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 1 - An Insider’s Guide to the World of Licensed Sports Products: How Licensing Works - Follow The Money or How $5,000,000,000 can be less than you think

Greeting folks!

This note is written by Scott Sillcox in September 2018 in response to a lot of readers asking me two questions:

A. You wrote and posted this 12 part blog in 2012-ish, is it 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!

Many thanks and happy reading -
Scott Sillcox

Please also note: This 12 part series initially appeared on my "Heritage Uniforms and Jerseys" blog, but I moved it in March 2012 to this blog which has a more single-focus on the world of licensed sports products.



This is Part 1 of a 12 Part Series of blogs Scott Sillcox wrote called “An Insider’s Guide to the World of Licensed Sports Products”. For a backgrounder on Scott Sillcox and his company, Maple Leaf Productions, please see the introductory blog and/or watch Scott's 11 minute introductory video.
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

Let’s put the sale of licensed sports products into some sort of perspective. In 2010 approximately $200 billion dollars worth of licensed merchandise was sold worldwide. Of that $200 billion of annual sales, approximately $25 billion was sports related.

Of the $25 billion of licensed sports products sold worldwide in 2010, some of the leading licensors are:
1. MLB: $5 billion in retail sales
2. US colleges: $5 billion in retail sales
3. NFL: $3.25 billion in retail sales
4. NBA: $3 billion in retail sales
5. NHL: $2 billion in retail sales
6. WWE: $1.2 billion in retail sales
7. NASCAR: $1 billion in retail sales
8-10. MLS: <$1 billion in retail sales
8-10. PGA: <$1 billion in retail sales
8-10. UFC: <$1 billion in retail sales

Missing: Non North American soccer teams (England, Germany, France, Spain, Italy, Brazil, etc.), largely because when it comes to merchandise licensing most of these teams operate independently and not as leagues – it would be as if the New York Yankees licensed their own merchandise and operated outside of the MLB umbrella. The North American sports leagues treat each team in the league as equals when it comes to sharing royalty revenue from the sale of licensed sports products, and most have done so since the 1960’s, whereas Manchester United of the English Premier League (a 20 team soccer league that is arguably the world’s best), says “No, we’re not going to be a 1/20th partner when we sell 30% of all licensed merchandise – we will control this revenue source ourselves”.

These figures aren’t hugely accurate but they are reasonable guesses based on industry knowledge and the great work done by License Magazine which publishes a terrific “Top 125 Global Licensors” list each year. I have compiled a one page summary of the Top 50 Global Licensors for 2010 and 2009 below.

[Please click on this image to see a larger size - I realize this is impossible to view at this size.]

Jan 2015: Let me update these figures to what I think is a more accurate number. I can explain my thinking if this is really important to you, but for now I am asking you to accept the figures below as a more reasonable estimate of annual retail sales. The major change is that US college sales have been grossly underestimated - there's no skullduggery, it's simply a case of there being no proper reporting mechanism in place to estimate the sales of all merchandise sold by the 2500-3000 colleges and universities in the US.

I believe that the sales of "North American" licensed sports products sold worldwide is more on the order of $32 billion and it breaks down as follows:
1. US colleges: $12 billion in retail sales
2. MLB: $5 billion in retail sales
3. NFL: $5 billion in retail sales
4. NBA: $3 billion in retail sales
5. NHL: $2 billion in retail sales
6. WWE: $1.2 billion in retail sales
7. NASCAR: $1 billion in retail sales
8-10. MLS: <$1 billion in retail sales
8-10. PGA: <$1 billion in retail sales
8-10. UFC: <$1 billion in retail sales

Still missing: All soccer other than MLS.

With respect to sales of licensed sports products by professional league, MLB with their $5 billion in sales is #1 (the NFL is right there as well with roughly $5 billion in sales), but to keep it a bit in perspective, the $10 billion of MLB + NFL licensed product sales are dwarfed by Disney which sells more than $28 billion worth of licensed products each year. So at $25 billion for 2010, the sale of all licensed sports products sports is big, but Disney sells more licensed products than all the sports leagues combined.

Now let’s focus on the $25 billion that is the world of licensed sports products.

Traditionally, all products licensed by the leagues listed above fall into one of two categories:

A. Soft goods
- Sometimes referred to as soft goods and headwear; or apparel; or apparel and headwear.
- This category is generally dominated by Nike, Reebok, adidas and a handful of other apparel giants.

B. Hard goods (aka Hardlines)
- Sometimes referred to as hardlines; or trinkets and trash.
- Electronics, especially video games, falls into this category although some people/leagues might call it a third category – I am going to leave Electronics as part of Hard Goods.
- This category has no giants on the scale of the apparel companies, rather this category is characterized by lots and lots of small, entrepreneurial companies.

Please see Part #3 of this blog series for more information about Soft Goods vs. Hard Good licensees – there are some important differences between the two categories of licensees that it is important to understand.

All that having been said, let’s now “Follow the Money”…

I’m going to assume that if you are reading this, then you are likely a pretty good sports fan. As such, I want you to answer a question – quickly and off the top of your head.


The question is: How much revenue do the New York Yankees receive each year from the sale of licensed sports products around the world? Not how much revenue is generated, but how much revenue do the Yankees actually receive.

You might want to read the question one more time, then write a number down on a piece of paper and then read on. Come on, just try it.

If you have a figure written down – well done – thanks for participating. If you haven’t written a figure down, this is your last chance – what do you have to lose?

So here is today’s lesson about how licensing works in general – let’s "follow the money" together…

A. Let's say my company is a hard goods MLB licensee.

B. Let's say we sell $1,000,000 worth of merchandise to retailers each year, i.e. we sell $1,000,000 of merchandise at a wholesale level (not retail).

C. We owe MLB a royalty equivalent to 12% of the wholesale value – 12% x $1,000,000 = $120,000. You can read more about royalty rates in Part #8 of this blog series, but for now I ask you to accept the fact that 12% is a decent average royalty rate in the sports world.

D. It doesn't matter what the stores sell our $1,000,000 worth of product for - they could turn around and sell the $1,000,000 worth of product that they buy from us for $3,000,000 or they could sell it for $1,500,000 - MLB gets the 12% of $1,000,000 from us, the licensee, not from the retailers. This is generally called the “First Level of Distribution” principle – the league derives their share of the revenue (their royalty) as a percentage of sales from the wholesaler, from sales to the “First level of distribution”.

E. MLB then takes our royalty payment of $120,000 and combines it in a pool with all the other payments from all the other MLB licensees. MLB then takes that royalty revenue and splits all of the royalty revenue EQUALLY among all 30 MLB teams. Even if 35% of all the MLB merchandise sold in a year is New York Yankees merchandise, the Yankees only get 1/30th of the revenue.

F. Now let’s do some simple math.

- Retailers sell approx $5,000,000,000 of RETAIL MLB merchandise per year (as noted above, this figure comes from the good folks at Licensee Magazine – they have published the figure of $5,000,000,000 as the MLB sales figure for both 2009 and 2010 and I believe it to be a fairly accurate number because MLB itself provides it to License magazine).

- A reasonable guess is that the wholesale value of the $5,000,000,000 worth of MLB licensed product sold is $2,500,000,000. This is the key figure – the $2,500,000,000 wholesale amount.

- We then take 12% of that wholesale amount – 12% of $2,500,000,000, which equals $300,000,000. This is the total amount of royalties that MLB collects from their licensees - $300,000,000. As mentioned above, 12% is a fairly standard royalty rate for a sports league.

- MLB then takes the $300,000,000 of annual royalties it receives and divides it equally among all 30 teams. This means that each MLB team gets $10,000,000 a year from the sale of licensed merchandise. That’s right - $10,000,000 from $5,000,000,000 – $10 million from $5 billion.

- So the answer to the question I posed above is $10,000,000. The New York Yankees get $10 million from the worldwide sale of licensed sports products. My guess is that if you took a chance and wrote a figure down on a piece of paper a few minutes ago, you guessed something considerably higher than $10 million.

- What I am trying to get at is although $5 billion is a huge amount of licensed sports products – and MLB is the leading sports league when it comes to the sale of licensed sports merchandise - the $10,000,000 per- team-share is barely enough to pay the salary of one decent pitcher. I am certain that most fans, and media, and even seasoned business people in the licensed sports industry see all sorts of MLB licensed merchandise being sold worldwide and they automatically jump to the conclusion that the MLB teams are "raking it in", but simple math shows you that they really aren't – they are only making “$10 million from $5 billion”.

- And to me, that's the big story about the sale of licensed sports products, one that you as a (potential) licensee need to understand. Each MLB team is only earning $10 million from the sale of licensed merchandise – and thus their natural inclination will be to want more, and in many ways it’s hard to disagree with that sentiment. When you consider that each team’s share of the national TV revenue pool is $35,000,000-ish, and that even the smallest market teams generate at least $12,000,000 of local TV/radio revenue (the Yankees might be $100,000,000 or more), you can see that the $10,000,000 from the sale of licensed sports products is important but not all important. The lesson? Keep things in perspective and you will have a better understanding of the business you’re in.

I would like to add a couple other side notes, but the primary lesson of this blog is “$10 million from $5 billion - How $5,000,000,000 can be less than you think!

Side note #1:
I will expand on this in Part #3 of this blog series, but I’d like you to understand that I have been using verbal shorthand when I refer to MLB, NFL or NHL, etc. I should really be referring to them as MLB Properties, NFL Properties and NHL Enterprises. My quick point is that each league typically forms a stand-alone subsidiary company (generally ending in “Properties”) as their licensing body, and as such each is its own entity, separate from the league itself. To me it looks like the league and acts like the league, but legally and structurally “Properties” are a separate entity. This is neither good nor bad, you should simply be aware of it and move on. This list may help you understand what each league calls its licensing entity:
1. MLB = MLB Properties
2. US Colleges = Please see Part #12 of this blog series for more on NCAA licensing
3. NFL = NFL Properties
4. NBA = NBA Properties
5. NHL = NHL Enterprises
6. WWE = WWE
7. NASCAR = NASCAR Properties
8. MLS = Soccer United Marketing
9. PGA = PGA Tour
10. UFC = UFC

The one thing that each league handles differently is the overhead cost of running the league. I have a reasonable grasp of how MLB handles it, so let’s stick with MLB. Each MLB team is required to pay back to the league [they call it the MLB operations fund] approximately $5,000,000 to cover all of the salaries, office rent, overhead, etc. of running the league (keep in mind MLB employs approximately 1000 people). I have no idea what it costs the league to run MLB Properties, the licensing side of the business, but a reasonable guess might be that 25% of the $5,000,000 MLB operations fund payment per team relates to MLB Properties (25% x $5 million = $1.25 million per team). So if you were to factor that cost into the whole equation, the $10,000,000 per team share of royalties gets reduced to a net profit of $8,750,000 per team – so perhaps the truer story being told here is “$8.75 million from $5 billion”.

Side note #2:
Almost every team in the NFL, MLB, NBA, NHL, etc. owns their own retail store(s) at their home stadium and perhaps elsewhere in the local community as well. The revenue and profits from the sale of merchandise at these stores, is handled differently than the royalties that accrue from the sale of licensed sports products. I don’t have any exact figures, but let’s do a bit of an educated guessing game.

- The Green Bay Packers have one of the most successful retail operations in the NFL. My guess is that they sell approximately $15,000,000 of merchandise each year. When you factor in the cost of the goods sold, the staff costs, and all of the other overhead costs, my guess is that the Packers retail operation might be turning a profit of $5,000,000 a year. $5 million is a significant amount of money, but again, not enough to pay even a modest 1st round draft pick.

- Now contrast this with a team like the Jacksonville Jaguars – a fine team and a fine organization, but the Jags’ retail operations probably sell less than $2,000,000 worth of merchandise annually. And when all of the costs are factored in, my guess is that the Jags don’t make any money on the sale of merchandise from their retail operations – they would like to of course, but in the end it’s really a service to their customers and fans, they are almost obligated to offer Jaguars merchandise.

- So in addition to a 1/30th share of royalties from the sale of licensed sports products worldwide (the $10 million from $5 billion equation), each individual team might make anywhere from $0 to $5 million additional profit from their own retail operations – a significant difference between teams, but still not a game changing amount of money when compared to the team’s operating budget.

- My point in all this? It is key that you, a (potential) licensee, would do well to understand that each team makes no more than $15,000,000 from shared royalties and their own retail operations.

Side note #3:
In the MLB example above, I used a 12% figure as a somewhat average royalty rate paid by licensees to the league. What I haven’t yet mentioned are products that are licensed by MLB AND the MLB Players’ Association. Please see Part #11 of this blog series for much more on this subject, but I wanted to point out that for certain products, such as trading cards or video games, each licensee is paying a “blended” royalty rate. Let’s say the blended rate is 18% - 9% going to MLB and 9% going to the MLB Player’s Association. So the fact that when there is a joint MLB-MLBPA license, the licensee will be paying less than 12% to the league, means that in reality the total royalty collected by MLB will actually be less than the $300,000,000 speculated earlier, and the per team share will be somewhat less than $10,000,000 – maybe as much as $1,500,000 less – meaning each team may actually only receive $8.5 million from $5 billion. Not subtract the “operations fund” overhead costs I guessed at being $1,250,000 per team, and we’re now down to “$7.25 million from $5 billion”. That’s 0.15 of 1% of retail revenue – not 1.5% of retail revenue, but just 0.15% of retail revenue.

So if you have “Followed the money” in this lesson, I hope you can understand why Jerry Jones, the owner of the Dallas Cowboys, or the Steinbrenner brothers, owners of the New York Yankees, would look at their $10 million from $5 billion – or $8.5 million from $5 billion – or $7.25 million from $5 billion – and say, “I like the way Manchester United handles things a whole lot better”.

That’s all for Part #1 of “An Insider’s Guide to the World of Licensed Sports Products”.

Thanks for reading and all comments are welcome!

Scott Sillcox
Email: ssillcox@rogers.com
Cell: 416-315-4736

PS In March 2012 I launched a new, searchable Online Directory of 2500+ 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. I update the database weekly, often daily.

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 the fall of 2018 Scott Sillcox will be continuing the multi-city tour of North America that he started in the spring of 2013. While in each city, I will be meeting face-to-face 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 me live and in person. If you 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 me coming to a city near you.

1. You can meet with me for a full day session – from 8:30am – 5:00pm - just you and me (or you and your team if you wish). The full day one-on-one session fee is $1500.

2. You can meet with me 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 me. The half day session fee is $900.

3. New for 2018: You can meet with me for two hours - the timing depends on my other meetings. The two-hour session fee is $600.

The cities and dates for the Fall 2018 tour are:
1. Week of Oct 1 - Detroit and Cleveland
2. Week of Oct 8 - Boston
3. Week of October 15 - Atlanta
4. Week of October 22 - Chicago
5. Week of Oct 29 - Florida (Ft. Lauderdale, Tampa and Orlando)
6. Week of November 5 - Southern California
7. Week of November 12 - Greater New York City area
8. Week of November 19 - Calgary and Vancouver
9. Week of November 26 - Washington DC and Raleigh NC
10. Week of December 3 - Northern California (Bay Area)

11. Week of December 10 - Dallas

I can send you a suggested meeting agenda - just ask - but because our one-on-one time together will be totally focused on your needs and your story, no two sessions are ever the same so the agenda is highly flexible.

If your city is not listed above and you would like me to come to you, I’m happy to go almost anywhere in the continental US or Canada as long as you book a full day session and pay a one-time all-inclusive travel fee of $500. Thus for a flat fee of $2000 I will come right to your door and spend a full day with you.

To register, simply call me, Scott Sillcox, at 416-315-4736 or email me at ssillcox@rogers.com and book your face-to-face time - you can lock-in a confirmed session right over the phone.


  1. Great insight. Can't wait to finish reading the series. Quick question, if I were to get licensed by the MLB to sell t-shirts, can I sell wholesale to the teams, AND retail to customers from my website? Thanks in advance, Mike

  2. My email is mjcaz1@aol.com if you would rather email me your response instead of posting it here. Thanks!

  3. Hi Mike!

    Your question is great and I'm happy to reply right here...

    If you were to become an MLB licensee:

    1. Yes you could sell wholesale to the teams (ie the team stores, aka team concessionaires). You would pay the 12% (or whatever your royalty rate is) on the wholesale price. Keep in mind that when you sell to team stores, in many cases your contract will stipulate that you must sell to team stores at your lowest price - the way the NFL auditor did this was he searched the previous 3 months sales for the lowest selling price for that item, then made sure that you charged no more than that rate to the team store. If you didn't, he would "fine" you and you would have to make up the difference that you "overcharged". Also, keep in mind that if you sell a product to a team store, they typically triple the price, ie if you sell them the t-shirt for $10.00, they will retail it for $30.00, vs most retailers who keystone the price (ie double the price) which means most other retailers would sell the same product for $20, not $30.

    2. Yes you would be able to sell retail to your customers from your own website unless your contract with MLB stipulated otherwise, so be sure that is included in your contract. If you did sell retail from your own site, keep in mind that you would be paying 12% (or whatever your royalty rate was) on the retail price. I have heard of some licensees who set up their e-tail website as a separate business and their licensed business sells product at a wholesale rate to the e-tail company - all as means to pay the royalty on the wholesale value of the product vs paying it on the retail price.

    Hope this is understandable!

    1. Scott- So if you did what you suggest in #2 above and you do set up a different company and the licensed business sells to the e-tail company to reduce the royalty amount, does anyone question the wholesale price? Since the same owner(s) own both companies- lets say you purchase goods for $2.50 each, can the licensed company re-sell this to the e-tail company for $2.55? basically barely any profit. or is there a law that says there has to be a certain mark up on the goods? This would seem to be fairly subjective as some companies may accept smaller profit margins than others. But in this scenario the goal is to basically reduce the royalty amount that has to be paid so are there rules/laws about this or no?

    2. There are a couple checks and balances the licensors have in place.
      A. The auditor will quickly learn what you are doing and put a stop to it - and it will cost you in terms of having to pay back-royalties (ie you will have to pay additional royalties on all sales done at the $2.55 price - perhaps the auditor will adjust those sales to a $4.50 price, whatever price is your general wholesale price or perhaps your highest wholesale price).
      B. You are obligated to sell to the team stores at your lowest wholesale price, so if you sold to your arm's length company for $2.55, then any and all sales to team stores have to be at the $2.55 price. This would mean that you would be making nothing on any sales to team stores.
      Bottom line - royalty avoidance is penny wise and pound foolish.

    3. Thanks for the reply. So- there is still a benefit in setting up another company and that is to enable you to sell retail and not pay the bigger royalties instead of just selling wholesale (if you want to go the retail route and sell both wholesale and retail) I have a few other questions- as the manufacturer, if we chose not to get a license and instead sell products we manufacture to a company who already has all the licenses (NFL, MLB,NBA, NCAA etc etc) we don't have to pay any royalties correct? The company who purchases from us and then resells pays these fees correct? Obviously this means there is an extra "middle man" per se or price level in the total process but if there is enough profit margin to do this, it could be a viable option. Do many companies just do this.... or do you know the percentage(if a stat like that is available)of those who just manufacture and sell to those who already have all the licenses in place? Are there companies who have all the licenses already that you would recommend that are leaders in the industry (without really giving them an "endorsement" )

    4. Hi JP -

      Why don't we take this discussion private - can you send me your email address? Mine is ssillcox at rogers dot com.


  4. Scott,
    Great info, thanks for sharing your knowledge to the inside workings of licensing deals.
    One question i have been seeing a bunch do this they buy an licensed product say a jersey or hat and add some form of decoration to it, then turn around and resale it. Where does this fit into the scope of licensing? Since royalities have been paid on the initial purchase, but adding non-licensed decoration to it(rhinestones or something else) and selling for profit. You covered something like this in your blog, but that was combining 2 or more licensed products into 1 item.

  5. Thanks for your note - a great question asked by a lot of people...

    FYI, I talk about this issue later in this blog in Part 12 - Section 14 and I call it "Marrying two products".

    If you do what you are proposing, and if you grow into even a reasonably successful business, you will at some point get a Cease and Desist letter from one or more of the leagues, or from their "policing" authority knowns as "CAPS". www.capsinfo.com

    Your logic is sound in that if you buy an officially licensed product, then the royalty has already been paid, and in theory you might think you should be able to do whatever you want with the item you bought.

    But you are really creating a new product, and the leagues/CAPS believe that product should be licensed and thus they will do what they can to make you stop what you are doing. It typically starts with a Cease and Desist letter and escalates from there.

    One tool the leagues have in their arsenal is that they can do their best to make sure that none of your suppliers will sell to you in the future if they feel you are circumventing the rules. So you will be forced to buy your "raw" product at the retail level.

    So my advice is simple: Best to work with them, not against them. Explore getting your own league license, or if that is unrealistic, consider working in some way, shape or form with an existing licensee. Or in some cases, the idea may just have to be put to rest...

    All the best -

  6. Hi Scott, I am a 'budding' artist and would like to legally be able to paint and sell NFL and MLB players, do I need my own license to do this or could I partner with a licensee from one of your lists to do so? Its all very confusing!

  7. Hi Lisa: I'd be happy to give you more info, but could you send me your direct email address? Mine email is ssillcox@rogers.com .

  8. Hi Scott, We are a manufacturing company interested in becoming licensees with numerous organizations. We were thinking of starting with our local high schools since the majority of the applications to the big leagues ask what other licenses you have. Do you know how to go about becoming a licensee for the high schools and do you recommend that as a starting point?Thank you

  9. Hi Anonymous -

    Sorry for the delayed reply and thank you for reading my blog... Here is my two cents worth:

    1. Starting with high schools is a great way to start, but keep a couple things in mind:

    - You'd love to choose a high school that has a store associated with it. Some high schools themselves have a store (but it's a minority of high schools that have a store), others have a store "in town" that is generally considered to be the "official store" of the high school.

    - The reason you want a store is otherwise you're working with one hand toed behind your back - having a store gets you instant credibility and gets your product in front of the target audience.

    - Most high schools don't have a formal licensing program in place - it's too cumbersome and it doesn't warrant a full time person overseeing a licensing program. So in most cases you can "do what you want" with high school teams. That being said, I would always suggest you check with the athletic director and/or the principal's office to get their take on things and/or their "permission".

    2. You are right when you note that most leagues ask what other licenses you have. More important than that, however, is simple experience making and selling the type of product that you are proposing for a league. If you have been making and selling a product for 3+ years, then if/when you apply to a league for a license, it's a much easier decision for the league to award you a license given that you have industry experience - this is regardless of whether or not you were a licensee.

    Hope that helps a bit...


  10. Hello Scott,

    Great website! I just spent 1 hour looking and reading all that great information. thank you for sharing it with all of us!

    I was reading your post about licenses and I have a question for you.

    lets say I made old vintage NFL jerseys from the 50's. The jerseys have no team logos or NFL logos; just a jersey with some numbers and stripes that look like the old vintage 1950's jersey. When I sell them I dont market them as "Dallas Cowboys Jerseys," I call them "Dallas Inspired Jerseys."

    would I break any laws in copyright? or infringing on any patents or licenses?

    thank you and I look forward to hear from you.



    1. Peter:

      Many thanks for your question and I have sent you a reply offline. Short answer, don't do it.


  11. Pretty good post. I just stumbled upon your blog and wanted to say that I have really enjoyed reading your blog posts. Any way I'll be subscribing to your feed and I hope you post again soon.

    playboy brand license & goodyear licensing

  12. Hi Scott,

    Very informative blog. For my purposes obtaining a license is likely beyond the scope of my needs. I currently have slogan ideas to be used on t-Shirts that incorporate either the the first name, last name, or combo of multiple professional athletes. It appears these names are protected which eliminates being able to print and market on my own. Is it possible to present idea to license holder for compensation if idea is accepted? In looking online Nike does not accept slogan ideas, Adidas does not accept outside ideas and Under Armour has an online submission form but has little info as to whether your idea is protected or if compensation is a consideration.

    Thanking you in advance

    1. Hi anonymous -

      I certainly have some thoughts and suggestions as to what you could/should do. This is where I have to put on my consultant's hat - I suggest you consider hiring me for a one hour phone call and we can talk our way through some possible options and potential partners. Not Nike or Adidas - they are far too big, but some other companies much further down the food chain.

      Feel free to contact me ssillcox@rogers.com and we can schedule an hour that works for both us us, and then you would prepay using Paypal. I can explain in more detail if you contact me directly via email.

      Thanks -

  13. Hey Scott,

    Great read. I have learned a lot from what you posted.

    I was wondering if there is a way to bypass the license.
    I want to create a case with NBA players on them.
    I was wondering if I tweeked the image would I still need to get a license. I won't be using the NBA logo but it will still be a bit clear who the play is and what time he plays for. The answer is mostly yes I still do but I would like to know your thoughts on the matter.
    Otherwise if I don't tweek it I would still have to get one because the players are part of the league.


    1. Hi -

      Could you send me your email address via ssillcox@rogers.com and I'll answer this question off line.


  14. Scott - what are the initial costs of selling licensed products? Is there a licensing fee I have to pay upfront... or do I just pay a fee per product?

    1. Hi Alby -

      Thanks for your note. If you have a chance to read further in the blog, this question is answered. But the short version is to obtain a license you make a guarantee as to how large an annual royalty you are going to pay. In most cases you have to prepay the annual royalty before you have sold any products. The size of the annual guarantee can range from $100,000+++ for an NFL license to $300 for many universities. Royalties range from 10% to 15% of the wholesale price of the product (ie if you sold $1,000,000 worth of product and your royalty rate was 12%, you would owe $120,000 worth of royalties.

      As for fees, there are exceptions, but for the most part there aren't any "fees" - just royalties.

      Hope this helps - read on for much more detailed info.


  15. Hi Scott,

    Hope all is well. Great advice thus far, I just had a quick one pertaining to your mention of teams selling in their own shops. It didn't seem clear to me, what I wanted to know was, when teams sell in their shops, does all of the revenue of the shop go into the pool, or just the percentages they collect from the licensees? Regardless, the organization will still be collecting its royalty percentage from me and tossing it in the pool. Since these shops are retailers within the organization do they distribute all of those profits within the pool or since the shops are on their property, all retail profits are theirs to keep?


    1. Adam -

      Great question - let's use the Green Bay Packers as an example.

      The Packers "team store" likely sold $30 million worth of products in 2015. Let's say they paid $12 million for the products, and let's say that all their other expenses (salaries, commissions, benefits, heat, light, fixtures, storage, etc.) cost them another $8 million. Thus the team store made a profit of $10 million. That entire $10 million goes to the Packers - it isn't shared with any other teams.

      Stick with the $12 million that the Packers paid to licensees for the products sold in their store. The licensees paid roughly 12% of that $12 million to the NFL in royalties = $1,440,000 royalties. That $1,440,000 of royalties ultimately gets split 32 ways (one share per NFL team x 32 teams), so when the Packers get a $9,375,000 royalty check from the league, $1,440,000 / 32 = $45,000 of the $9,375,000 actually came from sales of products in their own store.

      Where did the $9,375,000 royalty check to the Packers come from? All NFL merchandise sold around the world = roughly $5,000,000,000. That means roughly $2,500,000,000 wholesale. 12% x $2,500,000,000 = $300,000,000 in total league royalties, which then gets divided 32 ways = $9,375,000 of royalties per team. (But NFL Enterprises likely takes about 20% of this as their "administration" fee, so really each NFL gets a check for something closer to $8,000,000.)

      Bottom line - a team with a popular and well run team store, like the Packers, actually makes more profit from their own store than they do from their share of NFL royalties. Most teams (NFL, MLB, NBA, NHL) sell only between $2,000,000 and $10,000,000 worth of product from their team store, not the $30,000,000 that the Packers sell.

      I hope that helps!?!


  16. Scott, thanks for taking the time to share your knowledge and experience with the licensing process. I am interested in applying for a MLB license. My company has been steadily growing over the last several years and had about $45K in sales of unlicensed products in 2016. On MLB's FAQ list, they state that "Guarantees vary greatly but normally start at $50,000 for a national license. In determining minimum guarantees, MLB considers many factors including but not limited to: wholesale pricing, projected sales and distribution and financial soundness of the company. MLB may require all or part of the minimum guarantee to be paid up front." Paying $50,000 per year for licensing would require me to either bring on an investor or take out a significant loan. Do you know if MLB properties is willing to lower this fee for the first year or two so I can see what type of demand there is for my products without taking such a big risk? If so, any suggestions about how to negotiate a lower guarantee?

    Thanks again,


    1. Michael:

      Could you send me your email address and I'll reply to you directly? My email is ssillcox at rogers dot com . If you don't want to copy/paste your great note, just remind me that you sent me a note on April 18 via my licensing blog.


    2. Thanks Scott. I just sent you an email.

  17. Mr. Sillcox, how can I license my product through Major League Soccer?

    1. HI Memi -

      Could you send me an email directly at ssillcox at rogers dot com? It would also be great if you gave me a few more details.



Thank you for taking the time to add a comment - all input is welcome, especially the constructive kind! All the best - Scott