League’s favorite helmet maker in financial trouble

Vicis pleads for millions of dollars just to cover basic expenses

Around Thanksgiving, Aaron Rodgers and Russell Wilson received some news as unnerving as the sight of an all-out quarterback blitz.

The NFL stars and other investors in Vicis, the heralded Seattle-based helmet maker, were offcially informed that the company was running out of cash.

“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.

The plea for millions of dollars to cover basic expenses represents a startling fall for a company that has won plaudits for its high-tech helmets and raised more than $90 million from venture capital and some of the NFL’s highest-profile players. The company, with a board that includes highly respected doctors, business leaders and military advisers, also secured $1.1 million in grants from the NFL, though the league does not have an ownership stake.

The financial crisis at Vicis highlights one of the biggest challenges in football’s fight to make the game safer. Most brain scientists dismiss the idea that a new helmet can significantly reduce the risk of traumatic brain injuries and long-term brain damage.

Wilson, who stars for the Seattle Seahawks, Kansas

City Chiefs quarterback Patrick Mahomes and dozens of other players wear a Vicis helmet each Sunday.

Shock absorbers inside the helmet have been shown to reduce the impact of direct hits and limit the rotational energy the head absorbs. So far, that has not been enough for Vicis to succeed.

Youth and high school football participation is falling, and the helmet business is dominated by Riddell and a handful of companies that are weighed down by insurance costs.

Still, Vicis and other companies continue to try to develop better helmets for athletes and other commercial and military uses.

In its letter to investors, the company said it would try to raise additional money by selling shares that valued the company at just $5 million, compared with a $90 million valuation as recently as last year.

To stay afloat, Vicis plans to cut operating costs by half, curtail expansion plans and focus on just two football helmets — its adult model and a version for children.

Last month, the company’s board pushed out its co-founder and chief executive, Dave Marver, who said in an email that the odds were stacked against newcomers to the helmet business, even those like Vicis that have seen growth.

“We were more successful than most at raising capital, but it took a tremendous amount of time and e≠ort, e≠ort that could have been applied to growing and running the business,” Marver said.

The company expects to lose $26 million this year, according to internal Vicis documents.

With its cash dwindling, it has struggled to fulfill some orders. The delivery of a few hundred helmets ordered by the upstart XFL has been delayed.

The new league is hoping the helmets will arrive by the start of training camps early next year, according to an XFL offcial with direct knowledge of the transaction, who spoke on condition of anonymity to preserve the league’s relationship with one of the few helmet manufacturers.

In a statement, Matt McKenna, a spokesman for Vicis, said the company is seeking another round of funding. He declined to comment further.

Vicis approached the helmet market in the fashion of Tesla, the automobile maker that sought to capture the high end of the market first. Vicis targeted NFL and college teams that can afford its premium prices. The helmets can cost as much as $1,500, at least double what most high-end helmets cost. Executives hoped the visibility among top athletes would help them sell to youth and high school teams.

But the challenges for a newcomer, even one with the support and star power of Vicis, are fierce, said Vin Ferrara, who founded and ran the helmet maker Xenith for almost a decade. There are liability and product maintenance costs, helmets that need to be customized for players and teams, and a limited market that tightens competition.

Still, Vicis appeared to have advantages. Two professors from the University of Washington and Marver, a veteran of the medical device business, started the company in 2013. Its association with the NFL and support from Commissioner Roger Goodell helped immensely.