12 Part Blog Description
Are you looking to learn as much as you can about the business of sports licensing? Then please read the 12 Part "An Insider's Guide to the World of Licensed Sports Products in 12 Parts: Practical Lessons from the Trenches" - all 12 parts of the blog can be found within this site. Click here to start with the Introduction.
Thursday, March 1, 2012
Part 4 - An Insider’s Guide to the World of Licensed Sports Products: Quality Control – Where The Real Power in Licensed Sports Lies
This is Part 4 of a 12 Part Series of blogs Scott Sillcox is writing called “An Insider’s Guide to the World of Licensed Sports Products in 12 Parts: Practical Lessons from the Trenches”. For a backgrounder on Scott Sillcox and his company, Maple Leaf Productions, please see the introductory blog and/or watch his 11 minute introductory video. Scott is available to consult with anyone interested in pursuing a sports license.
The 12 Parts of this Licensed Sports Products blog are:
Part 1: How Licensing Works - Follow The Money or How $5,000,000,000 can be less than you think
Part 2: What’s Involved in Getting a License – You need them far more than they need you
Part 3: The Landscape and some of the players
Part 4: Quality Control – Where The Real Power in Licensed Sports Lies
Part 5: Royalty Reporting and Audits
Part 6: Selling Licensed Goods - Why it’s not as easy as it looks
Part 7: Players Associations and Current vs. Retired Players
Part 8: Royalty Rates – Is 12% the norm and when 12% isn’t enough
Part 9: Local Licenses – myth or reality?
Part 10: Packaging
Part 11: Ten Things (Actually 12 Things) I Learned Along The Way
Part 12: Ten More Things (Actually 14 Things) I Learned Along The Way
In this blog I’d like to explain about the “Quality Control” (QC) process that each of the leagues uses. There may be modest differences between leagues, but the principle is very much the same – before a product can be made and sold, both it and the packaging that will accompany the product need to be approved by the league’s Quality Control Department. Think of the QC process as a giant funnel (some would call it a bottleneck but that is not a fair assessment) through which all products must pass before they come to market. As a new licensee, it is vital for you to understand the importance of the QC process, and to understand the time frames involved.
Ultimately it is by use of the QC process that the league can best control their image, their product quality, etc. For the leagues the QC process is a measure of how well they are promoting their brand and demanding excellence for their brand.
Sometimes in the rush to get a product to market, a licensee “forgets” the QC approval process and rushes a product to market because they are certain the product would have been approved, or they simultaneously submit a product through the QC process while going ahead and producing the product en masse. Simply put - this is a dangerous game and an excellent way to lose your license. Don’t do it.
In the title of this Blog Part 4 I say “Quality Control – Where the real power in licensed sports lies”. Do I really mean this – are they that important? Yes, I really do believe that the QC department is vital to getting licensed products to market, and the takeaway lesson from this Blog for new licensees is that the Quality Control (QC) process is serious business and demands your full attention and respect at all times – you cannot drop your QC guard.
Like so many things in business, in the last 5-10 years the Quality Control Approval process has become an automated, online process (NFL QC submissions went online in 2002, MLB and NHL after 2006). Automated or not, and regardless of league, it works roughly as follows:
1. Step 1 - Submit a design: Proceed – Make changes and re-submit - Rejected
2. Step 2 - Submit a prototype: Proceed – Make changes and re-submit - Rejected
3. Step 3 - Submit a final product: Approved – Make changes and re-submit - Rejected
Below please find two samples of Quality Control “Submission Forms” from the time when these were done manually, not online. I am including these in this Blog because even though they are from the bygone manual-submission era, they give you a direct insight into what QC departments require from licensees.
1A. You submit design artwork online showing what the proposed product is going to look like in great detail. Why are you asked to show the design artwork before a prototype has been made? Because it’s a lot less expensive for you, the licensee, to change the design at the computer stage than it is to change an actual physical prototype. Once you reach the prototype stage, it becomes much harder and more expensive to change the product. So the league is doing its licensees a favor by having them submit the initial design artwork for QC approval. You also answer a series of questions about the product including what market is it intended for, expected launch date, etc.
1B. Depending on the league – each league has its own standards - the QC Department will get back to you with an online decision within approximately 10 days. In some cases the turnaround will be quicker, but if you consider the NFL where a staff of TWO QC managers conduct 80,000 product reviews in a year (80,000!!!), it’s remarkable that they can achieve a 10 day turnaround! The initial decision will be: Proceed / Make Changes / Rejected
1C. If the initial QC decision is to “Make Changes”, the QC staffer gives you detail on what needs to be done/fixed, and you start the Step 1 process over again until you get a “Proceed” decision. If the product is “Rejected”, you may want to lick your wounds and get on to another product because there really is no higher authority to whom you can appeal the QC decision.
Oh certainly you can complain to your licensing rep, but think of this in real, practical terms. If you try to go over someone’s head to change a “Rejected” into a “Proceed”, how do you think you will fare at the subsequent stages of the QC approval process? How do you think your other products will fare when they are submitted for approval? How fast do you think your future QC turnaround times will be?
I don’t say this to be mean and I don’t mean to imply that QC departments are vindictive – I never saw anything but professionalism in my 12+ years of QC experience – but the reality is the QC department can shut down a product line or delay it significantly so you absolutely need to work with them, not against them. The lesson? Ultimately you have to work within the system.
2. Step 2 is “Submit a Prototype” and it works much the same as Step 1 with the same possible outcomes - Proceed / Make Changes / Rejected - except that you are submitting an actual physical prototype. For some products, such as posters, you go from the Step 1 submission stage direct to the Step 3 submission stage because there is no prototype stage. For apparel and many other hard line goods, you go through all three stages.
3. Step 3 is “Submit a Product” and it works much the same as Step 2 with the same possible outcomes - Proceed / Make Changes / Rejected - except that you are submitting an actual physical product including packaging. It can be very frustrating to reach this 3rd stage only to be told to make changes because the reality is that to submit an actual product you have gone ahead and created a quantity of product, so to be told to make changes effectively means that the rest of “that batch” of products should be scrapped and never make it to market. In reality at least some of those products are not scrapped but instead become giveaways, salesman samples or perhaps sold into gray markets.
With respect to timing, this entire Step 1 – Step 3 process could take as little as 20 days or it could take 6 months or more. I would advise you to “budget” 30-40 days to have a product run through the QC approval process from beginning to successful conclusion (final approval).
What are the QC people looking for when I submit my product?
The NHL offers these guidelines as to what their QC department is looking for as it looks at products that have been submitted for approval:
A. Accuracy of logo representation
B. Proper use of Pantone colors
C. Proper use of trademark designations
D. Proper use of logo "holding lines"
E. Proper logo placement
F. General appearance and quality of product
G. Meeting NHL policies and standards
The NFL, MLB, NBA and other licensors have much the same set of criteria as the NHL, but allow me to use the NHL list to explain a bit about these guidelines and explain what the QC departments are looking for.
A. Accuracy of Logo Representation
- Each team has extensive guidelines for each team’s complete set of logos including primary logo, secondary logo, script logo, historic logo(s), etc. – all of this information is available online to licensees and is generally called a “Style Guide”. Think of a “Style Guide” as being a big thick manual showing team and league logos and how they should be used.
- The QC department spends a lot of time in the approval process making sure the use of any team/league logos on licensed products and licensed product packaging is correct.
- For the longest time licensees weren’t allowed to adjust or tinker with team/league logos in any way, but I have noticed that with the upswing in licensed women’s apparel/fashion in the last 5 years, things that previously never would have been approved (pink team logos immediately come to mind) are now being approved. That being said, I am 100% certain there are still Style Guide guidelines for such logo use, and the overriding rule of thumb should always be that you cannot tinker with a team/league logo in any way.
B. Colors / Proper use of Pantone Colors
- The QC team spends a great deal of time on color, and making sure that the colors of the proposed/actual product and packaging are correct. Each league has extensive guidelines for each team’s colors – the exact color to be used in print and even the exact color to be used in fabrics – once again detailed in the Style Guide. So when a prototype or actual product is submitted, the QC department spends a lot of time analyzing the color.
C. Proper use of trademark designations, or “Trademark designations for each logo and mark”
- If you look at almost any logo used in/on an MLB or NHL licensed product, you will almost always see an accompanying “trademark designation:
® Circle R (Registered trademark)
© Circle C (Copyright)
™ TM (Trademark)
100% proper use of these is critical to the MLB and NHL QC department teams, and try as you might to understand the logic of which symbol is used for which logo on which type of product, this is incredibly complicated. So in the real world licensees give it their best guess at the prototype stage and they expect the QC department to advice re corrections.
- Interestingly, with the NFL you will see very few
® Circle R (Registered trademark)
© Circle C (Copyright)
™ TM (Trademark)
I asked why this was the case several times, and in laymen’s terms the answer was always that the NFL has registered all of the team/league logos with the appropriate copyright and trademark bodies and the NFL considers use of the ®, © and ™ superfluous. I personally think the MLB and NHL are way over the top in their use of the symbols to the detriment of their products (the NHL requires use of © almost any time the word or image of the Stanley Cup is used on a product, and ™ after “The Original Six”, while MLB uses such things as the John Hancock® All-Star FanFest™) and that MLB and the NHL could take a lesson from the NFL on this, but they persist in demanding the use of these symbols and thus their QC departments become the symbol police.
Here is what MLB has to say about Trademark Designation:
- I’m not overly familiar with where the NBA, NASCAR and various NCAA schools stand on the use of trademark designations on licensed products, but their Style Guide will explain and their QC department will let you know upon your first submission.
D. Proper use of logo "holding lines"
- This relates to the proper use of logos exactly as they are meant to be used.
E. Proper logo placement
- This relates to the location and size of team and league logos used in the product/packaging, as well as to the logo size relative to other logos.
F. General appearance and quality of product
- This is self explanatory.
G. Meeting NHL policies and standards
- This is certainly a catch-all.
Here are a couple more that the NHL doesn’t have on their list:
H. Legal Lines / Legal Notices, aka Legal lingo, Legalese
- Once again the leagues differ, but various leagues require a legal statement on various types of products. For hardlines products like posters and clocks, some leagues require a legal statement right on the product, while for other hardlines products and almost all soft goods the legalese is confined to the packaging or hang tag.
- MLB likes to use:
Major League Baseball trademarks and copyrights are used with permission of Major League Baseball Properties, Inc. Visit MLB.com
- NHL likes to use:
All NHL© logos and marks and team logos and marks depicted herein are the property of the NHL© and the respective teams and may not be reproduced without the written consent of NHL© Enterprises ©NHL. All rights reserved.
NHL and the NHL Shield are registered trademarks of the National Hockey League. All NHL logos and marks and NHL team logos and marks depicted herein are the property of the NHL and the respective teams and may not be reproduced without the prior written consent of NHL Enterprises, L.P., © NHL 20XX. All Rights Reserved.
As was the case with the ®, © and ™, the NFL does not generally require the legalese, again their thinking being that their logos and trademarks etc. are properly registered and thus the NFL does not need the legalese.
- I’m not overly familiar with where the NBA, NASCAR and various NCAA schools stand on the use of “legalese” on licensed products, but their respective QC departments will let you know upon your first submission.
I. Hologram placement
- Virtually every hardlines product made for virtually every licensing league requires the use of an official hologram either on the product itself or on the packaging. For soft goods, the hologram is generally on a hang tag but in some cases, ball caps, we see the hologram “stuck” to the brim of the cap. Each league’s QC department has guidelines as to where the hologram can/cannot be placed.
- Almost every league has strict packaging guidelines for hardlines products and soft goods products. When you are submitting your product to the QC department for “Final Stage” QC approval (if not before), it will need to be submitted with the proposed packaging. It is common for the product itself to be approved but the packaging is rejected or sent back for changes.
- Please see Part 10 of this blog for much more on packaging. For now the point is simply that packaging is very much a part of the QC approval process.
One final aside about the QC process for many NCAA schools.
In Part 12 of this Blog, I will be explaining much more about the process of obtaining “NCAA” licenses. It can be confusing because NCAA licensing is done by:
1. A company called Collegiate Licensing Company (CLC) which represents 200-ish US colleges and universities
2. A company called Licensing Resource Group (LRG ) which represents another 200-ish other US colleges and universities
3. A company called Strategic Marketing Affiliates (SMA) which represents another 200-ish other US colleges and universities
4. For another 1000-ish schools that have chosen not be part of CLC or LRG or SMA, the licensing is done directly by the school.
In the world of collegiate licensed sports products, if you are working with CLC or LRG or SMA, there is a double QC approval process – first the product is reviewed by CLC’s (or LRG’s or SMA's) QC staff, and then it is passed on to the school for their approval. The point that I want to make is simply that for 600-ish NCAA schools, the QC approval process is a double approval process.
That’s all for Part #4 of “An Insider’s Guide to the World of Licensed Sports Products: Quality Control – Where The Real Power in Licensed Sports Lies”.
Thanks for reading and all comments are welcome!
PS In March 2012 I launched a new, searchable Online Directory of 1500+ North American Licensed Sports Products Companies – it can be found at www.LicensedSports.net and only costs $59 to use for three months. This is a highly searchable directory of licensed sports products companies in North America, companies that have been licensed by various sports leagues (NFL, MLB, NBA, NHL, NCAA, Nascar, MLS, etc.) as well as the various players’ associations (NFLPA, MLBPA, NBAP, NHLPA) and there is nothing like it anywhere on the internet. If you're not sure if this database would be worth the investment, check out this 3 minute video that gives you a sense of what to expect.
So if you’re looking for all the licensed sports products companies based in Connecticut, or all of the NFL licensees which sell housewares, or all companies licensed by the NBA and the NHL and MLB, check out this terrific and highly searchable resource at www. LicensedSports.net .
You might be asking yourself why did Scott Sillcox spend so much time and effort to create this Online Directory?
The answer is simple. I have a fair amount of knowledge about the licensed sports products business, knowledge that seems to be in scarce supply, especially on the internet. After spending 15+ years in the licensed sports products business, I accumulated a wealth of knowledge that I am happy to share. This blog and modestly-priced Online Directory are designed to share that information - information that is simply not available anywhere else on the internet. This blog and Online Directory are my way of giving back and helping people interested in the world of licensed sports products. I am also available as a consultant to people wanting to enter the licensed sports business (either by obtaining their own license or working with an existing licensee) as well as to existing licensees and would be delighted to chat with you if you think I might be able to help you in some way.
PPS: This is just a quick FYI that in Q1 2015 Scott Sillcox will be continuing the multi-city tour of North America that he started in the spring of 2013. While in each city, Scott will be meeting with people who want to learn more about sports product licensing.
If you are considering going through the process of acquiring a sports license(s), or if you are considering working with an existing licensee, you should strongly consider meeting with Scott as he criss-crosses North America.
There are three different types of meetings being offered:
1. You can meet with Scott for a full day session – from 8:30am – 5:00pm - just you and Scott (or you and your team if you wish). The full day one-on-one session fee is $1500.
2. You can meet with Scott for a half day session (4.5 hours) – either in the morning or the afternoon. This half-day session is also one-on-one - just you (or your team) and Scott. The half day session fee is $900.
3. You can meet with Scott in a day long workshop attended by no more than 5 people like yourself. 8:30am – 5:00pm. Truly great things come from workshop sessions like this – you meet and learn from kindred spirits because everyone brings a little something to the table. As long as you are willing to share a little bit about your idea, a small group workshop like this is a great learning tool and you will leave highly energized and highly motivated. The group workshop fee is $499 per person, and if a second person wants to attend from the same organization, the fee for the second person is $250.
One of the more popular parts of Scott's tour will be the 3rd option mentioned above - the one-day workshops in each city where there will be no more than 5 participants.
The focus of these workshops will be twofold:
- Understanding in detail what is involved in trying to obtain your own license(s)
- Understanding the ways in which someone with an idea for a licensed sports product might be able to work with an existing licensee to see the product come to life. We will discuss the pros and cons, as well as the hurdles you will face.
If you are interested in sports licensing but have a lot of questions, this day long workshop is a great source of information - and at $499, it's a terrific value. Workshops must be booked 10 days before the workshop date.
The cities and dates for the Q1 2015 tour are:
Dates / City
1. Jan 12-15 (Mon – Thurs): Las Vegas
Sports Licensing & Tailgate Show is Jan 14-16
2. Feb 3 – 5 (Tues – Thurs): Chicago
3. Feb 10 – 12 (Tues – Thurs): Boston
4. Feb 17 – 19 (Tues – Thurs): Los Angeles
5. Feb 24 – 26 (Tues – Thurs): Princeton NJ & NYC area
6. March 3 – 5 (Tues – Thurs): Cleveland & Ohio
7. March 10 – 12 (Tues – Thurs): Dallas
8. March 17 – 19 (Tues – Thurs): Fort Lauderdale, FL
9. March 24 – 26 (Tues – Thurs): Washington DC
You may have been dreaming about your product and the opportunity it represents for months, maybe years – now’s the time to move your idea forward! Take advantage of Scott being in your own backyard, roll up your sleeves and sign up to meet with Scott in person.
To register, simply call Scott at 416-315-4736 or email him at email@example.com and book your face-to-face time - you can lock-in a confirmed session right over the phone.
If you would like to see a proposed agenda for any of the three different session structures, just ask Scott and he will email you a proposed agenda.