This note is written by Scott Sillcox in fall 2023 in response to a lot of readers asking me two questions:
A. You wrote and posted many of your blog postings several years ago, is the info still relevant today? Short answer - absolutely! The basics of sports licensing change very little over the years, so I strongly suggest that if you are trying to learn about sports licensing, read away! I have also tried to update certain areas where there have been significant changes, so I feel comfortable in telling you that this information is still highly relevant.
B. You mention that you are a consultant and might be able to help me, do you still do consulting? Short answer - absolutely! I work in the licensing field virtually every day of my life, so if you have questions or would like my help, contact me! The two primary ways I work are hourly telephone consulting ($175US/hour) and face-to-face meetings where I come right to your office for a full day ($1500US/day + $650 travel expenses).
Many thanks and happy reading -
Scott Sillcox
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If you have any of the questions listed below about Sports Licensing and Licensed Sports Products, allow me to suggest one of the following five sources of information and answers:
1. Watch this 11 minute video called “Licensed Sports Products”. This video is specifically intended for people interested in bringing a licensed sports product idea to market - NFL, MLB, NBA, NHL, NCAA, NASCAR, MLS, UFC, WWE, etc. This video introduces you to Scott Sillcox, whose company produced a variety of sports products and was a licensee of the NFL, MLB, NHL and others sports leagues for more than 10 years. The video is intended to accompany a 12 part, highly detailed blog called "An Insider's Guide to the World of Licensed Sports Products in 12 Parts: Practical Lessons from the Trenches" which can be found at the link shown in Item #2 below. The video touches on the pros and cons of acquiring your own license vs working with an existing licensee, and the blog expands on that subject.
2. Read my highly detailed 12 part blog which can be found here and begins with this introduction. This 12 part series contains an unprecedented amount of information about licensed sports products that cannot be found anywhere else on the internet. This series is written for people interested in getting their sports product idea licensed and discusses both acquiring your own license as well as working with an existing licensee. This series of blogs should answer almost any question you might have about obtaining a license to produce NFL, MLB, NBA, NHL etc. licensed sports products.
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
If you are interested in being a retailer of licensed products, you do not need to read the 12 part series – instead, please read this particular blog which is directed towards retailers and potential retailers.
3. Please read any of my other blog postings which can be found at the Licensed Sports blog. Here you will find lists of licenses by league (ie from a list of MLB licensees to a list of Nascar licensees to a list of NFLPA licensees), sources of licensing information, distributor information, and a host of other licensed sports product information.
4. If you are interested in finding out more about licensed sports companies in North America, please visit this searchable Online Directory of North American Licensed Sports Products Companies - it’s called LicensedSports.net and costs just $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. Looking for companies which are licensed by the NFL, MLS and Nascar who are located in Ohio – you’ll find the answer here. Looking for MLB licensees who make/sell licensed automotive products? It’s here. Looking for headwear licensees of the NFL, MLB, NHL or NBA? It’s here as well. 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.
5. Consider hiring me, Scott Sillcox, as a consultant. I have been working with entrepreneurs and senior management of established businesses who are interested in either obtaining their own license or working with an existing licensee. I am happy to chat with people once or twice and trade a few emails back and forth at no charge, but at some point it may be apparent that you would like/need more of my time, in which case I work two ways:
A. I do one day and two day licensing consulting sessions where I come to your office or local facility (ie a hotel or conference center meeting room). My fee is $1500/day plus hotel/airfare. You would approve the hotel and airfare expense ahead of time - I am very frugal and treat your money like mine (I’ve been an entrepreneur for a long time and know how hard someone has to work to make a dollar). I pick up all other travel costs such as meals, taxis, car rental, etc.
B. I do telephone consulting at a rate of $175/hour.
But don't let these paid options scare you, hiring me as a paid consultant only makes sense for 1 out of 5 people who contact me, and I am happy to spend some time with you at no charge.
You can reach me at: Scott Sillcox
Aurora, Ontario
Cell: (416) 315-4736
email: ssillcox@rogers.com
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- How do I become an NFL licensee?
- How do I become an MLB licensee?
- How do I become an NBA licensee?
- How do I become an NHL licensee?
- How do I become an NCAA licensee?
- How do I become a US College licensee?
- How do I become a collegiate licensee?
- How do I become a NASCAR licensee?
- How do I become a UFC licensee?
- How do I become a PGA Tour licensee?
- How do I become an MLS licensee?
- How do I become a CFL licensee?
- How do I become a sports product licensee?
- How do I become a pro sports licensee?
- How do I get an NFL License?
- How do I get an MLB License?
- How do I get an NBA License?
- How do I get an NHL License?
- How do I get an NCAA License?
- How do I get a US College License?
- How do I get a collegiate License?
- How do I get a NASCAR License?
- How do I get a UFC License?
- How do I get a PGA Tour License?
- How do I get an MLS License?
- How do I get a CFL License?
- How do I get a sports product License?
- How do I get a sports merchandise License?
- How do I get a pro sports License?
- What does it cost to become an NFL licensee?
- What does it cost to become an MLB licensee?
- What does it cost to become an NBA licensee?
- What does it cost to become an NHL licensee?
- What does it cost to become an NCAA licensee?
- What does it cost to become a US College licensee?
- What does it cost to become a collegiate licensee?
- What does it cost to become a NASCAR licensee?
- What does it cost to become a UFC licensee?
- What does it cost to become a PGA Tour licensee?
- What does it cost to become an MLS licensee?
- What does it cost to become a CFL licensee?
- What does it cost to become a sports product licensee?
- What does it cost to become a pro sports licensee?
- Who can help me become a sports product licensee?
- Who can teach me what is involved in becoming a sports product licensee?
- Where can I find an expert to teach me about becoming a sports product licensee?
- Where can I find a consultant to teach me about becoming a sports product licensee?
- Need licensing help? Need sports licensing help?
- What does an NFL license cost? What is the cost of an NFL license? What is the cost of an NFL License Agreement?
And so on for each of the other leagues including MLB, NBA, NHL, NCAA, MLS, Nascar, UFC, WWE and players’ associations NFLPA, MLBPA, NBPA, NHLPA.
- How do I apply to become an NFL licensee? Where can I find NFL licensing information? Where can I find NFL license agreement information? Where can I find NFL license information? Where can I find information on obtaining an NFL license? How can I obtain an NFL licensing agreement? How can I get an NFL license? How can I become a manufacturer of NFL products? How can I use NFL team logos on a product?
And so on for each of the other leagues including MLB, NBA, NHL, NCAA, MLS, Nascar, UFC, WWE and players’ associations NFLPA, MLBPA, NBPA, NHLPA.
- What is involved in becoming an NFL licensee?
And so on for each of the other leagues including MLB, NBA, NHL, NCAA, MLS, Nascar, UFC, WWE and players’ associations NFLPA, MLBPA, NBPA, NHLPA.
- Where can I obtain a list of current NFL licensees? Where can I get a list of NFL licensees? How many NFL licensee are there? Does anyone have contacts for existing NFL licensees?
And so on for each of the other leagues including MLB, NBA, NHL, NCAA, MLS, Nascar, UFC, WWE and players’ associations NFLPA, MLBPA, NBPA, NHLPA.
- I have an idea for an NFL licensed product – what do I do next? I have a great idea for an NFL licensed product – where can I find out more about becoming an NFL licensee?
And so on for each of the other leagues including MLB, NBA, NHL, NCAA, MLS, Nascar, UFC, WWE and players’ associations NFLPA, MLBPA, NBPA, NHLPA.
- Where can I find an NFL license application? Where can I find an application to become an NFL licensee? And so on for each of the other leagues including MLB, NBA, NHL, NCAA, MLS, Nascar, UFC, WWE and players’ associations NFLPA, MLBPA, NBPA, NHLPA.
- What is the NFL license royalty rate? What is the royalty for an NFL license? What fee is paid to the NFL for licensed products? What percentage of wholesale does the NFL get paid?
And so on for each of the other leagues including MLB, NBA, NHL, NCAA, MLS, Nascar, UFC, WWE and players’ associations NFLPA, MLBPA, NBPA, NHLPA.
Hi
ReplyDeleteGreat blog! Just one question from me about something that isn't completely clear. Nike is now the NFL's on field uniform provider and paid a reported $1.1 billion to be so. However I'm unsure what that 1.1bn is. Do you know if it is an amount additional to the "12%" royalties or is the guaratee that you talked about? It's just the numbers seem a bit low considering the amount European football (soccer) teams make!
Cheers!
Hi and thanks for the question!
ReplyDeleteI don't have all the answers, but let's consider this $1.1 billion deal. And as we consider this deal, I ask you to keep in mind that royalties are paid on WHOLESALE sales. In simplest terms, Nike sells a jersey to a retailer for $100 WHOLESALE, and the Retailer in turn sells the jersey to the consumer at $200 RETAIL - the 12% royalty to the NFL is paid on the WHOLESALE sale, 12% of $100, not 12% of $200.
So let's look at the $1.1 billion dollar deal. The $1.1 billion is for 5 years, so on average Nike is guaranteeing the NFL $220 million dollars in royalties per year, likely something like $180 million in Year 1 and $260 million by Year 5. Now think in terms of the $180 million in Year 1 as being a royalty guarantee. So a $180 million dollar royalty guarantee at a 12% royalty rate suggests that Nike is actually guaranteeing the NFL Year 1 WHOLESALE apparel sales of $1.5 billion. Now hold that thought for a moment...
Now let's look at the fact that the NFL sells approximately $4 billion RETAIL worth of all licensed products each year. $4 billion RETAIL means $2 billion WHOLESALE. And of the $2 billion worth of WHOLESALE NFL products that are sold each year, apparel counts for likely 65% of the sales, and hardline products 35% (hardlines is everything from posters to video games to coffee mugs). So when the NFL sells $2 billion WHOLESALE worth of all products, this really means they are selling 65% x $2 billion = $1.3 billion of apparel at WHOLESALE. each year
Now let's guess that of the $1.3 billion of apparel that is sold at WHOLESALE each year, maybe 75% of it is Nike product and 25% is all the other apparel licensees (you may recall hearing that when the NFL announced this new deal with Nike, they also announced deals with 6 other apparel companies for smaller slices of the NFL apparel pie; and there are even other apparel licenses in addition to Nike and the other six). So take the $1.3 billion of WHOLESALE apparel sold each year and assume that 75% of that is Nike product = this means that we could expect that Nike would sell $975 million worth of Nike products at WHOLESALE this year.
Now go back to the beginning where we speculated that Nike is guaranteeing the NFL that they will sell $1.5 billion worth of product at WHOLESALE in Year 1. A guarantee of $1.5 billion worth of WHOLESALE sales vs an actual of something closer to $975 million.
So as a business person, it seems clear to me that Nike overpaid for the rights and that internally, they are likely calculating that they are going to end up paying the NFL something like the equivalent of 18% of WHOLESALE, at least in Year 1 or Year 2. Or perhaps Nike thinks, compared with Reebok, they can increase sales of licensed apparel 30-40-50%, which is likely not too realistic. My educated guess, and that's all it is, is that in order to do this deal with the NFL, Nike internally accepted the fact that they will be effectively paying the NFL a 15-16% royalty over the life of the contract.
A good deal for the NFL, and a reasonably good deal for Nike who paid a premium for some level of exclusivity.
Hope you can follow the logic in all of this!
Thanks -
Scott
PS I wonder if you have all the facts properly understood when you say the NFL-Nike deal seems low "considering the amount European football (soccer) teams make". If you can share some European deal facts with me, I can analyze that as well and I think you will fnd that the deals are very close. In the grand scheme of things, an apparel company isn't going to pay more than 20% (maximum) of expected WHOLESALE sales to the league/team. Maybe in Europe is ends up being closer to 20% than the 15-16% I am speculating Nike will actually be paying, but the effective royalty rates paid by the respective apparel licensees will be fairly close to each other.
Hi I came across your blog while researching licensed sports products. I just have a question which I was hoping you could answer. My question is how can I partner up with someone who has a sports license and get them to sell my product. I have a few of my products made and have given them as gifts. I have received only positive feedback and questions as to whether I will market my product and sell it to the general public. I would like to use logos from various sports teams on my product and was wondering how I could do that. My product is very unique and there is nothing like it on the market. I would appreciate your expert opinion on how I could find a partner to help my sell my product in a legal manner using logos from sports teams. Thank you!
ReplyDeleteGreat information, thank you!
ReplyDelete