Dan Arment's customer base is dwindling. The president of football helmet manufacturer Riddell Inc. sees fewer kids playing tackle football — many scared off by concussions, others unable to afford league fees and some who simply want to specialize in a different sport.

The number of players ages 6 to 17 dropped almost 16% year over year in 2013, according to the Sports and Fitness Industry Association.

But despite that, revenue at Rosemont, Ill.-based Riddell has grown by more than 40% since 2009, to more than $200 million, due to high-tech helmets, demand for more protective gear and higher price points for some products. While costs from concussion-related litigation and the resulting increased insurance premiums are hurting, parents' willingness to pay for top-of-the-line equipment is preserving the company's profits.

“As awareness around the importance of protection has grown, parents are looking for choices,” Mr. Arment says.

New sales and reconditioning of used football helmets make up more than 50% of revenue at Riddell, a subsidiary of Van Nuys, Calif.-based sporting goods conglomerate Easton-Bell Sports Inc. Riddell, whose 25-year sponsorship deal with the NFL expires at the end of this season, is the largest player in a space with only a handful of major competitors in Schutt Sports Inc., Rawlings Sporting Goods Co. and Xenith L.L.C. The rest of its business comes from other football equipment such as shoulder pads, collectibles and sports apparel.

Riddell has released three helmet designs in the past 11 years, starting with its $199 Revolution model, its first designed to reduce the incidence of concussions. The next-generation, $275 Revolution Speed came out in 2008 with improved face-guard protection. The Riddell 360 made its debut last year; it claims to be a better fit and to redirect energy from frontal impacts away from the head. The 360's catalog price: $390. Its sales are up 20% year over year.

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“People are spending more on (football protection)—more product and better product,” says Tom Cove, CEO of the Sports and Fitness Industry Association, based in Silver Spring, Md.

The Chicagoland Youth Football League, which includes about 380 teams in 37 suburbs, experienced a 7.5% drop in participation to about 7,600 players just in the past year. League fees, which average $325 per player, cover Riddell Revolution helmets or similarly priced brands. But more parents are fundraising to spring for other top-of-the-line helmets, says TCYFL President Geoff Meyer, who founded the program in 1998 and says 75% of the helmets used in the league come from Riddell.

“We'll say, 'This is what your fee covers, but if you feel you'd like something better for your son, you can get a more expensive helmet,' and that's what a lot of them have been doing,” Mr. Meyer says. “They want the best of the best, and they're paying retail for it.”

As a result, Riddell is seeing stronger sales from stores such as Sports Authority and Dick's Sporting Goods. Still, most of its sales come from 250 reps nationwide who work with teams and leagues.

Riddell was named in some of the lawsuits that were part of a recent $765 million settlement between the National Football League and more than 4,000 ex-players over concussion-related claims filed against the league since early 2011. It still faces claims from hundreds of those plaintiffs.

Other cases are popping up, including a $5 million suit filed this month in the U.S. District Court of Southern Indiana by two former University of Washington football players against both the company and the NCAA. In April, a Colorado state jury found Riddell liable for $3.1 million in compensatory damages in the case of a high school football player whose left side was paralyzed after he suffered a head injury during a practice drill in 2008, claiming the company failed to properly warn about the dangers of concussions.

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The company says it plans to appeal that judgment, which found no flaw in the helmet itself. Still, it “could be a significant (precedent) for future plaintiffs, which is not good for Riddell,” says Kathryn Thomas, a partner at Chicago-based law firm Freeborn & Peters L.L.P. who specializes in insurance coverage and co-edits a blog about concussion-related litigation.

Riddell helmets have specific language in their warning labels to address concussions, and the company provides resources on its website to educate players about concussion signs and treatment.

“We have to vigorously defend our product,” Mr. Arment says. “But we spend an enormous amount of resources on (legal costs), even when it's frivolous litigation. And there's a significant amount of that.”

The company's legal costs also are leading to higher liability insurance premiums.

Riddell also has a lawsuit against 29 of its previous insurers to get a court order requiring them to defend and indemnify the company in lawsuits from NFL players over head injuries suffered decades ago. “There was a multitude of companies that used to offer insurance to us. That number has been reduced significantly, and it's supply and demand — so the costs are going up significantly,” Mr. Arment says. “And there's no indication that we can see that the foot's coming off the gas.”

Danny Ecker writes for Crain's Chicago Business, a sister publication of Business Insurance.