Debt may force Marc Ecko to surrender control of his brand

Posted Sep 22nd 2009 4:15PM by Zac Bissonnette
Filed under: Deals

Just two years ago, high-flying fashion designer Marc Ecko paid $752,467 for the baseball Barry Bonds used to break Hank Aaron's home run record.

Then, after conducting an online poll to determine the ball's fate, Ecko branded it with an asterisk and shipped it off to the Baseball Hall of Fame in Cooperstown, prompting Bonds himself to call Ecko "stupid" and "an idiot."

Now Ecko probably wishes he had that three-quarters of a million dollars -- or the ball. The New York Post reports that the tough economy and excessive debt have forced Ecko's empire to the brink of bankruptcy. The Post cites reports that Ecko is in talks with Iconix Brand Group (NASDAQ: ICON), a licensing company with a portfolio of brands including Ed Hardy, Candie's, London Fog, Starter, and Joe Boxer.

The deal is likely to involve Iconix assuming some of Ecko's debt, including a $70 million loan from CIT Group that the company defaulted on.

The moral of the story -- for would-be entrepreneurs and investors -- is this: Don't invest in a company in an industry as cyclical and fickle as fashion when the company has a significant debt load. Debt can be fine for businesses with dependable cash flow and predictable financials. Unfortunately, that's not how fashion works.

Tags: Barry Bonds, BarryBonds, Baseball Hall of Fame, BaseballHallOfFame, icon, iconix, Marc Ecko, MarcEcko