Strike It Poor

Not only high-tech stocks are taking a beating these days. Take AMF Bowling, the Richmond, Va., company that tried to corner the bowling market. Shortly after AMF went public, in 1997, and launched a bowling-alley buying binge, at least one Wall Street analyst forecast that a share of its stock would eventually trade at $100.

Never happened. And, from the looks of things, never will. Last week, you could pick up AMF for about a nickel. That's right: Five stinkin' cents a share.

If AMF investors are heading for tall buildings, duckpin bowlers won't be following them. Many patrons of the locally bred, small-balls version of the lane game see justice in this corporate carnage.

"AMF tried to kill duckpin," asserts John Shanahan, president of the Baltimore Duckpin Bowlers Association. "What they did made a lot of people very, very bitter around here."

Sadly, only around here. Duckpin was invented in Baltimore around the turn of the century by future baseball Hall of Famers John McGraw and Wilbert Robinson. As legend has it, McGraw and Robinson, then with minor-league baseball's Baltimore Orioles, cooked up the game at a local pub by shaving down a regulation ball and pins. Soon enough, duckpin was more popular than tenpins in the Washington-Baltimore corridor, where the bulk of the bowlers registered with the National Duckpin Bowling Congress (NDBC)—more than 60,000 during peak years—have always hailed from. (Cool trivia: Nobody in the history of duckpin bowling has rolled a perfect 300 game; the high game stands at 279.)

These days, however, the state of duckpin is about as shaky as the state of AMF. According to the NDBC, there are now fewer than 14,000 duckpin bowlers and about 85 U.S. centers.

Even the most ardent AMF-basher knows that the company can't bear all the blame for pushing duckpins to the brink of extinction. Like so many other American industries that depend on mom-and-pop establishments, duckpin loses a house whenever a mom or pop proprietor gets a better offer or passes on. Nobody manufactures duckpin pinsetting equipment anymore—the last company to do so folded in 1969—so essentially no new blood can enter the sport. The Falls Church Bowling Center might be the next to go. The only duckpin alley left in Northern Virginia is owned by 91-year-old carpet tycoon Milton Diener, and many local bowlers worry that the life of that center will end when his does.

For duckpin die-hards looking for a villain as they watched their pastime roll toward oblivion, AMF made a good bad guy.

AMF was founded as the American Machine and Foundry Company Inc., a tobacco-industry supplier, in 1900. The company began its relationship with bowling in 1938 by hiring the inventor of the first automated pinspotter; it kicked off a boom in tenpin bowling by putting that machine into mass production after World War II. AMF's mission changed from selling bowling equipment to buying every available alley when, in 1996, Richmond honcho William Goodwin sold the company to New York investment firm Goldman Sachs for almost $1.4 billion.

AMF's master plan after the takeover was to consolidate the bowling world and thereby create the first national, and then international, brand for recreational bowling. Its bowling-alley acquisition spree left AMF with 545 centers, including dozens of tenpin and/or duckpin houses in this area, within a year of its 1997 IPO, and Asia was targeted as bowling's prime growth market. (Michael Jordan, whose stock has also fallen lately, was hired by AMF to be the spokesmodel for the global takeover.)

Some folks bought into the AMF scheme. In an April 1998 interview with Microsoft Investor, an Internet newsletter, fund manager Ron Baron advised everybody to buy and hold AMF as part of what he called a "megatrend" investment strategy. "We think that AMF is going to double its cash flow in the bowling alley business in three years and double it again three years after that," Baron said. "We think AMF is going to be $100 (a share) in five years."

Oops. The stock, which had opened at $19.50, never went higher than $31 a share. By late 1998, it was in free fall.

AMF, it's now clear, had both overestimated how much brand loyalty Americans would have when it comes to bowling, and, if the company's version of the collapse is to be believed, underestimated what impact the Asian economic bust would have on its plan to globalize the game. In any case, revenues fell from $70 million in 1997 to just $6 million a year later. (A pending class-action suit against AMF on behalf of all its stockholders alleges that the corporation misrepresented its financial performance prior to its IPO.)

When the bottom dropped out in the Far East, AMF began closing U.S. centers to cut costs. In this area, duckpin houses took the hit. Company-owned alleys in Harford, Arbutus, Middlesex, Joppa, and Rolling Road were shuttered. Strictly business, said AMF. But Charm City rollers saw an anti-duck conspiracy when AMF kept all its tenpin alleys open and converted some split duckpin/tenpin houses into tenpin-only centers. Worst of all, AMF refused to make the equipment from the duckpin alleys it closed available to the duckpin proprietors who were so desperate for the no-longer-manufactured hardware.

"AMF had a plan that everybody would bowl tenpin after they closed up all the duckpin houses," says Shanahan. "That was stupid."

As if trading at a nickel a share weren't enough proof, AMF now admits that its methods were unsound. "Frankly, we bought too many centers too quickly," says Merrell Wreden, AMF's vice president of corporate communications. "The strategy at the time was to grow quickly and create a critical mass in terms of size, and I think we accomplished that. But we could have done a better job of expanding comfortably and assimilating [the acquired centers] into the company."

Wreden says AMF doesn't need to apologize to duckpin bowlers for its business decisions of the last few years. However, along with a planned financial restructuring in the first quarter of 2001, AMF's other orders of business for the new year include the reinstallation of 14 duckpin lanes at the company's Timonium center, making it a split duckpin/tenpin house. As it was before AMF took over.

But until duckpin bowlers hear the sound of little balls crashing into little pins at that center, they'll remain convinced that AMF is out to get them.

"AMF hates duckpin," says Robin Olson of Gaithersburg, who operates a Web site for fellow duckpin devotees. "I'm just glad AMF doesn't own more duckpin houses. And that I don't own any AMF stock." —Dave McKenna

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