<PAGE>  1
                      <SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                   FORM 10-Q

               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) 
                    OF THE SECURITIES EXCHANGE ACT OF 1934 

                     FOR THE QUARTER ENDED MARCH 31, 1997


                        Commission file number: 0-19298


                              RIDDELL SPORTS INC.
            (Exact name of registrant as specified in its charter)
               
               
           DELAWARE                          22-2890400
 (State or other jurisdiction of           (I.R.S. Employer
  incorporation or organization)           Identification No.)


                  900 THIRD AVENUE, NEW YORK, NEW YORK, 10022
             (Address of principal executive offices)  (Zip code)

                                (212) 826-4300
             (Registrant's telephone number, including area code)


                                NOT APPLICABLE
            (Former name, former address and former fiscal year,
                       if changed since last report)


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.    Yes [ X ] No [   ]


Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.

                  8,067,985 Common Shares as of May 14, 1997

                                       1
<PAGE>  2

                              RIDDELL SPORTS INC.

                                     INDEX


                                                                    Page

     Form 10-Q  Cover Page  . . . . . . . . . . . . . . . . . . . .   1

     Form 10-Q  Index . . . . . . . . . . . . . . . . . . . . . . .   2

     Part I.  Financial Information:

       Item 1.   Financial Statements:
                Consolidated Balance Sheets . . . . . . . . . . . .   3

                Consolidated Statements of Operations . . . . . . .   4

                Consolidated Statements of Shareholders' Equity . .   5

                Consolidated Statements of Cash Flows . . . . . . .   6

                Notes to Consolidated Financial Statements  . . . .   7

       Item 2.  Management's Discussion and Analysis of 
               Financial Condition and Results of Operations  . . .  12


     Part II.   Other Information

       Item 1.  Legal Proceedings   . . . . . . . . . . . . . . . .  18

       Item 2.  Changes in Securities   . . . . . . . . . . . . . .  21

       Item 3.  Defaults upon Senior Securities   . . . . . . . . .  21

       Item 4.  Submission of Matters to a Vote of Security Holders  21

       Item 5.  Other Information   . . . . . . . . . . . . . . . .  21

       Item 6.  Exhibits and Reports on Form 8-K  . . . . . . . . .  22


     Signatures . . . . . . . . . . . . . . . . . . . . . . . . . .  22

                                       2

<PAGE>  3
Part 1.   FINANCIAL INFORMATION
Item 1.   FINANCIAL STATEMENTS

<TABLE>
<CAPTIONS>
                                                RIDDELL SPORTS INC. AND SUBSIDIARIES
                                                     CONSOLIDATED BALANCE SHEETS

                                                                                 March 31,     December 31,
                                                                                 1997             1996
                                                                            --------------   --------------
                                                               ASSETS 
<S>                                                                          <C>              <C>
Current assets:
  Cash      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        $ 304,443        $ 356,670
  Accounts receivable, trade, less allowance for doubtful 
    accounts ($564,000 and $513,000 respectively)   . . . . . . . . . . .       21,142,165       15,144,943
  Inventories (Note 3)  . . . . . . . . . . . . . . . . . . . . . . . . .       14,620,416       16,406,168
  Prepaid expenses  . . . . . . . . . . . . . . . . . . . . . . . . . . .        6,050,108        6,654,962
  Other receivables   . . . . . . . . . . . . . . . . . . . . . . . . . .          245,978          159,747
                                                                            --------------   --------------
           Total current assets . . . . . . . . . . . . . . . . . . . . .       42,363,110       38,722,490
Property, plant and equipment, less accumulated 
  depreciation ($3,975,095 and $3,819,343, respectively)  . . . . . . . .        3,421,036        3,506,853
Intangibles and deferred charges, less accumulated
  amortization ($10,580,177 and $10,158,671 respectively)   . . . . . . .       33,645,022       34,066,528
Other assets  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           65,158           65,158
                                                                            --------------   --------------
                                                                               $79,494,326      $76,361,029
                                                                            ==============   ==============
                                                LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term debt   . . . . . . . . . . . . . . . . . .      $ 3,175,893      $ 1,158,198
  Accounts payable  . . . . . . . . . . . . . . . . . . . . . . . . . . .        4,048,960        4,866,962
  Accrued liabilities   . . . . . . . . . . . . . . . . . . . . . . . . .        6,843,665        6,739,980
                                                                            --------------   --------------
           Total current liabilities  . . . . . . . . . . . . . . . . . .       14,068,518       12,765,140
Long-term debt, less current portion:
  Shareholders and related parties  . . . . . . . . . . . . . . . . . . .          439,000          439,000
  Banks and other   . . . . . . . . . . . . . . . . . . . . . . . . . . .       31,500,000       29,544,892
                                                                            --------------   --------------
                                                                                31,939,000       29,983,892
Deferred taxes  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        1,820,000        1,820,000
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .        3,938,909        4,046,979
Contingent liabilities (Note 4)

Shareholders' equity
  Preferred stock, $.01 par; authorized 1,000,000 shares; none issued
  Common stock, $.01 par; authorized 20,000,000 shares; issued
    and outstanding 8,067,985 shares  . . . . . . . . . . . . . . . . . .           80,680           80,680
  Capital in excess of par  . . . . . . . . . . . . . . . . . . . . . . .       31,456,912       31,456,912
  Accumulated deficit   . . . . . . . . . . . . . . . . . . . . . . . . .       (3,809,693)      (3,792,574)
                                                                            --------------   --------------
                                                                                27,727,899       27,745,018
                                                                            --------------   --------------
                                                                               $79,494,326      $76,361,029
                                                                            ==============   ==============

</TABLE>
                           See notes to consolidated financial statements

                                       3
                                        
<PAGE>  4
                     RIDDELL SPORTS INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTIONS>
                                                                     Three Months Ended
                                                                         March 31,
                                                             ---------------------------------
                                                                  1997                1996
                                                              --------------    --------------
<S>                                                             <C>               <C>
Net revenues:
  Net sales   . . . . . . . . . . . . . . . . . . . . . . .     $ 18,000,706       $ 19,036,101
  Royalty income  . . . . . . . . . . . . . . . . . . . . .          574,197            807,585
                                                              --------------     --------------
                                                                  18,574,903         19,843,686
Cost of sales . . . . . . . . . . . . . . . . . . . . . . .       10,094,012         10,210,492
                                                              --------------     --------------
Gross profit  . . . . . . . . . . . . . . . . . . . . . . .        8,480,891          9,633,194
Selling, general and administrative expenses  . . . . . . .        7,207,043          6,991,449
Product liability expense . . . . . . . . . . . . . . . . .          625,000            664,133
                                                              --------------     --------------
Income from operations  . . . . . . . . . . . . . . . . . .          648,848          1,977,612
Interest expense  . . . . . . . . . . . . . . . . . . . . .          665,967            627,214
                                                              --------------     --------------
Income (loss) before taxes  . . . . . . . . . . . . . . . .          (17,119)         1,350,398
Income taxes  . . . . . . . . . . . . . . . . . . . . . . .               -              60,000
                                                              --------------     --------------
Net income (loss)   . . . . . . . . . . . . . . . . . . . .         ($17,119)       $ 1,290,398
                                                              ==============     ==============
Net earnings (loss) per share . . . . . . . . . . . . . . .          $  0.00            $  0.15
                                                              ==============     ==============
Weighted average number of common and
  common equivalent shares outstanding    . . . . . . . . .        8,067,985          8,456,962

</TABLE>

                See notes to consolidated financial statements

                                       4

<PAGE>  5
                     RIDDELL SPORTS INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTIONS>
                                                                                 Retained
                                         Common Stock            Capital         earnings           Total
                                    ---------------------       in excess      (Accumulated     Shareholders'
                                      Shares       Amount        of par           deficit)         equity
                                    -----------   --------    --------------   --------------  --------------
<S>                                  <C>         <C>           <C>             <C>              <C>
For the three months ended March 31, 1996:
  Balance, January 1, 1996    . . .   8,067,985    $80,680       $31,456,912     ($6,635,750)      $24,901,842
    Net income for the period   . .                                                1,290,398         1,290,398
                                    -----------   --------    --------------   --------------  --------------
  Balance, March 31, 1996   . . . .   8,067,985    $80,680       $31,456,912     ($5,345,352)      $26,192,240
                                    ===========   ========    ==============   ==============  ==============


For the three months ended March 31, 1997:
  Balance, January 1, 1997  . . . .   8,067,985    $80,680       $31,456,912     ($3,792,574)      $27,745,018
    Net loss for the period   . . .                                                  (17,119)          (17,119)
                                    -----------   --------    --------------   --------------  --------------
  Balance, March 31, 1997   . . . .   8,067,985    $80,680       $31,456,912     ($3,809,693)      $27,727,899
                                    ===========   ========    ==============   ==============  ==============
</TABLE>

                           See notes to consolidated financial statements

                                       5

<PAGE>  6
                     RIDDELL SPORTS INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTIONS>
                                                                    Three Months Ended
                                                                         March 31,             
                                                             ---------------------------------
                                                                  1997                1996     
                                                              --------------     --------------
<S>                                                             <C>               <C>
Cash flows from operating activities:
    Net income (loss)   . . . . . . . . . . . . . . . . . .         ($17,119)       $ 1,290,398
    Adjustments to reconcile net income to net 
     cash used in operating activities:
       Depreciation and amortization  . . . . . . . . . . .          577,258            493,656
       Provision for losses on accounts receivable  . . . .           82,366            153,651
       Deferred taxes . . . . . . . . . . . . . . . . . . .               -              60,000
       Changes in assets and liabilities (net
       of effects from acquisitions):
         (Increase) decrease in:
           Accounts receivable, trade   . . . . . . . . . .       (6,079,588)        (6,470,098)
           Inventories  . . . . . . . . . . . . . . . . . .        1,785,752           (355,715)
           Prepaid expenses   . . . . . . . . . . . . . . .          604,854            924,919
           Other receivables  . . . . . . . . . . . . . . .          (86,231)            30,933
           Other assets   . . . . . . . . . . . . . . . . .                -                200
         Increase (decrease) in:
           Accounts payable   . . . . . . . . . . . . . . .         (818,002)          (128,787)
           Accrued liabilities  . . . . . . . . . . . . . .          103,685         (1,760,193)
           Other liabilities  . . . . . . . . . . . . . . .         (108,070)           (75,055)
                                                              --------------     --------------
               Net cash used in operating activities  . . .       (3,955,095)        (5,836,091) 
                                                              --------------     --------------
Cash flows from investing activities:
  Capital expenditures  . . . . . . . . . . . . . . . . . .          (69,935)          (428,855)
                                                              --------------     --------------
               Net cash used in investing activities  . . .          (69,935)          (428,855)
                                                              --------------     --------------
Cash flows from financing activities:
  Net borrowings under line-of-credit agreement   . . . . .        4,131,000          6,034,693
  Principal payments on long-term debt, banks and other   .         (158,197)          (141,571)
                                                              --------------     --------------
               Net cash provided by financing activities  .        3,972,803          5,893,122
                                                              --------------     --------------
Net increase in cash  . . . . . . . . . . . . . . . . . . .          (52,227)          (371,824)
Cash, beginning . . . . . . . . . . . . . . . . . . . . . .          356,670            615,081
                                                              --------------     --------------
Cash, ending    . . . . . . . . . . . . . . . . . . . . . .       $  304,443        $   243,257
                                                              ==============     ==============
</TABLE>

Supplemental cash flow information:

     Cash paid for interest was $585,268 and $618,211 for the three month
periods ended March 31, 1997 and 1996, respectively.  Income tax payments, or
refunds, were not significant for the periods ended March 31, 1997 and 1996.


                See notes to consolidated financial statements.

                                       6

<PAGE>  7
                     RIDDELL SPORTS INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   Basis of presentation

     The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries.  All significant intercompany accounts and
transactions have been eliminated.  These statements are unaudited, and in the
opinion of management include all adjustments (consisting only of normal
recurring adjustments) necessary for fair presentation of the Company's
consolidated financial position and the consolidated results of its operations
and cash flows at March 31, 1997 and 1996 and for the periods then ended. 
Certain information and footnote disclosures made in the last Annual Report on
Form 10-K have been condensed or omitted for these interim statements. 
Accordingly, these consolidated financial statements should be read in
conjunction with the December 31, 1996 Annual Report on Form 10-K.  Operating
results for the three months ended March 31, 1997 are not necessarily
indicative of the results to be expected during the remainder of 1997.

     Tax expense for the period ended March 31, 1996 was reduced by the
benefit of net operating loss carryforwards recognized during the period.  The
recognition of this tax benefit had the effect of decreasing tax expense, and
increasing net income, by approximately $460,000, or $0.05 per share,  for the
three month period ended March 31, 1996.

2.   Earnings per share

     For the period ended March 31, 1996, earnings per share were based on the
weighted average number of outstanding common shares and the assumed exercise
of dilutive common stock options and warrants less the number of treasury
shares assumed to be purchased from the proceeds of the assumed exercise. The
number of treasury shares assumed to be purchased from the proceeds is based
on the average market price of the Company's common stock for the period in
computing primary earnings per share, and is based on the end of period market
price of the Company's common stock, if higher than the average market price,
in computing fully diluted earnings per share. For the three month period
ended March 31, 1996, fully diluted earnings per share have not been presented
as the results are approximately the same as primary earnings per share after
rounding to the nearest cent.

    For the period ended March 31, 1997, earnings per share were based on the
weighted average number of shares outstanding. Earnings per share were not
adjusted for the assumed exercise of common stock options and warrants or the
assumed conversion of the Convertible Subordinated Notes issued in November
1996, as the effect of these items would not have been dilutive for the
period.

    The Financial Accounting Standards Board has recently issued Statement of
Financial Accounting Standards No. 128 "Earnings Per Share" ("SFAS 128"). This
statement simplifies the standards for computing earnings per share, replacing
current presentations with a dual presentation of basic and diluted earnings
per share. Basic earnings per share excludes dilution while diluted earnings
per share is computed similarly to fully diluted earnings per share. SFAS 128
is effective for financial statements issued for periods ending after December
15, 1997. If the provisions of SFAS 128 had been applied to the periods
presented in this report, basic earnings per share for the three month periods
ended March 31, 1997 and 1996 would have been $0.00 and $0.16, respectively,
and diluted earnings per share would have been $0.00 and $0.15, respectively.

                                       7

<PAGE>  8
                         RIDDELL SPORTS INC. AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)


3.   Inventories

     Inventories consist of the following:

                                  March 31,       December 31,
                                    1997              1996     
                                -------------     -------------
         Finished goods            $5,284,318        $6,712,249
         Work-in-process            3,664,052         4,345,056
         Raw materials              5,672,046         5,348,863
                                -------------     -------------
                                  $14,620,416       $16,406,168
                                =============     ============= 

4.   Litigation matters and contingencies

     Recorded assets and liabilities 

     In regards to the product liability and other litigation matters and
contingencies discussed below, the Company has recorded certain liabilities. 
While these amounts are discussed in the remaining sections of this note, a

summary of these amounts together with other items comprising the applicable
balance sheet line items is as follows:

<TABLE>
<CAPTIONS>
                                                            Accrued
                                                           liabilities    Other liabilities
                                                            (Current)       (Non-Current)
                                                          -------------    ---------------
  <S>                                                     <C>              <C>
   March 31, 1997:
     Product liability matters:
       Future payments on settled cases                     $ 1,750,000        $         -
       Reserves for pending and other contingencies             600,000          3,500,000
                                                          -------------    ---------------
            Totals for product liability matters              2,350,000          3,500,000
     Provision for proposed settlement and other costs
       relating to fraudulent transfer litigation             1,400,000
     Other litigation contingency reserves                      700,000                 - 
     Other (not related to litigation or contingencies)       2,393,665            438,909
                                                          -------------    ---------------
                                                            $ 6,843,665       $  3,938,909
                                                          =============    =============== 
   December 31, 1996:
     Product liability matters:
       Future payments on settled cases                     $ 1,750,000          $       -
       Reserves for pending and other contingencies             500,000          3,500,000
                                                          -------------    --------------- 
            Totals for product liability matters              2,250,000          3,500,000
     Provision for proposed settlement and other costs
       relating to fraudulent transfer litigation             1,400,000
     Other litigation contingency reserves                      400,000                 - 
     Other (not related to litigation or contingencies)       2,689,980            546,979
                                                          -------------    --------------- 
                                                           $  6,739,980       $  4,046,979
                                                          =============    =============== 
</TABLE>

                                       8


<PAGE>  9
                         RIDDELL SPORTS INC. AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

Product liability:

     At March 31, 1997, a subsidiary of the Company was a defendant in 9
product liability suits relating to personal injuries allegedly related to the
use of Riddell helmets.  The ultimate outcome of these claims, or potential
future claims, cannot presently be determined.  The Company estimates that the
uninsured portion of future costs and expenses related to these claims, and
incurred but not reported claims, will amount to at least $4,100,000 and,
accordingly, a reserve in this amount is included in the Consolidated Balance
Sheet at March 31, 1997 as part of accrued liabilities and other liabilities. 
These reserves are based on estimates of losses and defense costs anticipated
to result from such claims based on available information, including an
analysis of historical data such as the rate of occurrence and the settlement
amounts of past cases.  However, due to the uncertainty involved with
estimates actual results have at times varied substantially from earlier
estimates and could do so in the future.  Accordingly there can be no
assurance that the ultimate costs of such claims will fall within the
established reserves.

     The Consolidated Balance Sheets also include liabilities related to
unpaid portions of cases settled in prior periods at March 31, 1997 and
December 31, 1996.


     MacGregor fraudulent transfer litigation:

     MacGregor Sporting Goods, Inc. (now known as M. Holdings, Inc.) ("Mac I")

filed for bankruptcy in March 1989.  In 1993, Mac I's Creditors' Committee and
the bankruptcy trustee of MGS Acquisition Inc. ("MGS") filed a complaint
against the Company seeking rescission of, and/or monetary damages in excess
of $28.5 million plus interest relating to, the Company's acquisitions in 1988
and 1989 of substantially all the assets of two of Mac I's former second-tier
subsidiaries (including the football helmet division, MacGregor trademark
licensing business, and the non-football uses of the Riddell trademark) (the
"Acquisition") for alleged failure to pay fair consideration at a time when
Mac I was insolvent or as a result of which Mac I became insolvent or
undercapitalized.

     By order in November, 1994, the complaint was dismissed as time-barred. 
The court ordered the appointment of a trustee in Mac I's bankruptcy, but did
not decide whether the trustee would be time-barred if it decided to take a
similar complaint against the Company.  In March 1995, the newly appointed
trustee in Mac I's bankruptcy, together with the bankruptcy trustee of MGS
(collectively the "Trustees") filed a similar complaint against the Company. 
Additionally, Innovative Promotions, Inc. and certain other purported
unsecured creditors of Mac I filed a complaint under state debtor and creditor
law against the Company making similar allegations and claims as the actions
described above, seeking rescission and/or damages in excess of $22 million. 
The Trustees intervened in the Innovative action as plaintiffs, purportedly to
preserve their rights in the event they lost their separate action.

     In April, 1996 the Company signed an agreement with the Trustees to
settle the "fraudulent transfer" litigations described above.  The proposed
settlement was subject to, among other things, approval by two bankruptcy
courts.  The proposed settlement had provided for a payment of approximately
$1.4 million by 

                                       9

<PAGE>  10
                         RIDDELL SPORTS INC. AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

the Company.  However, in June 1996, in view of opposition from the Creditors'
Committee of Mac I, the Trustees withdrew a motion they had filed to approve
the proposed settlement of the actions against the Company, and the proposed
settlement agreement terminated.  In October 1996 a former employee of the
Company filed a counterclaim against the Company and several subsidiaries in
the Mac I bankruptcy, seeking indemnity and contribution in an indeterminate
amount from the Company in connection with a suit by the Mac I trustee against
such former employee.

     The Company had previously recorded a  provision for the proposed
settlement as well as anticipated costs relating to the litigation.  The
Company has charged certain litigation costs against the liability reserve
reducing the balance to $1,400,000 at December 31, 1996.  The Company has not
otherwise adjusted the liability reserve for these actions as a result of the
termination of the settlement agreement, as the balance remains within the
potential range of costs of resolving the litigation.  However, as discussed
above, the plaintiffs in the actions are seeking damages far in excess of this
amount and, accordingly, there can be no assurances that the matter will
ultimately be resolved at an amount within the reserve.  The reserve is
reflected in the Consolidated Balance Sheets as part of accrued liabilities at
March 31, 1997 and December 31, 1996.  The Company remains confident that the
fraudulent transfer cases are without merit, and intends to vigorously defend
against them.  


     Other contingencies and litigation matters:

     In connection with the Company's suit against its former President,
Frederic Brooks, for alleged breaches of his consulting agreement and certain
other matters, Mr. Brooks filed counterclaims against the Company.  Mr. Brooks
alleges the Company breached its indemnification obligations to him as a
former officer and director of the Company in connection with the Company's
action against Mr. Brooks, a purported class action (now settled), an action
(now settled) against Mr. Brooks brought by certain stockholders of the
Company, and the action brought by the Mac I trustee, and seeks damages in
excess of $3.3 million plus future attorneys' fees and interest.  Mr. Brooks
also seeks compensatory and punitive damages combined of at least $15 million
against the Company, two of its officers and directors and an entity
controlled by them for tortious interference with contract and prospective
advantage and prima facie tort.  Mr. Brooks has impleaded the Company's
"Riddell" footwear licensee for contribution for all damages that may be
assessed against him in the Company's suit against Mr. Brooks for certain
alleged breaches of his consulting agreement relating to, among other things,
alleged attempts to disparage and take control of the Company.  In connection
with a settlement of certain actions between the Company and its "Riddell"
footwear licensee in early 1994, the Company agreed to indemnify the licensee
and certain of its affiliates in the event they were so impleaded by Mr.
Brooks into the Company's suit against Mr. Brooks for breach of his consulting
agreement.  Mr. Brooks' claims against the Company also seek consulting fees
of $580,000 plus interest under his consulting agreement (which the Company
has previously deposited in an escrow type account), consulting fees with the
Company's "Riddell" footwear licensee exceeding $850,000 and attorney's fees
exceeding $1.5 million through April 1996, plus interest.  The Company
believes Mr. Brooks' claims against the Company are without merit and intends
to vigorously defend against them.

                                      10

<PAGE>  11
                         RIDDELL SPORTS INC. AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

     Additionally, the Company has certain other claims or potential claims
against it that may arise in the normal course of business, including claims
relating to employee terminations.  The Company has recorded provisions for
certain of these claims and certain of the "other" litigation matters
discussed above.  Reserves for such claims amounted to $700,000 at March 31,
1997 and $400,000 at December 31, 1996.  While these amounts, together with
the remaining $1,400,000 provision relating to the MacGregor fraudulent
transfer litigation discussed above,  represents an estimate of certain
minimum costs likely to result from these litigation matters, other than
product liability claims, the Company cannot estimate the full extent of a
potential range of loss related to such litigation matters as their ultimate
outcome cannot be presently determined.  Accordingly, there can be no
assurance that such claims will be resolved within such reserves.


5.   Recent Developments

     On May 5, 1997 the Company and its newly formed merger subsidiary entered
into an Agreement and Plan of Merger with Varsity Spirit Corporation
("Varsity"), a supplier of cheerleader and dance team uniforms and  operator
of cheerleader camps, dance camps and travel tours  throughout the United
States. The Merger Agreement calls for purchase of all of Varsity's
outstanding shares at $18.90 per share or approximately $91 million plus other
related payments, costs and expenses.  (Total costs and expenses of the
acquisition and the related financing discussed below are anticipated to
approximate $13 million) of approximately $4 million.   The Company commenced
a tender offer on May 12, 1997 which expires in June 1997, unless extended.

     The Company intends to fund the acquisition and costs and working capital
needs by means of proceeds of borrowings under a $35 million revolving loan
facility to be provided by a bank group to be led by NationsBanc, N.A. and NBD
Bank and proceeds to be obtained from the issuance of $100 million of senior
notes of the Company to be placed through a private placement pursuant to Rule
144A of the Securities Act of 1933, as amended.  To the extent the senior
notes are not sold prior to the purchase of the Varsity shares as
contemplated, the transaction will be financed by a bridge loan among
NationsBridge L.L.C. and NBD.  The Company has entered into commitment letters
with the various prospective lenders with respect to the revolving loan
facility and bridge loan.

     Pursuant to related stock purchase agreements, certain executive officers
of Varsity who are also Varsity shareholders will purchase from the Company
shares of its Common Stock in an aggregate amount approximating $4.4 million.
The various agreements contemplate the grant of options to executive officers
and other employees of Varsity to acquire an aggregate of 950,000 shares of
common stock.
                                   11

<PAGE>  12

Item 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS:

The following table sets forth selected operating data as a percentage of net
revenues:
                                                  Three months ended
                                                      March 31, 
                                                 -------------------- 
                                                  1997        1996
                                                 --------    --------
Entire company:
   Net revenues:
     Net sales  . . . . . . . . . . . . . . . .     96.9%       95.9%
     Royalty income . . . . . . . . . . . . . .      3.1         4.1
                                                 --------    --------
     Total net revenues . . . . . . . . . . . .    100.0       100.0
   Gross profit . . . . . . . . . . . . . . . .     45.7        48.5
   Selling, general and administrative expenses     38.8        35.2
   Product liability expense  . . . . . . . . .      7.4         6.9
   Income from operations . . . . . . . . . . .      3.5        10.0
   Interest expense . . . . . . . . . . . . . .      3.6         3.2
   Income (loss) before taxes . . . . . . . . .     (0.1)        6.8
   Net income (loss)  . . . . . . . . . . . . .     (0.1)        6.5

Sports products and services segment:
   Net sales  . . . . . . . . . . . . . . . . .    100.0%      100.0%
   Gross profit . . . . . . . . . . . . . . . .     43.9        46.4


Overview:
     Operations for the first quarter of 1997 resulted in a net loss of
$17,119, or $0.00 per share, compared to first quarter 1996 net income of
$1,290,398, or $0.15 per share.  Total revenues for the three months ended
March 31, 1997 decreased by 6% to $18,574,903 from $19,843,686 for the three
months ended March 31, 1996.

     The Company realized gains in the sale of athletic products and services
sold directly to its institutional customers of  approximately 15% as further
discussed below.  However, these gains were offset primarily by a decline in
sales of sports collectible products sold to retailers.  In summary, the
overall decrease in profitability for the quarter was a result of the
quarter's decline in sales while related selling and marketing expenses
continued at comparatively fixed levels coupled with an increase in certain
other expenses.

     The effect of these factors are further described in the following
discussion of operating results by line item together with other matters
having a significant effect on the Company's results of operations.

                                      12

<PAGE>  13

     Revenues

     Net sales of the Company's sports products and services segment (which
comprises all revenues other than trademark licensing royalties) decreased by
5% to $18,000,706 for the three months ended March 31, 1997 from $19,036,101
during the comparable period of 1996.  Within this segment the Company
achieved gains in sales of competitive products and services sold directly to
schools and other institutional customers.  This gain was offset by a decline
in sales of sports collectible products sold to retailers. The Company also
experienced a decrease in sales of other product lines including competitive
youth football products sold through recreational dealers and products sold
internationally.


     Sales of competitive athletic products and services sold to schools and
other institutions increased approximately $1.9 million or 15% in comparison
to the first quarter of 1996.  Sales of reconditioning services, which
increased 7% over the first quarter of 1996,  accounted for approximately
$500,000 of this gain.  This improvement reflects increased unit volume as
well as moderate price increases.  The Company benefitted from a volume
increase in its core football helmet and shoulder pad products.  This has
occurred as the Company gains additional experience marketing these items
direct to institutional customers (a change adopted at the end of 1994 as
discussed in prior reports) and continues to place emphasis on expanding sales
of these products.  The Company benefitted from initial sales of its newly
introduced line of athletic practice clothing and experienced strong growth in
its line of baseball products introduced last year.  Sales of baseball
products to institutions have increased as the Company gains experience in
selling the products and the products themselves gain acceptance in the field.

     Sales of sports collectible products sold to retailers for the first
quarter of 1997 decreased by approximately 42% or $1.9 million, in comparison
to the first quarter of 1996. The Company believes that the decline is
principally due to the trade adjusting its inventory intake based on the
Company's improved order fulfillment record and to the timing of product
introductions.  In the year ago period, customers stockpiled inventory because
of product shortages in the preceding Christmas selling season. This led
retailers to take inventory early to ensure availability for later in the
year. During 1996 the Company demonstrated sufficient order fulfillment
capability which allows retailers to postpone orders and to match inventory
receipt more closely with consumer demand.

     In the first quarter of 1996 the Company also benefitted from sales of
sports collectible products which were in their introductory phase, such as
the Company's miniature hockey goalie mask.   In contrast, the Company had no
new products shipping in volume during the first quarter of 1997.  While the
Company has several new collectible products slated for 1997 introduction,
these will not be available for shipment in volume until the second and third
quarter of the year.  These new products include a line of miniature baseball
helmets bearing major league baseball logos, and a line of miniature
collectibles based on the Star Wars Trilogy(R) which is the first line of
retail collectible products sold by the Company that is not associated with
sports.

     Royalty income from trademark licensing decreased by $233,388, or 30%, 
to $574,197 for the three months ended March 31, 1997 from $807,585 
during the comparable period of 1996.  This decrease was primarily
attributable to a decline in royalties from the licensing of the 
MacGregor trademark which decreased by 26%, or approximately $190,000. 
MacGregor licensing income decreased principally due to a decline in 
royalties from Kmart.  Additionally, as discussed in prior reports, 
licenses which had accounted for approximately $80,000 of royalties in 
the first quarter of 1996 expired at the end of 1996.   Royalties 

                                      13

<PAGE>  14

from the licensing of the Riddell trademark decreased 53%, or approximately
$40,000.  The decrease results from a decline in royalties realized from the
Company's licensee for the Riddell trademark on athletic footwear.  The
Riddell footwear licensee remains in bankruptcy proceedings as discussed in
prior reports.  The licensee must continue to comply with the terms of the
license, including payment of royalties.  However, in view of the bankruptcy
proceedings, there can be no assurance that royalties will be received in the
long term from this licensee. 

     Gross Profit

     Gross profit for the quarter ended March 31, 1997 decreased $1,152,303,
or 12%, compared to the first quarter of 1996.  The decline includes a
decrease in gross profits from sports products and services as well as the
decline in royalty income from trademark licensing discussed above.  While
trademark licensing does have certain costs included in selling, general, and
administrative expenses, there are no related costs which are deducted in
arriving at gross profit.  Accordingly, each increase or decrease in royalty
income results in an equal change in gross profit.

     Gross profit attributable to the sports products and services segment
decreased $918,915, or 10%, to $7,906,694 for the first quarter of 1997 from
$8,825,609 for 1996's first quarter.  Gross profit margin rates for the
segment decreased to 43.9% of sales for the quarter ended March 31, 1997
compared to 46.4% of sales for the quarter ended March 31, 1996.  The decrease
in gross profits and gross margin rates is principally due to the overall
decline in sales discussed above, which impacted gross margin rates through
decreased efficiencies arising from lower utilization of fixed cost
operations.  Margins were also negatively impacted by increased reconditioning
costs.


     Selling, General and Administrative Expenses

     Selling, general and administrative expenses increased to $7,207,043 for
the quarter ended March 31, 1997 from $6,991,449 for the quarter ended March
31, 1996.  The increase is principally due to an increase in litigation
related legal expenses of approximately $400,000.  Additionally, overall
selling and marketing expenses remained relatively constant despite the
decrease in sales discussed above due to the fixed nature of a large portion
of these costs.   An increase in promotional and other variable selling
expenses incurred to generate the increase in sales of competitive athletic
products offset any reduction in variable expenses related to the decrease in
sales of sports collectible products. Legal expenses are anticipated to remain
at high levels through the remainder of the year.


     Interest Expense

     Interest expense increased 6%, or $38,753, to $665,967 for the first
quarter of 1997.  This increase reflects an increase in average debt levels
offset in part by a decline in average interest rates.  Debt increased due to
increases in working capital and overall decreases in non-interest bearing
liabilities.  Average interest rates declined principally due to the November
1996 sale of $7,500,000 of 4.10% Convertible Subordinated Notes, the proceeds
of which were used, in part, to repay indebtedness which carried a higher
interest rate.

                                      14

<PAGE>  15

CAPITAL RESOURCES AND CHANGES IN FINANCIAL CONDITION:


     The Company sells a portion of its competitive football products and
reconditioning services on dated payment terms with payments from customers
(primarily high schools and colleges in these cases) generally due the
following July to October period.  Accordingly, trade receivables increase
throughout the year as sales are made on these dated payment terms.  The
increase in trade receivables continues throughout an annual cycle until
reduced at the end of the cycle as the dated receivables become due.  In order
to finance the resulting large receivable levels, the Company maintains a
revolving line of credit.  The outstanding balance on the revolving line of
credit generally follows the seasonal receivable cycle described above,
increasing as the level of receivables increase until the fall of each year
when collections of the dated receivables are used to reduce the outstanding
balance on the line.  The Company's current borrowing limits under the line of
credit discussed above fluctuate throughout the year from a low of $20,000,000
to a high of $31,750,000 at predetermined points in time.  The liability under
the line is reflected on the Consolidated Balance Sheets as part of long-term
debt, with the balance in excess of the annual borrowing limit low of
$20,000,000 included in the current portion of long-term debt.

     Operations during recent years have resulted in periods of increased
working capital demands due to volume growth in certain product lines and
other changes in the Company's business.  As discussed in prior reports, the
Company completed certain financing matters in late 1996 which will provide
increased capital to finance the Company's normal working capital requirements
anticipated over the next year.  The Company remains in discussion with its
senior lender regarding additional changes to its loan agreement, including a
long term extension of its revolving line of credit which currently has a
maturity date in April 1998.

RECENT DEVELOPMENTS

     On May 5, 1997, the Company, Cheer Acquisition Corporation, a Tennessee
corporation and a newly formed, wholly owned subsidiary of the Company
("Merger Sub""), and Varsity Spirit Corporation, a Tennessee corporation
("Varsity Spirit") entered into an Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which Merger Sub has commenced a tender offer to
purchase all outstanding shares of common stock, par value $0.01 per share, of
Varsity Spirit (the "Varsity Shares") at $18.90 per Varsity Share, net to the
seller in cash (the "Offer Price"), upon the terms and subject to the
conditions set forth in the Offer to Purchase and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer") sent to Varsity Spirit shareholders on or
about May 12, 1997. The Offer will expire Monday June 9, unless extended at
the Company's option, subject to the terms and conditions of the Offer.

     Varsity Spirit is the leading supplier of cheerleader and dance team
uniforms and accessories to the youth, junior high, high school, and college
markets. Varsity Spirit is also the largest operator of cheerleading and dance
team camps in the U.S. and conducts nationally televised cheerleading and
dance team championships. Varsity Spirit also conducts domestic and
international travel tours and sponsors national and international special
events for school spirit groups. The Varsity Shares are quoted on the NASDAQ-
NMS under the symbol "VARS."

     The transaction (the "Merger"), which was approved by both companies'
boards of directors, is valued at approximately $91 million.  The Company
estimates that the total funds required to consummate 

                                      15

<PAGE>  16

the Merger, refinance the Company's and Varsity Spirit's indebtedness that is
required to be repaid in connection with the transaction, fund the working
capital needs after the Merger of the new surviving subsidiary and pay related
costs and expenses will be approximately $136.9 million.  The Company intends
to obtain such funds by means of proceeds of borrowings under a $35 million
revolving loan facility to be provided by a bank group to be led by
NationsBanc, N.A. and NBD Bank and proceeds to be obtained from the issuance
of $100 million of senior notes of the Company to be placed through a private
placement pursuant to Rule 144A of the Securities Act of 1933, as amended.  To
the extent the senior notes are not sold prior to the purchase of the Varsity
Shares as contemplated, the transaction will be financed by a bridge loan
among NationsBridge L.L.C. and NBD. The Company has entered into commitment
letters with the various prospective lenders with respect to the revolving
loan facility and bridge loan.

     The Merger Agreement provides that following satisfaction or waiver of
the conditions to the Offer, Merger Sub will purchase all Varsity Shares
validly tendered pursuant to the Offer and not otherwise withdrawn. The Offer
is conditioned upon, among other things, the receipt of tenders of at least a
majority of the outstanding Varsity Shares on a fully diluted basis. Pursuant
to the Merger Agreement, as soon as practicable after the completion of the
Offer and satisfaction or waiver of all conditions, Merger Sub will be merged
with and into Varsity Spirit with Varsity Spirit surviving the Merger as a
wholly owned subsidiary of the Company. At the time at which the Merger is
consummated, each Varsity Share then outstanding (other than Varsity Shares
held in the treasury of Varsity Spirit, Varsity Shares held by the Company,
Merger Sub or any other wholly owned subsidiary of the Company and Varsity
Shares held by stockholders of Varsity Spirit who exercise their dissenters'
rights, if any, under the Tennessee Business Corporation Act) will be
converted into the right to receive the Offer Price in cash.

     Pursuant to a shareholders agreement (the "Shareholders Agreement") dated
as of May 5, 1997, by and among the Company, Merger Sub and certain
shareholders of Varsity Spirit, including Jeff Webb, its Chairman, President
and Chief Executive Officer (the "Varsity Key Shareholders"), the Varsity Key
Shareholders have agreed to tender 1,738,530 Varsity Shares, representing
approximately 38% of the outstanding Varsity Shares, at the Offer Price and in
accordance with the terms and conditions of the Offer.


     The effect of the Varsity Key Shareholders agreeing to tender all of the
Varsity Shares beneficially owned by them pursuant to the Shareholders
Agreement is that the Company is assured of receiving the tender of
approximately 38% of the currently outstanding Varsity Shares.


     Furthermore, pursuant to the Shareholders Agreement the Varsity Key
Shareholders have agreed, for a period ending upon the earlier of the
consummation of the Merger and four months after the termination of the Merger
Agreement, to vote the Varsity Shares held by them in favor of the Merger and
against any proposal or offer to acquire all or a substantial part of the
capital stock or business of Varsity Spirit and not to tender their Varsity
Shares pursuant to any competing acquisition proposal that might be made by
another person. Nothing contained in the  Shareholders Agreement will be
construed as requiring any Varsity Key Shareholder who is also a director of
Varsity Spirit to propose, endorse or recommend the Merger Agreement in his or
her capacity as a director of Varsity Spirit.

     Pursuant to stock purchase agreements (the "Stock Purchase Agreements")
dated as of May 5, 1997 by and among certain key employees of Varsity,
including Mr. Jeffrey Webb (the "Varsity Key Employees"), the Company and
Merger Sub, the Varsity Key Employees have agreed on or before the fifth
business date after the consummation of the Offer to purchase from the Company
shares of its Common Stock with the net after-tax proceeds from the sale at
the Offer Price of 325,000 Varsity Shares owned by the Varsity Key 

                                      16

<PAGE>  17

Employees. The purchase price per share of Company Common Stock pursuant to
the Stock Purchase Agreement is the average closing price of the Company's
Common Stock for the twenty trading days ending on the day immediately
preceding the consummation of the Offer; provided that the purchase price per
share will not exceed $4.50 nor be less than $2.80. The Stock Purchase
Agreements also contain certain registration rights provisions pursuant to
which the Company has granted certain piggy back registration rights to
register the shares of the Company's Common Stock acquired by the Varsity Key
Shareholders under the Stock Purchase Agreements.

     In connection with the transaction, the Company has entered into
employment agreements (the "Employment Agreements") with the Varsity Key
Employees. Pursuant to his Employment Agreement with the Company, Mr. Jeffrey
Webb has agreed to become the President and Chief Operating Officer of Varsity
Spirit upon consummation of the Merger and to become a party to the
Stockholders Agreement dated as of August 14, 1995 by and among Mr. Robert
Nederlander, Leonard Toboroff, John McConnaughy, David Mauer and Dan Cougill,
directors and/or officers of the Company. Furthermore, pursuant to the Merger
Agreement, if the Merger is consummated, Mr. Jeffrey Webb will become Vice
Chairman and a member of the Board of Directors of the Company. In addition,
the Merger Agreement allows Mr. Webb to designate another individual
reasonably acceptable to the Company's Board to become a member of the Board;
consequently, upon consummation of the Merger, the Board shall be increased
from six to eight members.

     The Merger Agreement and the Employment Agreements contemplate the grant
of options to acquire an aggregate of 950,000 shares of the Company's Common
Stock to the Varsity Key Employees and other employees of Varsity upon
consummation of the Merger.

     In connection with obtaining necessary consents under the Merger
Agreement, the Company amended its 4.10% Convertible Subordinated Note due
2004 in favor of Silver Oak Capital L.L.P. (the "Silver Oak Note") to provide
in part that if the Merger is consummated the Conversion Price (as defined
therein) of the $7,500,000 aggregate principal amount of the Silver Oak Note
will be reduced from $6.00 to $5.3763 per share and the number of stock
options which can be granted to key employees in any year during the term of
the Silver Oak Note will be increased.

                                      17

<PAGE>  18

Part II. OTHER INFORMATION


Item 1.   Legal Proceedings

Mac I Fraudulent Transfer Action and State Law Debtor and Creditor Claim

     MacGregor Sporting Goods, Inc. ("Mac"I) filed for bankruptcy protection
in March 1989 in the United States Bankruptcy Court in New Jersey.  Mac I, its
Creditors' Committee and the bankruptcy trustee of MGS Acquisition, Inc.
("MGS") jointly brought an action against the Company, its principal lender,
NBD Bank and others in the New Jersey Bankruptcy Court (OFFICIAL UNSECURED
CREDITORS' COMMITTEE OF MACGREGOR SPORTING GOODS, INC. V. RIDDELL SPORTS INC.,
No. 93-2214 (RG) (Bankr. D.N.J.)).  By order dated November 3, 1994 the court
dismissed this complaint as time-barred.  The court also appointed a trustee
in the bankruptcy of Mac I, but did not decide whether the trustee would be
time-barred if he decided to bring a similar action against the Company and
its lender.  Plaintiffs in the action had sought monetary damages and/or the
rescission of the Company's acquisitions (the "Acquisitions") in 1988 and 1989
of substantially all the assets and businesses of two former, second-tier
subsidiaries of Mac I, including among other things the football protective
division, the MacGregor licensing business and the non-football uses of the
Riddell trademark for, among other things, alleged failure to pay fair
consideration at a time when Mac I was insolvent or as a result of which Mac I
became insolvent or undercapitalized.  The monetary damages alleged in
connection with the Acquisitions exceeded $28.5 million.  In addition to
seeking monetary damages and/or rescission from the Company, the complaint
sought to void the liens of NBD Bank in the property at issue.

     After the above action was dismissed, the trustees (the "Trustees") in
the Mac I and MGS bankruptcy proceedings commenced a substantially similar
action against the Company in March of 1995 entitled, BRUCE LEVITT, BANKRUPTCY
TRUSTEE FOR MACGREGOR SPORTING GOODS, INC., NOW KNOWN AS M. HOLDINGS, INC.,
PAUL SWANSON, BANKRUPTCY TRUSTEE FOR MGS ACQUISITION, INC. V. RIDDELL SPORTS
INC., et al, No. 95-2261 (RG) (Bankr. D.N.J.) in the Chapter 11 bankruptcy
case of Mac I (the "Levitt Action").  The complaint seeks monetary damages in
an unspecified amount plus interest and/or rescission in connection with the
Company's Acquisitions on the grounds, among others, that the Company
allegedly failed to pay fair consideration at a time when Mac I was insolvent
and/or undercapitalized.  In addition to seeking monetary damages and/or
rescission from the Company, the complaint seeks to void the liens of NBD Bank
in the property at issue.  The complaint also seeks damages against the Board
of Directors of Mac I including Frederic H. Brooks ("Brooks"), a former
President of the Company, for breaches of fiduciary duties to Mac I for
failing to obtain fair consideration in connection with these transactions. 
By order dated April 25, 1997, the New Jersey Bankruptcy Court approved a
settlement whereby the complaint will be dismissed against all of the members
of the board of directors of Mac I with the exception of Brooks.

     Additionally, Innovative Promotions, Inc. and certain other purported
unsecured creditors of Mac I initiated a state law debtor and creditor action
against the Company based on substantially the same claims as were made in the
Trustees' actions in the New Jersey Bankruptcy Court. The Innovative Action is
now pending in the New Jersey Bankruptcy Court (INNOVATIVE PROMOTIONS, INC. ET
AL. V. RIDDELL SPORTS INC. ET AL. (IN RE MACGREGOR SPORTING GOODS, INC.), Adv.
Proc. No. 94-2656(RG) (the "Innovative Action").  The plaintiffs in the
Innovative Action seek rescission of, and/or monetary damages in excess of $22
million exclusive of interest relating to the Company's Acquisitions for
alleged failure to pay fair consideration at a time when Mac I was insolvent,
or as a result of which Mac I became insolvent or undercapitalized. 
Plaintiffs also seek judgments voiding the liens of NBD Bank with respect to
the assets.  In June 1995, the 

                                      18

<PAGE>  19

Trustees in the Levitt Action (the "Trustees") intervened as plaintiffs in the
Innovative Action purportedly to preserve their rights in the event they lost
the Levitt Action.

     In April 1996 the Company entered into a settlement agreement with the
Trustees in which the Company agreed to pay an aggregate of $1.4 million and
releasing the Company and other defendants from all claims and liabilities in
the litigations.  The settlement was subject to, among other things, approval
of two bankruptcy courts.  On June 24, 1996 the Trustees withdrew their motion
to approve the settlement agreement in light of a Plan of Reorganization of
Mac I submitted by the Mac I Creditors' Committee in opposition to the
settlement agreement.  The Company notified the Trustees that their actions
breached, and caused termination of, the proposed settlement agreement.  The
Creditors' Committee's Plan of Reorganization is subject to acceptance by the
creditors and court approval.

     The Company has answered the complaints in both the Levitt Action and
the Innovative Action. The Company remains confident that the fraudulent
transfer cases are without merit and intends to vigorously defend against
them, including without limitation by asserting the cases are time- barred.
The Levitt Action is currently in the discovery phase, and is tentatively
scheduled for trial at the end of 1997.

     On October 31, 1996 in the Levitt Action, Frederic Brooks (the Company's
former President) filed an answer and counterclaim against the estate of Mac I
and a cross-claim against the other defendants in the Levitt Action, including
the Company and several of its subsidiaries.  The cross-claim against the
Company and such subsidiaries sought indemnification and contribution under
state law, the Company's Bylaws and Brooks' employment agreements with the
Company in an indeterminate amount.  In April, 1997, the bankruptcy Judge
dismissed Mr. Brooks' claims for contribution and stayed Mr. Brooks' claims
for indemnification against the Company pending determination of similar
claims against the Company in RIDDELL SPORTS INC. V. FREDERIC H. BROOKS,
described below.  The Company believes the remaining cross-claim is without
merit.


Employee Litigation

     From time to time the Company is party to employee litigation claims. In
June 1995, a subsidiary of the Company was served with a complaint entitled,
BEVERLY A. EICHLER V. RIDDELL, INC. (D. Ct, N.D. III., E. Div.), No. 95-C-
3782. The complaint, brought by a former employee of one of the Company's
subsidiaries who was terminated in December 1993, alleged sex and age
discrimination and sought past and future wages and punitive damages in an
undisclosed amount. In early 1997 a jury awarded Ms. Eichler damages in the
amount of $59,000 and the court assessed front-pay damages of $420,000.  In
April, 1997, the Judge denied a motion by the Company to order reinstatement
in lieu of front pay damages.  Plaintiff has filed a motion for her attorneys
fees which is still pending.  The Company has filed an appeal of the District
Court's decision.

     In connection with the Company's suit against its former President,
Brooks, for alleged breaches of his consulting agreement and certain other
matters, Brooks filed counterclaims against the Company and two of its
officers and directors.  The action is captioned, RIDDELL SPORTS INC. V.
FREDERIC H. BROOKS, (D.C., SDNY), 92 Civ. 7851 (JGK).  Brooks generally
alleges the Company breached its indemnification obligations to him as a
former officer and director of the Company and seeks damages in excess of $3.3
million, plus future attorneys fees and interest.  Brooks also seeks
compensatory and punitive damages 

                                      19

<PAGE>  20

combined of at least $15 million against the Company, two of its officers and
directors and an entity controlled by them. 


      Brooks' counterclaims originally alleged claims for breach of contract,
declaratory relief, tortious interference with contract and prospective
advantage (including in connection with the Company's "Riddell" footwear
licensee), injurious falsehood, prima facie tort and abuse of process.  On
January 5, 1995, the Court dismissed Brooks' claims for injurious falsehood
and abuse of process with prejudice and dismissed Brooks' tortious
interference with prospective advantage and prima facie tort claims without
prejudice.  On February 3, 1995, Brooks amended his counterclaims to reassert
claims for tortious interference with prospective advantage and prima facie
tort.  In connection with a settlement of certain actions between the Company
and its "Riddell" footwear licensee, the Company agreed to indemnify the
licensee and certain of its affiliates in the event they are impleaded by
Brooks into the Company's suit against Brooks for breach of his consulting
agreement;  Brooks has impleaded the Company's "Riddell" footwear licensee and
other affiliates of the footwear licensee for indemnification for all damages
that may be assessed against him in the Company's suit against Brooks for
certain alleged breaches of his consulting agreement relating to among other
things alleged attempts to disparage and take control of the Company and to
Brooks' alleged cooperation with the Unsecured Creditors' Committee of
MacGregor.  Until recently (as discussed below)   Mr. Brooks' claims against
the footwear licensee (but not its affiliates) was  stayed as a result of its
filing a  bankruptcy petition.

     In March 1996, Brooks filed a motion for summary judgment dismissing the
claims against him and requesting consulting fees of $587,000 under his
consulting agreement (which the Company has previously paid into an escrow
account), and the Company filed a motion for partial summary judgment
dismissing certain of Brooks' claims against it and its affiliates. Late in
1996 Brooks clarified that the relief he was seeking in his motion for summary
judgement included, among other things, consulting fees pursuant to Brooks'
consulting agreement with the Company's "Riddell" footwear licensee in an
amount exceeding $850,000, approximately $1,500,000 for the loss of
prospective opportunities,  attorney's fees and expenses of approximately
$1,500,000 incurred through April 30, 1996 in connection with Brooks'
counterclaims, plus interest on all such amounts.

     On March 22, 1996, all of the parties filed motions for summary judgment
in RIDDELL V. BROOKS.  On January 7, 1997 a United States Magistrate Judge
issued a Report and Recommendation, and on March 25, 1997, a United States
District Judge issued an Opinion and Order, regarding the summary judgment
motions. The District Court essentially denied Riddell's motion for summary
judgment dismissing Mr. Brooks' counterclaims, although it held that any
recovery by Mr. Brooks for legal fees must be offset by $324,000 which Mr.
Brooks received from Riddell's directors' and officers' insurance carrier. 
Riddell intends to argue at trial that any recovery by Mr. Brooks should be
offset by a greater amount.  The Court also denied Mr. Brooks' motion for
summary judgment seeking the dismissal of Riddell's claims against Mr. Brooks
for breach of a consulting agreement and for breach of fiduciary duty.  The
Court also dismissed Mr. Brooks' claims for contribution against certain
parties affiliated with the Company's "Riddell" footwear licensee.  However,
Mr. Brooks' claims against this licensee were not ruled upon because of the
automatic stay of litigation against this licensee resulting from the
licensee's filing of a bankruptcy petition.  In April 1997, the judge
presiding over the licensee's bankruptcy petition lifted the automatic stay,
and the licensee has filed a summary judgement motion seeking dismissal of Mr.
Brooks' claim against it; Mr. Brooks has opposed the motion.

                                      20

<PAGE>  21

     The Company believes Brooks' claims against the Company for breach of
contract, tortious interference with contract, tortious interference with
prospective advantage and prima facie tort  are without merit and intends to
vigorously defend against them.


Other

     On May 2, 1997, the Court in an action entitled KATHLEEN PREVOST.
ADMINISTRATRIX OF THE ESTATE OF KEVIN PREVOST. DECEASED. V. WEST PENN POWER
COMPANY ET AL. Court of Common Pleas, Washington County, Pennsylvania, Civil
Division No.94-4753, approved plaintiff's Petition for court approval to
settle and compromise wrongful death and survival actions as to individual
defendants All American Sports Corporation, Riddell, Inc. and Riddell Sports
Inc.. Accordingly, this matter has been settled and the plaintiff has signed a
Joint Tort-Feasor Release as to All American Sports Corporation, Riddell, Inc.
and Riddell Sports Inc.  The complaint had named the Company and its
subsidiary, All American Sports Corporation, and other defendants in
connection with the death by electrocution of a minor at a facility leased by
All American Sports Corporation in Burgettstown, Pennsylvania. The complaint
against the Company and its subsidiary alleged wrongful death, failure to
warn, negligence and other things. The settlement amount was paid in full by
the Company's insurance carrier.

     The Company is also a defendant in certain product liability
proceedings.  See Note 4 of "Notes to Consolidated Financial Statements".


     The Company is also a defendant in certain other litigation described in
Item 3 of its Form 10-K for the year ended December 31, 1996.


Item 2.   Changes in Securities

     None


Item 3.   Defaults upon Senior Securities
     None



Item 4.   Submission of Matters to a Vote of Security Holders
     None



Item 5.   Other Information
     None

                                      21

<PAGE>  22

Item 6.   Exhibits and Reports on Form 8-K

  (a)  Exhibit index:

     10   Amendment dated may 2, 1997 to Note Purchase Agreement dated October
          30, 1996 between Silver Oak Capital L.L.C. and Riddell Sports Inc.

     11   Computation of Earnings Per Share

     27   Financial Data Schedule (submitted in electronic form to
          SEC only)


 (b)   Reports on Form 8-K

          The Company filed a Form 8-K dated May 5, 1997 reporting that the
          Company entered into an agreement and plan of merger to acquire the
          outstanding shares of common stock of Varsity Spirit Corporation for
          $18.90 per share.




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                        RIDDELL SPORTS INC.

     Date:     May 14, 1997             By   /s/ DAVID MAUER
                                            --------------------
                                             David Mauer
                                             President and 
                                             Chief Executive Officer


     Date:     May 14, 1997             By   /s/ LAWRENCE F. SIMON
                                            -----------------------
                                             Lawrence F. Simon
                                             Senior Vice President 
                                             (Principal Accounting Officer)

                                      22