinet members,
along with business and labor leaders friendly to the White House. The Federal Reserve's Open Market Committee meets in Washington
to set short-term interest rates. Interpublic Group, J.C. Penney, Tiffany and Wal-Mart issue
quarterly financial reports. Economic indicators: July retail sales August 14 Wednesday Deadline set by the Securities and Exchange Commission for
chief executive and chief financial officers of many large corporations
to personally certify the accuracy of last year's financial reports. Financial Accounting Standards Board meets in Norwalk, Conn.,
to consider accounting treatment of stock options. ImClone Systems and Nordstrom issue quarterly reports. Inventory-Sales Ratio: June August 15 Thursday Dell Computer, Gap, Kohl's and Liberty Media issue quarterly
reports. Federal Reserve releases minutes of June 26 Federal Open
Market Committee meeting. ( Concern the Federal Reserve will say on Tuesday that slowing
growth is the biggest threat to the economy, suggesting the rebound in
corporate profits will falter. ) Economic indicators: July industrial production July Weekly Jobless Claims August 16 Friday Economic indicators: July consumer price index. Housing Construction: July Sales Tax on “Doc Fees” and “ Discounting Lease” Bette Kerhoulas bettek@pacifica-capital.com informed
Leasing News her company is one of six that the California Franchise Tax
Board audited. When title is passed to another, the Franchise Tax Board
is determining this to be a “sale.” Bette says the tax board is now determining that all discounting
to a funding source is a sale if “title is passed.” In many master documents, the funder takes title. The Franchise Tax Board is ruling that all these transaction
are subject to tax, and are going back three years with a penalty of ten
percent per year on the taxes not paid. In addition, Bette says the tax board is claiming that because
“document fees” were included, they were part of the sale and there is
sales/use tax on this charge, going back ten years with a 10% penalty fee for each
year the alleged tax is not paid. Bette states the Franchise Tax Board plans to audit all leasing
companies in California to see if they are compiling with the law. If the tax is being charged monthly, evidently there is compliance. The Equipment Leasing Association has a group headed by Dennis
Brown that has been following the streamline sales tax laws to be uniformly
adopted by the states. Perhaps
other states will view the California action as a precedent for their state. It
is not secret, all government entities are looking for “extra money.” Readers interested in learning more may want to attend this
special meeting in Los Angeles being sponsored by United Association of Equipment Leasing: August 20,2002 United Association of Equipment Leasing Los Angeles Region Sales and Use Tax Issues in Equipment Leasing Sales Tax on Documentation
fees? Radisson Hotel—Los
Angeles West Side 616 West Centinela Avenue Culver City, Ca. 950230 310-659-1776 Time: 2:00pm –2:30pm Registration
& Networking 2:30pm—5:00pm
Program Speakers: Sylvia Le, Senior Tax Auditor Eileen
Smith, Senior Tax Auditor (Both
speakers are from the Board of Equalization ) ------------------------------------------------------------------------------------------ FDIC subpoena of the lobbying activities of the Patton Boggs
LLP law firm on behalf of Texas businessman Charles Hurwitz. By James V. Grimaldi Washington Post Staff Writer K. Street beware. A federal judge has issued a ruling that
should give pause to every lobbyist, the lawmakers they lobby and especially
their clients. U.S. District Judge Thomas Penfield Jackson, who oversaw
the Microsoft Corp. antitrust trial, has given the go-ahead for a subpoena
of the lobbying activities of the Patton Boggs LLP law firm on behalf
of Texas businessman Charles Hurwitz. The ruling last month was made at the request of the Federal
Deposit Insurance Corp. and marks another nasty turn in the particularly
bitter litigation pending against Hurwitz in which the FDIC is seeking
$250 million recompense for his role in the $1.6 billion failure of United
Financial Savings & Loan Houston in 1988. The FDIC wants the subpoena
so it can disprove Hurwitz's claim, pushed by Patton Boggs lobbyists with
members of Congress, that the agency had a vendetta against him. Patton Boggs lawyers attempted to rebuff the subpoena, citing
among other things attorney-client privilege. But Jackson enforced the
subpoena, limiting the file search to communications with federal agencies
or departments, members of Congress, brokerage houses, consultants and
public relations firms. The ruling echoes that of U.S. District Judge Denny Chin
in Manhattan, who granted the subpoena of federal prosecutors seeking
communications of lawyers lobbying for the presidential pardon of fugitive
financier Marc Rich. "The Marc Rich Lawyers were acting principally as lobbyists,"
Chin wrote last year. "They were not acting as lawyers or providing
legal advice in the traditional sense." Though many of their K Street colleagues wanted Rich's attorneys
to appeal, they did not. Among those forced to hand over communications
were Jack Quinn of the Quinn Gillespie & Associates LLP lobbying firm,
Kathleen A. Behan of Arnold & Porter, G. Michael Green of Dickstein
Shapiro Morin & Oshinsky LLP, and Robert F. Fink of Piper Rudnick
LLP. Rich attorney Lewis "Scooter" Libby, formerly of the Dechert
firm and now Vice President Cheney's chief of staff, escaped that subpoena. In the Hurwitz matter, the FDIC, a regulator and federal
insurer of the nation's bank deposits, said it sought the subpoena of
Patton Boggs materials to rebut assertions by Hurwitz that the FDIC sued
him so the government could get its hands on a treasured California redwood
forest. He claims the agency is conspiring with the Interior Department
and environmentalists to extort him into giving up the forest. Hurwitz has increased logging on 196,000 acres of land he
owns in the Headwaters Forest. Congress in 1997, in a bid to keep Hurwitz
from stepping up logging and at the behest of the Clinton administration,
passed a weird authorization to purchase about 7,500 acres of Hurwitz's
forest -- and allowed the government to accept more acreage as a settlement
of claims brought by the FDIC and the Office of Thrift Supervision, which
has a separate action pending against Hurwitz. But FDIC lawyers said it never wanted the forest. It wants
cash from the Texas businessman as compensation for the loss to the taxpayers
when the Houston savings and loan failed. Officials there scoff at the
idea that the bank regulator is in cahoots with environmentalists to grab
Hurwitz's trees. FDIC Deputy General Counsel Jack Smith told Jackson at a
hearing that the subpoena "is designed to show that the charges that
have been trotted around this town for the last six years by Patton Boggs
and by Charles Hurwitz are totally untrue." "Not a single offer for redwoods came from the FDIC,"
Smith continued, "yet somehow Patton Boggs and Charles Hurwitz have
managed to convince some congressmen and a lot of people who write for
the press about the idea that that FDIC is the one who has been trying
to get their redwoods and steal them." Patton Boggs lawyer Mitchell R. Berger argued that the FDIC
sought the subpoena in retaliation after it lost attempts to quash a deposition
of FDIC General Counsel William F. Kroener. Patton Boggs also argued that
the request failed to meet a legal test to overcome attorney-client privilege. Berger called the subpoena a "cathartic exercise"
because "they feel like they have been beat up in Congress, that
they have been subject to charges that they don't like." But Smith said Thomas Hale Boggs Jr., name partner of the
firm, was not Hurwitz's attorney but his lobbyist: "You can almost
take judicial notice that Tommy Boggs is not a litigator. He is the most
prominent lobbyist in America right now." Jackson sided with the FDIC, giving Patton Boggs until Sept.
1 to allow a Texas judge to review whether the subpoena is relevant. Turning
to Berger, Jackson said he would be inclined to agree with him "if
you were, in fact, defense counsel" but added: "You are not.
You provided services of a different nature." ------------------------------------------------------------------------------------------- How are you? I saw
the rankings of leasing newsletters, that included Business Leasing News. It
was nice to be included. Can you
describe what the ranking numbers mean, and provide the full cite on the
Lexa people, so I can look at their background, etc. You will be seeing the August issue of BLN next week, which has some good new stuff. All the best! David David G. Mayer Patton Boggs LLP 2001 Ross Avenue Suite 3000 Dallas, Texas 75201 Tel: (214) 758-1545 Fax: (214) 758-1550 Author of: Business
Leasing For Dummies Publisher of: Business
Leasing News --- I just read today's news and was surprised to see how quickly
you were able to test out the suggestion that I had made. I'm glad that you and the advisory board like the results. I just tried it out on the web and it's exactly what I was referring to. I'm sure that many of your readers will enjoy this great new feature. Thanks again, Jason P.S. Your offer to
send me a bottle of wine is very appreciated, but not necessary. I should
be sending you one! --- It looks great and is much easier to read. However, I will still read the e-mail version to get this day in history. Bruce Kropschot Kropschot Financial Services 116 Estuary Drive Vero Beach, FL 32963 Great! Terrific! Love it! --- Did I mention that I like the new format? Bob Teichman, CLP Teichman Financial Training 3030 Bridgeway, Suite 213 Sausalito, CA 94965 Tel: 415-331-6445 Fax: 415-331-6451 e-mail: BoTei@aol.com "Providing education and training to the equipment leasing
and financing industry." (772) 234-4544 --- Kit, The new format is
fantastic. I think it is easier to read and much easier to navigate. Congratulations! Bob
Baker CLP -------------------- This is beautiful. Much
easier to read. Andrew Thorn athorn@nowlease.com -- I am not in
the leasing industry, but I have been reading your newsletter because of a problem my wife's medical practice
has been having with RW Professional Leasing and AMEX. You have provided me with the only source of
information on RW Professional Leasing and its relationship with American Express. American
Express has been pressuring our small medical practice to pay back the entire amount on a lease that was
set up by RW Professional Leasing 2 years ago. We were asked to pay nearly 80% interest on a 150K loan after 2 years. We were ignored by AMEX each time we asked question about the validity of these claims. After learning about RW Leasing from your newsletter we contacted
AMEX executives and informed them of this problem (we mention
RW Professional Leasing after the arrest were made in June). AMEX's tuned changed suddenly. AMEX contacted
us immediately and now appears to be very willing to re write the contract to reflect its true value.
I hope this works out for us. I just wanted to drop you a line a thank you for publishing
your newsletter on the leasing industry. Thank you very much. Karl Barham Karl_Barham@bus.emory.edu ------------------------ Kit, with a great
deal of appreciation for your Leasing News positions wanted, Emily Fitzgerald
contacted me and placed me as Vice President, Middle Market, at
IFC Credit. My focus is transactions in the $200K + market. We do pay broker fees. Let's grab another
cup of coffee soon. Thanks, Jim James F. Murray Vice President IFC Credit Corporation 650.357.1975 jamesmurray6@attbi.com --------------- Jeffrey Taylor’s Latest Newsletter (Jeff talks about
criticism he received regarding his opinion on the Pawnee-Egan-Naelb endorsed video sales training, at the request of Leasing News---two other trainers gave a similar opinion,
but Jeff appears to be singled out, as he was more incensive:
) http://www.leasingnews.org/articles.doc/LeaseAccounting2.htm ---------------------------------------------------------------------------------- Housing prices may indicate bubble Contra Costa Newspaper Columnist Tapan Munroe (...home prices are a lagging economic indicator. In other
words, they come down months after other measures of the economy such
as employment and output because people hold on to their property and
reluctantly lower prices eventually.) Despite the sinking stock market and an anemic economic recovery,
the strength of the real estate market has been astonishing. According
to the National Association of Realtors, U.S. home prices increased by
more than 10 percent between June 2001 and June 2002. Do these numbers
portend the makings of a real estate bubble? According to John Burns, a real estate consultant out of
Southern California, several of the major U.S. metropolitan areas have
overheated housing markets. These include Boston, San Diego, Fort Lauderdale,
San Francisco, Miami, Denver, San Jose, Orange County, Charleston, S.C.,
and New York City. Burns' analysis is based on a measure he calls a "housing
cycle barometer" for each of the metro areas. This measure of affordability
is based on data that include down payments, mortgage payments, personal
income and housing prices. Based on this indicator, Boston is the least-affordable
market in the United States, and San Francisco ranks fourth in terms of
lack of affordability. But lack of affordability alone does not imply that we have
a housing bubble. Lack of affordability can be a result of not building
enough housing in a region. For a market to attain the bubble status,
we need to look at additional criteria. According to Economy.com, the
symptoms of a housing bubble in a region would include the following: • Home prices increase at double-digit rates for more than
two years in a row (rapid housing inflation). • As soon as homes hit the market, they are sold in a matter
of hours (expectation of rising prices). • Home price increases consistently outpace income growth
(sustained decline in affordability). To this list, I would add two additional symptoms: • Prices are rising because of speculative reasons (buying
and selling to make a fast buck) • Home prices become so much higher relative to rental rates
that prices cannot be sustained (People opt to rent rather than buy). In many of the markets cited above, there have been periods
in which home prices have increased annually at double-digit rates at
least for a year or two. Home prices have also increased at rates faster
than income increases in these markets. There have also been periods in
places like Silicon Valley when million-dollar homes have been sold in
a matter of hours during the heyday of the dot- com era. Without a doubt,
many metro areas, particularly those with a high-tech base, have a housing
bubble. But a bubble only becomes a problem if it explodes and there
is a collapse in the market. A crash in home prices similar to the stock
market crash of 2001-2002 can be catastrophic for the economy as well
as individual net worth. So far we have not seen this happen in any of the metro markets.
What we are seeing nationally is that the bubble is beginning to deflate
slowly. Home prices have been coming down in many metro areas, and in
others price appreciation has softened appreciably. But it would be a
mistake to think that all housing markets are cooling off. In the Bay
Area, despite a lackluster economic recovery, real estate prices continue
to rise as home buyers take advantage of some of the lowest mortgage rates
in years. In the Bay Area, homes under the million-dollar range continue
to sell briskly. There appears to be softening in prices for homes above
the million-dollar range. As far as the Bay Area is concerned, home prices will continue
to increase at modest single-digit rates in the coming months barring
a double-dip recession and further setbacks in the tech sector. The underlying
reason is that the demand for housing in the Bay Area is always present,
as not enough housing has been built in the past decade and people want
to live here. An additional reason is the pent-up demand originating from
thousands of families who have been priced out of the Bay Area housing
market in the boom years of the late 1990s. Looking ahead, we need to remember that home prices are a
lagging economic indicator. In other words, they come down months after
other measures of the economy such as employment and output because people
hold on to their property and reluctantly lower prices eventually. This
is particularly true now because the memory of a red-hot housing market
will continue to linger for quite some time before reality sets in and
people lower prices. Thus, we will see softening in real estate prices
in the coming months. There is little doubt that many metro real-estate markets
have low affordability, including the Bay Area. In addition, Bay Area
home prices have sky- rocketed in the 1997-2000 period. So the real question
is whether the price bulge is sustainable. As far as the Bay Area is concerned,
the answer is yes as long the economy gets back on track and job creation
resumes soon. But we will continue to be a "housing-impaired"
region over the long haul. That will continue to adversely affect the
region's economic vitality. A gradual slowdown in the rate of home-price increases for
regions such as the Bay Area is probably the best scenario for relieving
the pressure inherent in the current housing bubble. This will avert serious
economic consequences associated with a real-estate crash. The solution
to our complex housing situation is increasing the supply of housing in
a variety of price ranges as well as densities in the region. This is
an old mantra, but I think that it is the only real option we have. Tapan Munroe is president of Munroe Consulting Inc. of Moraga.
His column runs the first and third Sunday of every month. His e-mail
is tapan@tapanmunroe.com. --------------------------------------------------------------------------------------------------- Nearly Half of Americans Planning to Cut Their Use of Debt
Because of Stock Market Plunge, According to the Cambridge
Consumer Credit Index (Newstream) -- Almost half of all Americans (43%) are less
willing to incur more credit card debt because of heavy losses in the
value of their stock portfolios, while 57% claim not to be affected by
recent market declines, according to the results of a nationwide survey
by the Cambridge Consumer Credit Index. The highest-income Americans,
earning over $75,000 a year in income, have been even more affected by
plunging stock prices, with 47% saying they will cut back on their use
of credit. These findings are the result of monthly nationwide telephone
poll of 1000+ adults conducted by ICR/International Communications Research
in the past week, sponsored by The Debt Relief Clearinghouse. "Economists continue to ask if the consumer is going
to stop spending because of the declines in the stock market. Now we have
the answer: nearly half of Americans do plan to sharply reduce their use
of credit because they have suffered such enormous losses in their portfolios
in recent months. This cutback in credit use will be even more pronounced
among higher-income consumers who are the main drivers of the consumer
economy because their portfolios have suffered the most." says Jordan
Goodman, spokesperson for the Index. In the month of August, the Index dropped by 7 points from
July levels, meaning that more Americans are reducing and are planning
to reduce their debt burdens. This plunge-the largest on record since
the Index was launched in December 2001-- reverses a 12 point surge in
June and July. The Cambridge Consumer Credit Index is a forward looking
economic indicator gauging consumer spending and debt. It is released
on the fifth business day of every month to coincide with the Federal
Reserve Board's G19 release of consumer credit outstanding data. In conjunction
with the Index, the Cambridge Credit Counseling Corporation is releasing
its monthly survey of people who have called it for credit counseling
services over the past month. Cambridge representatives ask callers for
the primary reason that they found it necessary to get help with their
debts now. Of the 1586 people who answered, this was the order of their
responses: 1.I am frustrated with high bank rates and fees (28%) 2. My income has been reduced from a lower salary, less overtime
or layoff (23%) 3. I want to improve my ability to achieve future financial
goals like buying a house or saving for retirement (15%) 4. I got into too much debt by overspending (12%) 5. My lack of financial education caused me to take on too
much debt (11%) 6.Other reasons (4%) 7.Large medical expenses forced me to take on huge debts
(4%) 8. My recent divorce or widowhood forced me to take on large
debts (3%) For more information on the survey see www.cambridgeconsumerindex.com/camsurvey.asp The Cambridge Consumer Credit index number is composite of
these three questions: 1. In the past month, have you taken on more debt or paid
off debt? 2. The Index reads 66 on this question, a drop of 6 points
from July. In August, 33% of Americans say they have taken on more debt,
with 22% taking on a little and 11% taking on a lot more debt. Conversely,
67% of Americans have paid off debt, with 44% paying off a little and
23% paying off a lot. In July 36% of consumers had taken on more debt
while 64% had paid off debt, indicating that the number of Americans taking
on debt is falling. 2. In the next month, do you anticipate taking on more debt
or paying off debt? The Index reads 40 on this question, down by two points from
July. In August, 20% plan to take on more debt, with 5% planning
to take on a lot and 15% planning to take on a little debt. Conversely,
80% plan to pay off debt, with 60% paying off a little and 20% paying
off a lot. In July 21% planned to take on debt and 79% planned to pay
off debt. 3. In the next six months, do you expect to take on debt
because you are thinking of making a major purchase such as a car, education,
appliance, medical procedure, furniture or carpeting? The Index reads 62 on this question, a drop of 12 points
from July, the biggest one-month drop in the history of the index. In August, 31% of Americans plan to take on more debt to
make such purchases, with 9% taking on a lot of debt and 22% taking on
a little more debt. In contrast, 69% of Americans plan to pay off debt
in the next six months, with 48% expecting to pay off a little and 21%
expecting to pay off a lot. In July 37% of Americans planned to take on
more debt, while 63% planned to pay off debt. The Reality Gap-which is the difference between what consumers
say they will do in the next month and what they actually do, narrowed
sharply from 17 to 11 percentage points. In July 80% of consumers said
they planned to pay off debt in the next month, while 69% actually said
they did so a month later. A month earlier, 81% of Americans planned to
pay off debt but only 64% actually did. "Consumers are clearly concerned by the current economic
and stock market environment, and are taking action to cut their debts
and curtail their spending in response," says Jordan Goodman, spokesperson
for the Index. For more information about the Cambridge Consumer Credit
Index, contact Media Relations Representative Paramjit Mahli at pmahli@cambridgecredit.org
or 800-804-0575, or economist Allen Grommet, who provides an economic
analysis of Index results, at agrommet@cambridgecredit.org or 800-804-0575,
or the Index website at www.cambridgeconsumerindex.com. Consumers wishing
to find out more about Debt Relief Clearinghouse referral services should
call 1-888-4DEBTHELP or visit www.debtreliefonline.com. US Airways files for Chapter 11 bankruptcy ALEXANDRIA, Va. (AP) US Airways, hard hit by slumping travel
following the Sept. 11 terrorist attacks, filed for Chapter 11 bankruptcy
Sunday the first major carrier to declare bankruptcy since the attacks
put the industry in a tailspin. --- Tourism industry to push for national marketing corporation ORLANDO, Fla. (AP) Tourism industry leaders plan to ask for
a national organization to sell the United States as a destination to
international travelers. --- By Ronald Blum, Associated Press NEW YORK (AP) Some of the nastiest pitches in baseball this
year are being hurled across Manhattan conference rooms, where owners
are demanding economic changes that could spark the game's ninth work
stoppage since 1972. It could mean no World Series for the second time in eight
years. Players are likely to set a strike date when their executive
board meets Monday, possibly leading to a walkout in late August or early
September. The key stumbling block appears to be management's demand to
slow escalating player salaries a luxury tax on teams with high payrolls.
''Eventually, it all has to be tied together,'' said Atlanta
pitcher Tom Glavine, the National League player representative. ''There's
caution on our side because obviously the big issues revenue sharing and
luxury tax are out there.'' Finding a way to slow salaries has been a perennial management
goal. Players, however, would like keep things the way they are. Since
1976, the last season before free agency, the average salary has jumped
from $51,500 to $2.38 million, a 46-fold increase. Commissioner Bud Selig said it has reached the point where
only the richest teams can compete. He thinks revenue-sharing taking from
the biggest clubs and giving to the smaller ones, like his family-owned
Milwaukee Brewers is the only way to restore competitive balance. ''The system is so, in my judgment, badly flawed, it's going
to take a myriad of solutions,'' Selig said earlier this month. One anti-revenue sharing owner who sticks up for big-market
clubs is George Steinbrenner, whose New York Yankees' payroll is $135
million. Steinbrenner says profit-sharing should be used to raise payrolls,
not help teams rack up profits. There seemed to be some progress in negotiations the past
week, with players ending their decades-old opposition to mandatory drug
testing and agreeing to be tested for steroids starting next year. Players also are amenable to increasing the amount of local
revenue teams share. But they oppose the luxury tax, which could force
high-spending clubs to trim tens of millions of dollars from payrolls.
The union doesn't want to leave itself open to a lockout,
which would delay a confrontation until next spring, when owners have
less money at stake. That's why a strike date probably will be set. Monday's meeting in Chicago takes place on the eighth anniversary
of the 232-day strike that led to the cancellation of the World Series
for the first time since 1904. But a big difference from 1994 is that both sides have had
dozens of bargaining sessions in recent weeks and have narrowed their
differences. Nine years ago, when owners demanded a fixed ceiling on salaries
known as a cap, the first substantive talks didn't take place until three
months after the walkout. ''There's good reason to be optimistic at this point,'' said
former pitcher David Cone, a key member of the players' negotiating team
during the last walkout. ''The framework's there for an agreement, unlike
last time.'' The last strike wiped out the final 52 days and 669 games
of the regular season and forced cancellation of the first 23 days and
252 games of the following season. It ended only after a federal judge
issued an injunction restoring the terms of the former labor contract,
ruling owners had illegally changed work rules. ----------------------- Redesigned football helmets tackle concussions, comfort By Dave Carpenter, Associated Press CHICAGO (AP) The NFL's helmet maker of choice is looking
to turn more heads, especially on campus, with a new model it claims could
reduce the risk of concussions. Like a preseason football team without a record, Riddell
Sports' longer, extra-padded helmet doesn't yet have the on-the-field
results to declare it a winner, or a safer helmet. But its appearance in pro training camps and on some college
and high school practice fields this summer signals the latest innovative
play-calling in a hard-hitting market involving three helmet makers, competing
to equip more than 2 million U.S. players. Knocking heads to produce a safer, more comfortable helmet,
manufacturers are giving teams, players and parents more choices and a
slightly more streamlined look for a piece of equipment that hasn't changed
much in the past two decades. ''One company pushes another one does something that's innovative
and the other one adopts it,'' said Bill Jarvis, athletic equipment manager
at Northwestern University, whose players test gear for Riddell and wear
a variety of helmets. Riddell's Revolution is the first football helmet to be marketed
on the claim that it might be able to cut down on concussions a claim
that has the Chicago company's competitors grumbling about hype and lack
of evidence. Its arrival comes on the heels of a new lighter-weight helmet
from Adams USA Inc., which bought out the helmets of Bike Athletic Co.
Adams says the lightness of its Elite series helmets might reduce the
risk of certain injuries because players aren't as inclined to drop their
heads when they get tired. Both approaches may be right for different reasons and different
injuries, according to helmet expert and industry consultant Dave Halstead.
But he said neither is likely to lessen the most troubling risk in football
catastrophic brain injury. ''I don't think there's a helmet out there that's somehow
going to be the panacea,'' said Halstead, technical adviser to the National
Operating Committee for Standards on Athletic Equipment and director of
the Sports Biomechanics Impact Research Center at the University of Tennessee.
''What football helmets do today is keep you from getting killed.'' If Riddell is right, its design could also keep players from
getting mild traumatic brain injuries, or concussions, as often a compelling
claim in a sport that causes about 100,000 concussions a year, 40 percent
of them at the high school level. The Revolution is its response to research funded by the
National Football League that found seven of 10 on-field concussions were
caused by hits to the side of the head. The helmet has more interior padding and a shell that extends
forward to the jaw to increase the area of protection. The back protrudes
to offer better padding. The facemasks have been redesigned and teardrop-shaped
holes on the top provide more ventilation. ''I'm glad to see that they are making advancements because
nobody has made a change in the helmet in 20-something years,'' NFL Players
Union executive director Gene Upshaw told NFL.com. Riddell said about 40,000 of the new helmets will be in use
this fall, worn most visibly by as many as a quarter of NFL players and
some players on all top college teams. But while the NFL may be its biggest
showcase, with a majority of the 2,000 players wearing Riddells of one
model or another, the $100 million-a-year company is looking to more lucrative
playing fields: those of the nation's 15,000 high schools. ''The product we developed was really focused on getting
to the masses,'' said Bill Sherman, president and chief executive of the
company that makes 300,000 helmets annually and other gear. ''We want
every player in the NFL wearing the Revolution helmet, but when we introduce
a new product we have to look at our core market and that's a million
high school players.'' The new helmets sell for about $150 at least $30 more than
Riddell's standard model. Garry McNab of Adams USA, the No. 3 helmet maker, says the
warning label on Riddell's new helmet speaks louder than any sales pitch.
It reads: ''No helmet can prevent serious head or neck injuries a player
might receive while participating in football.'' ''I can't say that one helmet's any better than the other,
and I don't think anybody else can say that,'' said McNab, secretary-treasurer
of the Cookeville, Tenn.-based company. Riddell's closest rival, Litchfield, Ill.-based Schutt Sports,
hasn't changed its basic helmet shape in 15 years, and president Julie
Nimmons suggested her competitors' new looks might be a gimmick. Schutt
recently released a new, lighter helmet, the Air Advantage, with slightly
different features and is field-testing a prototype with more padding.
''Football is a game of very, very hard collisions, and I
don't think there's a manufacturer out there that isn't concerned about
what happens on the field,'' Nimmons said. ''However, there's only so
much any of us can do'' about trying to minimize injuries. On the Net: http://www.riddell.com http://www.schuttsports.com http://www.adamsusa.com ----------------------------------------------------------------------------------------------- NEW: E-Mail Removal Form:
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