Greeting folks!
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 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! 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
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.
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Greetings!
This is Part 12 of a 12 Part Series of blogs Scott Sillcox wrote 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
Greetings!
As I wrote in the opening to
Part 11 of this blog, the primary goal of this series of blogs has been to share knowledge, and that’s what Part 12 does, but please don’t expect to find an overly logical flow to the following thoughts.
So in no particular order, here are 10 things – alright I couldn’t keep it to just 10, so here are 14 more things - I learned about licensed sports products over the course of the last 15 years.
The topics covered in this Blog are:
1-12 are covered in
Part 11
13. Some licensed sports products history
14. Marrying two products vs. what royalties need to be paid
15. West Coast Teams
16. Collegiate Licensing
17. The use of stadium/ballpark/arena images in licensed products
18. Different types of Retail Licenses and the importance of “Authorized Distribution Channels”
19. Links to license applications
20. Sub-licensing
21. Some common questions & misconceptions
22. What is drop shipping and how does it work?
23. I’m an artist (or I represent an artist) and I’d like to produce licensed artwork such as limited editions and/or posters…
24. I was wondering if you could explain to me how the deals between entrepreneurs with an idea and existing licensees are structured? I want to manufacture and distribute a licensed product and I fully understand that I will not be able to become an NFL licensee myself. If I had an agreement with an existing licensee, would I only be able to sell to them?
25. Do all teams share royalties equally?
26. Selling to various retailers – how much do they mark up the price?
Here we go…
13. Some licensed sports products history
I’m a bit of believer in respecting the value of history, so allow me to share a bit of history of licensed sports. Anyone entering this field of business owes a debt of gratitude to those who went before them and smoothed the road. So allow me to pay tribute to:
A. The man who got the (licensed sports products) ball rolling
Sports Specialties Corporation
FYI - I published
this fairly detailed blog posting on David Warsaw in March 2020.
And here's what I wrote in 2012...
The grandfather of the licensed sports products business, David Warsaw, founded Sports Specialties Corporation in 1928. He was just 16 years old when he formed Sport Specialties as a subsidiary of his family’s Chicago-based pottery business. In 1928 he came up with the idea of ashtrays that resembled Wrigley Field and to put Cubs logos on them. Warsaw approached Cubs owner Phil Wrigley for permission to sell the ashtrays in the stands of Wrigley Field during the summer of 1928 and won Wrigley over when he agreed to pay him a "royalty" on every ashtray sold.
That launched an industry and Warsaw on a career that saw him work with sports legends, coaches and owners such as Wrigley, George Halas of the Chicago Bears and Walter O'Malley of the Dodgers. Eventually, as Warsaw himself once noted, "we made everything you saw in ballparks except food and jewelry."
Warsaw moved his business to Southern California after World War II and it grew as it went from idea to idea. In the late 1950's Warsaw patented a miniature ceramic-ish baseball player whose head bounced on a small spring - a product known today as the "bobble-head". The first licensed sports bobble-heads were MLB bobbleheads produced in 1960 and it seems they were actually made by a Japanese company called “Lego” – I am slightly unclear as to whether the Lego bobble-heads were Sports Specialties’ products but I strongly suspect they were and have read that Lego was a Swiss company that did work with Sports Specialties. Each of the 15 bobbleheads in the set was made of paper-mache, and it appears that there was one for each of 12 MLB teams (there were 16 teams at the time) as well as 3 West coast minor league teams. I have read that each bobblehead had the same face except that the Pirates had an eye patch and the Orioles had the Oriole’s mascot as its head. A few months later the 1960 World Series saw player-specific bobbleheads created in the “likeness” of Roberto Clemente, Mickey Mantle, Roger Maris and Willie Mays. (See
this link for images.)
This image shows some/all of the 15 bobbleheads that were in the very first set of MLB bobbleheads from 1960 - a full six years before MLB Properties was even formed! Please note that not all of the 15 bobbleheads pictured may be from the 1st set – one or more may be from sets (Indians?) produced after 1960.
In 1963, Sports Specialties became the first official licensee of the newly founded "National Football League Properties" and in the following years was the first to be named as an official championship locker room headwear supplier for special sports events such as the Super Bowl, NBA Finals, All-Star Games, and the NCAA Final Four. Sports Specialties secured the first "Authentics" license agreement in professional sports when the NFL "ProLine" ball cap was created in 1984. In addition, the company's signature 100% wool sized caps, The "Pro", were the first products for "on field" authentic headwear for the NFL, NBA, NHL, MLB.
David Warsaw died in 1996 at 83. NBA commissioner David Stern remarked that "David Warsaw was the father of the sports licensing industry. He did it with an intelligence and an integrity that set the standard for all who came after him." Stern went on to say that the entire sports merchandising industry "is the progeny of David Warsaw." Pete Rozelle, former National Football League commissioner, said that "Dave was sort of the granddaddy of it all [sports merchandising]."
Sports Specialties was sold to Nike Inc. in 1992 for $78 million, and was folded into Nike's operations. By this time Sports Specialties had evolved from its roots in hard goods to being essentially a softgoods - specifically headwear - company.
B. NFL Properties et al
Several times earlier in this 12 Part series I mentioned that I have been using verbal shorthand when I refer to MLB, NFL or NHL, etc. and that I really should have been referring to them as MLB Properties, NFL Properties and NHL Enterprises, etc.
The 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 each “Properties” entity 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 below 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
(i) NFL Properties was founded in 1963 and the first license was granted to none other than the previously mentioned Sports Specialties.
(ii) MLB Properties was founded in 1966
(iii) NHL Enterprises began in 1969
(iv) NBA Properties began in 1967
For more on the history (and business) of Sports Licensing, please see either of these two books:
1.
Sport Marketing by Bernard James Mullin + Stephen Hardy + William A. Sutton, first published in 2000 and re-printed several times since. See especially Chapter 9 – Licensed and Branded Merchandise Pages 189-212.
2.
Principles and Practice of Sport Management by Lisa Masteralexis + Carol Barr + Mary Hums, first published in 1998 and re-printed several times since. See especially Chapter 18: The Sporting Goods and Licensed Products Industries (Pages 382-398 in the 2nd Edition).
C. The vintage/heritage/throwback subset of licensees
Most of the sports leagues celebrate their history with a family of licensed products that the league markets under a separate name/brand – a set within a set. In most but not all cases the league collects a royalty that is 1% or 2% higher than their regular royalty for products sold under their vintage license.
MLB - Cooperstown Collection
NHL – Legacy + Heritage + Vintage
NFL – Throwback Authentics
NBA – Hardwood Classics
NCAA – College Vault
(i) MLB Properties seems to have begun their vintage line, The Cooperstown Collection, in 1988-ish. It is still going strong. Products branded with The Cooperstown Collection label pay a 12% royalty vs 11% for non-vintage products.
(ii) NHL Enterprises began their vintage line, initially conceived as the Legacy Collection but changed pre-launch to the Heritage Collection, in 1991-ish to coincide with the NHL’s 75th anniversary. The line was renamed the Vintage Collection in 2001-ish and is still going strong. Products branded with The Heritage Collection label pay the same 11% royalty as regular NHL licensed products. The first set of NHL Heritage Licensees in 1991-ish included:
- American Needle & Novelty
- CCM/Sport Maska
- DeLong Sportswear
- Mirage Elliot & Kastle Inc.
- Nutmeg Mills
- The Roman Company
- Woody Sports
(iii) NFL Properties launched their vintage line, The NFL Throwbacks Collection, in 1991 prior to the NFL’s 75th anniversary in 1994. Just like the NHL, there were 7 initial licensees. For much more info on the early years, please visit
this blog I wrote in April 2020. The “Throwback” line of products gradually disappeared by the mid 1990’s. The NFL does not currently have an official subset of vintage licensees although they they have a set of vintage logos that they only make available to select licensees, so I think of this as a defacto subset of "heritage" or "vintage" licensees.
(iv) NBA Properties launched their vintage line, NBA Hardwood Classics, in 1998-ish. (Don’t confuse the vintage product line with the TV show - in 1999 the NBA launched a TV show on NBA TV called “NBA’s Greatest Games” and in 2004 renamed it “NBA TV: Hardwood Classics presented by The History Channel”.) As of 2018 the NBA’s Hardwoods Classics line of products is still going strong. Products branded with The Hardwood Classics label pay the same 13% royalty as regular NBA licensed products.
(v) The NCAA licensing group “CLC – The Collegiate Licensing Corporation” launched a vintage line in 2007 called “The College Vault”. Products branded with The College Vault label pay a 2% premium over the regular licensee rate. Some of the early College Vault licensees included:
- adidas
- Artehouse
- ASC (American Stamp Collectibles)
- Asgard Press
- Banner Supply
- Boelter Brands
- Mitchell & Ness
- Nike
- Original Retro Brand
- Tailgate Clothing Company
- Whitman Publishing
- WinCraft
- Winning Streak Sports
14. Marrying two products vs. what royalties need to be paid
This is a very specific issue but a very important one to some people and an issue that I believe the leagues are watching very closely and may be a source of frustration . At issue is what I call “marrying” two (or more) products together to make a new product.
Example #1:
- A wonderful company called
Photofile is licensed by almost all the leagues. They make a variety of products, but their bread and butter products are photographs of players. Photofile typically sells the photos in a plastic envelope, generally with a framed mat around the photo. Theoretically, anyone can buys photos from Photofile, frame them, and sell the framed piece. What makes things interesting is the royalty – try to follow: When I buy an MLB photo from Photofile, let’s say for $10, the price includes an 11% royalty to the league. But when I turn around and frame the product myself and sell it for $30, I pay no royalties to MLB because the royalty was already paid on the photo. In some earlier blogs in this series I said that royalties were paid at the “first level of distribution”, and that’s the principle that is being applied in this case even though the product being sold has changed in the distribution channel.
Example #2:
This framed product marries 26 patches with a photo
This framed piece frames three patches
- A well respected company called
National Emblem is licensed by the NHL and NBA, and used to hold NFL and MLB licenses. Their bread and butter products are patches, the type you find on jerseys that celebrate team anniversaries, stadium openings/closings, Stanley Cup Finals, NBA Finals, etc. National Emblem typically sells the patches in a plastic envelope, generally with very rigid/stiff backing. The reason for the stiff backing is that the league orders them to do it so that it would be difficult for me to buy the patch and then sew it onto a jersey or a jacket because it is so stiff that it won’t bend with the piece of apparel. I suspect that this is a major reason they no longer hold NFL and MLB licenses – the “stiff patch” policy took away a major source of sales. That being said, anyone can buy a patch from National Emblem, sew or glue it onto a piece of already licensed apparel, and then try to sell the apparel for a higher price than they paid for the two components – no royalties would be paid on the sale of the “new” product because royalties were previously paid for in the sale of the apparel as well as the patch.
But what is more interesting is when someone buys the patch and then frames it with something else, say a player photo from Photofile. In this case it’s just like Example #1 above – the royalties have been paid on the photo and on the patch, and no royalty is paid on the much higher valued framed piece.
Example #3:
This framed piece marries a photo, pin and patch - all three of which are licensed products.
- The same issue holds for pins. I can buy an official NFL team pins from a pin licensee, let’s say for $2, and that price includes an 11% royalty = $0.22 to the league. But when I turn around and marry the pin in a frame with a Photofile photo and sell it for $35, I pay no royalties to the NFL because the royalty was already paid on the pin and on the photo.
I could provide you with other examples of “marrying” products, but I hope you get the point. It feels like there is a little bit of a “loophole” here that might work to the advantage of some entrepreneurs and against the leagues who one would think should be collecting the royalty on the finished product being sold to the public.
15. West Coast Teams
When I was considering what US College football teams to produce products for, I created a “priority list” starting with Notre Dame at the top of the list. And not too far down the list, somewhere between 10th and 15th, I had UCLA and USC and not too far below them University of Washington.
At the time I was putting together this list, I was being visited/audited by the NFL auditor (
see Part 5 for Auditing), and I set his up in a spare office where I had all of my US college research files. At one point the auditor looked at all the boxes with US college names on them and asked me – what are those? I explained that I was working on an NCAA product line much like my NFL and MLB and NHL line, and went on to explain that I had the boxes ordered on the shelves in my somewhat finalized priority position. With that the auditor laughed at me and asked what I was doing with UCLA, USC and Washington in the top 20? I tried to explain my thinking in historic terms, and he laughed at me again, asking “Shouldn’t you be most concerned about sales? Don’t you know about the west coast factor?” At this point I knew I was in trouble and asked for help.
The auditor - with greater delight than you might have suspected – explained to me that every west coast team – NFL, MLB, NBA, NHL, NCAA – sells far less than you would otherwise expect. When I began to doubt what he was telling me – I was thinking of the Raiders and the Lakers jerseys – he reiterated his point: West Coast teams sell far less than what you would otherwise expect. He asked me about my own NFL, MLB and NHL products and their sales vs the rest of the league, and he was right. For the next hour he then shared instance after instance to prove his point (he was careful not to mention company names of course). He even called several licensees (as a licensee, never a call you want to receive – remarkable how he seemed to get right through to the person in charge) and asked them about the West Coast factor.
From that point forward I have looked at West Coast teams, regardless of league, from a different viewpoint. Don’t ask me to explain why it’s the case, but I’m a convert - there’s a West Coast factor.
16. Collegiate Licensing (I have updated this Section 16 as of March 2020)
I have the sense that I have covered a lot of NCAA licensing information in various parts of Blogs #1 – 10, but allow me to tell (or re-tell) most of the story in one place.
When I use the expression “NCAA”, I am using verbal shorthand because I really mean US College and Universities and not the actual NCAA itself.
In the grand scheme of things, there are 2500-ish colleges and universities in the US. And for those 2500+ schools, there are effectively:
A. Five licensing bodies for US colleges and universities
and
B. One licensing body for the actual NCAA
For the schools, the five licensing bodies are as follows:
1. A company called
CLC (which initially stood for Collegiate Licensing Company) which represents 700-ish US colleges and universities as well as numerous Bowl Games, Conferences and other misc entities in the college realm. As you can see in the logo below, CLC is the result of a merger that was finalized in very late 2018 between two companies - Learfield and IMG College - but we aren't going to focus on that. What is important to know is that most (but certainly not all) of the "Top 200" schools in the US are repped by CLC including 100+ of the
130-ish FBS schools. CLC is based in Atlanta GA and was founded by Bill Battle in 1981 because his old coach at Alabama, Bear Bryant, asked him for business advice related to companies wanting to use his name and likeness as well as the schools name and logo.
Visit their website for a list of the schools they represent. CLC offers select licensees a license to produce a vintage product line called “
The College Vault”.
2. A company called
Fermata College which was founded in 2014 and represents a handful of major US colleges and universities. When I say a handful, I mean just that - they represent six schools (it used to be seven, but now six after Virginia left the fold). Their six schools are: The University of Georgia, the University of Kentucky, the University of Miami, the University of Notre Dame, the University of Oregon and the University of Wisconsin. CLC was started in 2014 by several former CLC employees.
3. A company called
Exemplar Associates, LLC which was founded in 2016 and represents a handful of schools - 7 as of March 2020. Their schools are: Columbia University, Cornell University, The College of the Holy Cross, University of Pennsylvania, Saint Anselm College, Washington University in St. Louis, University of Wyoming. Exemplar's founder previously worked for Learfield.
4. A company called
Affinity Licensing, best known for being the leading "Greek" licensor (ie fraternities and sororities), now represents 13 colleges including Appalachian State, Kent State and Georgia State.
5. For the other 1800-ish US college and universities that have chosen not be part of CLC or Fermata or Exemplar or Affinity, the licensing is done directly by the school. Think of these 1800-ish schools as "Independents".
CLC and their 700+ schools clearly represent the lion's share of the market in terms of the highest sales volume schools - I don't know this for a fact but I think it would be safe to say that CLC would have 175 of the Top 200 schools as measured by sales of licensed products and therefore royalties returned to the school (CLC does not represent independents Ohio State, USC or Indiana, but a high percentage of the other biggies).
For the NCAA itself, there is actually an official NCAA license – one that allows licensees to use the actual blue circular NCAA logo below and the expression “NCAA”. And the licensing body for the NCAA name/logo used to be the NCAA itself, but now the NCAA has contracted with CLC to provide this service, so contact
CLC. And if you would like to see a list of companies licensed by the NCAA itself, please
see this list published by the NCAA (be sure to look at the list of EXTERNAL licensees, not the INTERNAL list).
As background, the NCAA (National Collegiate Athletic Association) is a largely voluntary association of approximately 1250 American college and universities (as well as one Canadian university) which have joined together to govern athletic competition in a fair, safe, equitable and sportsmanlike manner, and to integrate intercollegiate athletics into higher education so that the educational experience of the student-athlete is paramount. The NCAA has an annual budget of approximately $1 billion.
The NCAA was founded in 1906 as the Intercollegiate Athletic Association and became the NCAA in 1910. The NCAA is currently headquartered in Indianapolis and oversees approximately 23 different sports, most of which are played by men and women, with men's football and men's basketball having the highest profiles.
For all sports except football, the NCAA uses a three-division setup of Division 1, Division 2 and Division 3. Division 1 and Division 2 schools can offer athletic scholarships to student athletes, while Division 3 schools may not offer athletic scholarships. Generally speaking, schools with larger student bodies compete in Division 1, while smaller schools compete in Divisions 2 and 3.
In
this blog (Part 3 of my 12 Part series), I estimated that if you were to combine all of the US college and university licenses (CLC + Fermata + Exemplar + Affinity + direct with school + NCAA itself), you might find that there were:
Soft goods licensees: 1500 companies
Hard goods: 10,000 companies
Total: 11,500+ companies
Total retail sales: $15 billion
March 2020 note: I believe that collegiate licensing generates $15 billion at retail, not the $5 billion that I and others have been reporting. The explanation is a bit complicated - back in the early-mid 2010's when CLC repped 2200-ish schools, they published annual sales reports that indicated their 200 schools (not the 2500 total schools) generated roughly $5 billion of sales. But when you take into account all 2500+ schools and the year 2020, I'd say the US college market is roughly $15 billion at retail.
My guess is that each year a good 1000+ companies do not have their US college license renewed or go out of business, and that a thousand new companies take their place. This compares to the NFL/MLB/NHL/NBA which combined might license 100-ish new companies each year.
As explained in
Part 5, the CLC + Fermata + Exemplar + Affinity + direct with school Royalty Rates are:
1. Standard royalty rate for most sales/products/licensees: 8-15% depending on the school - all of the Top 200 schools are at least 12%.
2. Royalty rate for sales to distributors: The licensing bodies tend not to have a distributor royalty rate, so the rate is the same general rate as #1 above, namely 8-15% depending on the school
3. Royalty rate for sales of products branded with the a historic/heritage collection logo known as “College Vault” in the case of CLC licensed schools and by other names in select other instances: + 2%, so 12-17%.
4. Royalty rate for products jointly licensed by the school & players association: There is no players’ association – the players are amateur athletes.
5. Royalty rate for sales of “Premium Products” (see Part 11 of this blog): The licensing bodies tend not to have a “Premium Product” royalty rate, so the rate is the same general rate as #1 above, namely 8-15% depending on the school
6. Royalty rate for sales of Championship Game/Finals products: There seems to be a trend towards charging a 2-3% premium above the general royalty rate as shown in #1 above, but this varies by school/league/licensing body so please ask the appropriate licensing body for the actual rate but generally 12-18% depending on the school.
7. Royalty rate for sales of Championship Game/Finals products to distributors: The licensing bodies tend not to have a distributor royalty rate, so the rate is the same general rate as #6 above.
* I would appreciate confirmation of this rate by others.
17. The use of stadium/ballpark/arena images in licensed products
Both of these products were produced by Maple Leaf Productions and both used stadium images.
This could be a whole blog all by itself, and I have a lot of experience and opinions on this topic (as evidenced by the products pictured above). If you are really interested in this subject, you probably want to hire me on a consulting basis and we can really roll up our sleeves. But in the most general of terms, the major issue with using stadium/ballpark/arena images is that often the league feels they do not have the right to license the stadium/ballpark/arena image and/or name, believing that in many cases the stadium image and/or name is owned by a third party and is therefore outside of the licensing jurisdiction of the league. This is especially true of older stadiums/ballparks/arenas no longer in use.
More specifically, here is roughly where the various leagues stand:
MLB: MLB is the most progressive of the leagues, and they have negotiated for licensees the rights to use the name and/or image of almost all the current stadiums as well as a handful of older stadiums. MLB doesn’t provide licensees with ballpark images, but they do provide the licensing.
NFL: The NFL basically wants licensees to secure the rights to use stadium names and/or images on their own, directly with the stadium owner, and then to provide proof of those rights to the NFL before a product can be produced. My two cents worth is that the NFL should be much more aggressive on this and at least take MLB’s lead, but who am I to say…
NHL: See NFL above.
NBA: I am not familiar enough with the NBA’s licensing policies to know their stance, but if I had to guess, it is likely more like the NFL/NHL than it is like MLB.
NCAA: Don’t forget that NCAA licensing is actually done by CLC or LRG or SMA or directly by some schools, so each could be a little different with respect to the use of stadium images. But to me the overriding factor in almost all cases is that each school owns their own stadium and since CLC/LRG/SMA represent the school,
I’m going to leave it there for now. If you want more insight and suggestions and examples of what I did, please contact me.
18. Different types of Retail Licenses and the importance of “Authorized Distribution Channels”
When you become a licensee, it doesn’t mean you can go out and sell to anyone you wish – far from it! Your license agreement can have any number of “qualifiers”, such as:
A. A geographic limitation: You can only sell to customers based in the US (or Canada, Mexico, International, etc.)
B. A retail category limitation: This is a limitation on the TYPE of retailer (aka Authorized Distribution Channel) you call sell to.
The NFL uses the following categorizations (there may be other categories as well):
• Airport/hotel retailers
• Better department stores
• Card/party/craft/hobby stores
• Catalogue/direct response
• Convenience stores
• Distributors
• Drug stores
• Fan shops
• Gift/flower shops
• Grocery stores
• Home stores
• Mass market stores
• Mid tier
• Retailer related e-commerce
• Sporting goods stores
• Team sales (Club/stadium/concessionaires)
• TV retail
• Warehouse club stores
MLB uses the following categorizations (there may be other categories as well):
• Jobbers
• Wholesalers
• Distributors
• Retailers
• Internet sales (direct to public)
NHL uses the following categorizations (there may be other categories as well):
• Canadian member teams
• US member teams
• HHOF
• Independents
• Mass merchants and department stores
NBA:
I am unclear as to the NBA categories but they certainly have different categories.
The point is that the league could use this part of the contract to tailor someone’s license to differentiate between licensees who sell more or less the same product, ie Company A has a ball cap license that allows them to sell only into the following categories and Company B has a ball cap license that allows them to sell only into these different categories (there could be overlap, or there could be some exclusivities).
What you the licensee need to understand, long BEFORE you sign your contract, is that this is a tool the league uses to control/limit licensees. You might think this must be nearly impossible for the league to enforce, but I would submit that if Company A begins selling into Company B’s “exclusive” category, the league will hear about it immediately and be forced to make a judgment/ruling/decision, and if you value your license, you do not want to put the league in that position.
19. Links to license applications:
1. NFL
- Go to
www.nfl.biz and click on "Become a licensee" to download a Prospective Licensee Info Packet (this is actually a full License Application, not what I would call an “info packet”).
- Or call 212-450-2000 and ask to speak with the licensing department.
2. MLB
- MLB does not have an online application form. The best I can do is to direct you to where you can download an
"International Prospective Licensee Information Form" here - this can show you what is involved in applying for a license, but don’t use this downloaded form if you are interested in obtaining an MLB USA license.
- Or call 212-931-7800 and ask to speak with the licensing department.
3. NBA
- The NBA does not have a downloadable form online.
- Call them at 212-407-8000 and ask to speak with the licensing department.
4. NHL
- Go
here at the NHL website where you can see the NHL license application policy and contact information, but not an actual license application.
- Or for an NHL USA license, call 212-789-2000 and ask to speak with the licensing department.
- Or for an NHL Canada license, call 416-359-7900 and ask to speak with the licensing department.
5. NCAA
A. The
Collegiate Licensing Company (CLC) represents 200-ish US colleges and universities. Visit their website for a list of the schools they represent and to download a license application(s).
B.
Licensing Resource Group (LRG) represents another 200-ish other US colleges and universities. Visit their website for a list of the schools they represent and to download a license application(s).
C.
Strategic Marketing Affiliates (SMA) represents another 200-ish US colleges and universities. Visit their website for a list of the schools they represent and to download a license application(s).
D. For another 1000-ish US college and universities that have chosen not be part of CLC or LRG or SMA, the licensing is done directly by the school. In that case, contact the school and ask for the product licensing department.
E. To obtain an actual NCAA license (not for any schools, just for the NCAA), you used to apply directly to the NCAA, but now the NCAA has contracted with CLC to provide this service, so contact
CLC.
6. WWE
Mattel is master toy licensee - visit
this WWE url for some licensing info but not an application. Their website is
www.wwe.com and their phone number in Stamford CT is 203-352-8600.
7. NASCAR
- Go
here to download a NASCAR license application.
- Or you can visit
the NASCAR website for more information and their phone # in Charlotte NC is 704-348-9600.
8: MLS:
- The
MLS website does not have an online license application.
- To get a license application, contact MLS at 212-450-1200 and ask for Tanya Rojas, Consumer Products Coordinator Tanya.rojas@mlssoccer.com . For a list of licensees, please visit
here.
9. PGA
- The
PGA website does not have an online license application.
- To get licensing information, please call their head office in Palm Beach Gardens FL at 561-624-8400.
10: UFC
- The UFC website is
www.ufc.com. UFC is wholly owned by Zuffa Inc. of Las Vegas but their website does not have an online license application.
- To get licensing information, please call their head office in Las Vegas at 702-221-4780.
11. CFL
- The
CFL website does not have an online license application.
- To get licensing information, the CFL directs people to contact Daryl Seidman of IMG Sports Licensing in Toronto at 647-788-8075.
12. United States Tennis Association
- The
USTA website does not have an online license application.
- To get licensing information, the USTA directs people to contact Paul White, Director Licensing and retail Development for the USTA at their White Plains, NY office 914-696-7000.
20. Sub-licensing
This expression can mean different things to different people – I will try to explain:
When someone contacts the NBA (I am using the NBA as an example here, but it is the same with the NFL, MLB, NHL, NCAA, etc.), as I wrote in
Part 1 the NBA’s automatic reaction is to get you off the phone as quickly as possible because they don’t have time to chat with the seemingly endless number of entrepreneurs and dreamers and schemers contacting them about getting a license. Remember – you need them a lot more than they need you.
One of the ways they get you off the phone is to suggest that you find a current NBA licensee and figure out a way to work with them and the NBA may use the expression “sub-license”, as in “Why don’t you try to work out a sub-license agreement with an existing licensee.” If you ask for a list of NBA licensees, they’ll tell you to use the internet to find them. If you ask the NBA for a contact name(s) at various companies, they won’t help you.
But when the NBA tells you to try to work out a sub-license agreement with an existing licensee, there are really two different things being said:
A. They are telling you to reach some sort of agreement with an existing licensee where you share your idea with the company, then they take on that product as if it was their own and they pay you a small (and I mean small) piece of the action. I don’t care how good your idea is, if you can’t get your own license and have to work with someone else, they hold all the cards and you hold almost none. As long as you understand that, then please go ahead and talk, share and negotiate and come up with the best deal you can – all I want you to understand is to some people the deal will seem very one sided.
B. They may actually be telling you to work out a formal sub-licensing agreement, an agreement that is sanctioned by the league. This is much more complicated to explain so allow me to use an example of a sub-licensing agreement that was sanctioned and encouraged by the NFL. This was in 2002-ish and I honestly don’t know if this sort of thing is allowed any more, but let me explain.
MVP Pics was a Canadian company that sold personalized locker room pictures – your name on the back of a Patriots jersey in what appeared to be the Patriots dressing room. MVP Pics was advised by the NFL’s Canadian office that their sales in Canada would likely be too small to warrant a license, so they should find an existing NFL Canada licensee on a sub-license basis. They contacted me, and I felt for a fellow entrepreneur and agreed to allow them to be a sub-licensee of Maple Leaf Productions as long as it was sanctioned by the NFL. The agreement worked like this:
- MVP Pics would submit product concepts to me, and I would submit them to the NFL Canada for Quality Control approval. The product would have MVP Pics name on it, not Maple Leaf Productions.
- MVP Pics would make the product.
- MVP Pics would sell the product.
- MVP Pics would bill their customers for the product and the customers would pay MVP Pics.
- Each month MVP Pics would report their sales to me (units, sku’s, prices, etc.)
- I would then include MVP Pics sales in my monthly sales/royalty report to the NFL – it would be a separate product, but the sales totals would roll into my total sales and they would count against my guarantee. This was the only benefit I received in this deal – that it helped me meet my annual guarantee. I suppose that I could have charged MVP Pics some sort of royalty fee myself, either a fixed annual amount of a percentage, but I didn’t. As I said, I did it to help a fellow entrepreneur. My guess is there aren’t too many people as willing to help as I was (some might say dopey), so don’t expect to be able to do a sub-licensing agreement without having to pay the existing licensee something.
- After a year or two of this arrangement, MVP Pics wasn’t giving me their sales reports in a timely fashion, and I was getting called onto the NFL carpet for their tardiness, and as soon as that was the case, I told MVP Pics our relationship was ending.
- As I said earlier, I don’t know if any of the leagues still sanction this type of arrangement, but the question can certainly be asked and if the answer is Yes, then the challenge becomes finding a willing licensee – the only ones who might consider a sub-licensing arrangement would be someone who is having trouble meeting their annual guarantee and is thus in danger of losing their license.
C. The most current example I can find of Sub-licensing is something I am witnessing with the apparel companies. It may be that the only type of sub-license agreements that the leagues now sanction are with apparel companies because of the huge money involved – I don’t know.
But here are two examples of what I have observed.
(i)
Franco Apparel seems to be a MLB sub-licensee of Majestic, they seem to call it “co-branding”, as in “Our team licensed apparel products are co-branded with Majestic”. Franco Apparel is a strong brand in apparel for newborns and children up to boys size 20 and girls size 16, and Majestic has apparently joined forces with Franco to reach this children’s market. My guess is that Majestic has a huge annual guarantee to MLB, and one way to help meet/exceed that guarantee is for them to “share the risk” by entering into sub-licensing agreements with other major apparel corporations who have strengths in specific market segments. This would have to be very carefully coordinated with MLB Properties because of the intricacies of apparel licenses, but it is apparently doable because the proof is in the pudding – Franco Apparel (a non MLB licensee) is working with Majestic (an MLB licensee) with the end result being that it appears as though Franco is a licensee.
(ii)
Profile (Profile NYC) seems to be sub-licensee of NFL licensee VF Imagewear. “Profile Enterprises has recently acquired the right to be the licensee for Big and Tall products of the NFL apparel under license from VF Imagewear Inc. The licensed apparel will feature the team names, logos, and likeness of the NFL brand and its 31 affiliated teams.” [Makes you wonder what happened to the 32nd NFL team ha ha]. Once again, just like the Franco Apparel-Majestic MLB deal, it appears as though the NFL sanctions sub-licensing arrangements between large apparel companies, and in the NFL case, they even use the expression “under license from VF Apparel”, clearly what most people would call a sub-license.
As I said earlier, I don’t know if sub-licensing agreements are available to the little guys, but if they are, the challenge remains to find someone who is willing to work with you.
We’re now in the home stretch and I’d like to answer some reader questions in public in the hope that the answers can help others who may have the same questions.
21. Some common questions & misconceptions
Since I began this Blog, I have been asked the following three questions by quite a number of people, so while the answers may seem obvious to some, I have learned they aren’t so obvious to others.
Common question #1: Do I need a license or permission to be a retailer of NFL/MLB/NBA/NHL/NCAA/etc. merchandise?
Allow me to answer this using the NFL as an example – the same answer holds for the other leagues, but it’s easier to write about one league than multiple leagues.
The good news is that there are no restrictions from the NFL vis a vis you becoming a reseller/retailer of NFL products. All you would do is contact whichever NFL licensees you are interested in and see if they will sell to you. Let's assume there are approximately 100 NFL licensees (85 hardlines, 15 soft goods) - my guess is that 75 of the 100 would sell to you, while the other 25 or so would likely say you're "too small" unless you bought a fairly significant volume of product. The hardest item to purchase, I suspect, would be jerseys, and as you probably know Nike takes over from Reebok by this time next year. Nike will certainly have a policy of what type of retailers they will/won't sell to, and small guys likely won't be on the list - that's just the world we live in and you're not going to change that. I may be all wrong about Nike and they may be all-embracing, and all you would have to do to find out is simply contact someone in their licensed jerseys sales department to find out what it takes to become a vendor.
Common question #2: Do I need a license or permission to be a blogger about an NFL/MLB/NBA/NHL team? What if I monetize my blog?
There are far more qualified people than I out there who would have opinions, but my two cents worth is that freedom of speech trumps all else and that you are able to blog about any team you wish. My quick rule of thumb is to spend time seeing what other people are doing and how long they’ve been at it – surely that will suggest what can be done.
That being said, I do know that the NFL is very particular about website names and the use team logos – I don’t know to what extent this is the case with the other leagues, I believe the NFL is the most vigilant in this regard. Once again, I cannot tell you specifically what you can and can’t do, but I would spend time online seeing what other people have done vis a vis website names and the use of team logos. I do know that a customer of mine was issued a cease and desist order and told to change his e-tail store name from www.nflnut.com to something else, and try as he might to think of a way to fight it, he couldn’t find a way that wasn’t going to cost him a lot of money in legal fees.
The frustrating thing to me is that in the real world you would never be able to simply call the NFL and ask them what you can/can't do on the internet because the person at the NFL is going to tell you that you can't do anything, and of course that's not true. Maybe your lawyer could talk to their lawyer, but that would get hugely expensive and I still believe the NFL lawyer would tell your lawyer that you can't do anything and of course that's not true.
Now leave the NFL alone for a moment and let's talk about the Dallas Cowboys. If I think the NFL might be a bit of an internet bully, then I believe that the Dallas Cowboys would make the NFL look like small timers. The Cowboys more than any other team are hugely protective of their name and logo on the internet and elsewhere. And again, in the real world you would never be able to simply call the Cowboys and ask them what you can/can't do on the internet because the person at the Cowboys is going to tell you that you can't do anything, and of course that's not true.
To help resolve this issue but before you ask your lawyer anything (I would suggest a lawyer who specializes in the internet AND trademarks/intellectual property vs one who specializes in copyright infringement), I would spend as much time as I could on finding all the Dallas Cowboy fan sites that are currently on the web. Now pay close attention to how many of them are truly monetizing their site - this to me is the key! My guess is that the NFL and the Cowboys allow fans to have Cowboys fan websites, but as soon as those websites begin to make money (ie monetize themselves), that's when a cease and desist letter gets sent.
PLEASE UNDERSTAND that I could be completely wrong on all this - maybe I am imagining bogeymen that don't exist. But I'm slightly suggesting that freedom of speech allows you to do anything you want on the internet. If you have already spent a lot of time on the internet and found that few Cowboys fan sites currently monetize themselves, this could be the reason why - the NFL and/or the Cowboys shut them down once they begin to become big/eat into the revenue pie. My pure guess is that if my hunch is right and that the NFL/Cowboys are litigious with internet fan sites, then there must be some legal cases where a fan site has taken the NFL/Cowboys to court (or vice versa) and thus your internet + intellectual property lawyer should be able to find some legal precedent. So once you've truly studied as many Cowboys fan sites as you can and once you have truly studied to what extent each has monetized itself, then you will have a far better sense of whether or not you want to spend time with a lawyer.
Sorry to be a bit of a bummer on this whole internet fan site issue, but better you do the research now and prepare yourself than to find your site up and running after a lot of time and money only to find out then that the NFL/Cowboys are going to try to come after you with "cease and desists". My gut says you should be a Boy Scout (and Be Prepared) on this one folks.
Common question #3: I thought that if I was a licensee that the NFL/MLB/NBA/NHL/NCAA/etc. bought the product from me – I didn’t realize that I’m supposed to sell direct to retailers.
I have been surprised to receive this question numerous times – it never would have occurred to me but the answer is very short:
You are the one selling the products, not the NFL. The NFL never buys anything from you so please get that out of your mind.
If you sell $1,000,000 worth of NFL products (presumably to bricks and mortar stores and catalogues and e-tailers), you will owe the NFL royalties in the amount of 12% x $1,000,000 = $120,000. You get to do whatever you want with the remaining $880,000.
When the bricks and mortar stores and catalogues and e-tailers sell your product to John Q Public, they are typically doubling the price (called keystoning). So if they buy $1,000,000 of product from you, they likely are selling it for $2,000,000. The NFL does not get any royalties from the retailers - they have already collected their 12% = $120,000 from you.
Even if the NFL website buys your product, don't think of the NFL website as being part of the NFL, think of them as just another e-tailer (in fact the NFL doesn't run the e-comm part of their website, a private company called GSI Commerce runs it but they make it look as though the NFL is running it).
Please see this blog about selling to the online stores of the various major leagues - it tells the story of GSI Commerce and the transition to Kynetic in the last half of 2011.
Ditto the NFL team stores – think of each team store as just another retailer (except of course as mentioned in an earlier blog you have to sell to the team stores at your lowest price), don’t think of them as being somehow owned by the NFL because they aren’t.
22. What is drop shipping and how does it work?
The Wictionary does a good job of defining drop shipping as: "To deliver goods for a business directly to its customers, as though the business owned a relevant inventory, but the manufacturer or wholesaler is the real source of that delivery."
Whether or not that is confusing to you, if you are interested in Drop Shipping, please read on.
The issue is typically that retailers, generally e-commerce retailers, advertise products for sale on their websites that they don’t actually ever have in their possession. They advertise Product X for sale, list a price, and wait for someone to buy it. When someone buys the product, the e-tailer conveys the sales information to a third party – generally the manufacturer but perhaps also a wholesaler or distributor – who then pulls the product from inventory and ships the product directly to the customer.
So if you are a retailer the issue becomes finding “partners” who are willing to drop ship for you. Once again I am going to sue the NFL as an example – the same would hold true to licensees of the other leagues but it’s less confusing to write about one league.
A. Dealing Direct with licensees who drop ship
Some of the 100+ NFL licensees will actually have a "Drop ship" program themselves - likely some of the smaller licensees vs the more high profile licensees. What this means is that you take the order. You process the transaction. You communicate the order to the licensee (each licensee will have a different way for you to do this and that may be frustrating/confusing/complicated to automate). They will actually drop ship the product to the customer and charge you for the product plus shipping & packaging. You would have a credit card on file with them and they would simply charge your credit card. Of the 100 licensees, how many have a drop ship program that you could take advantage of? Maybe 20. Which 20? You would have to contact the sales department of each licensee and you are ultimately asking them a simple question - "Do you have a drop ship program for retailers?".
As for getting a list of the 100 NFL licensees for you to contact, I actually have it on my list of "to do's" in the next six months to create an online database of "current" NFL, MLB, NHL, NBA, NCAA licensees, their address info and websites, and a short summary of what products they carry. March 2012 note: Done - please visit
LicensedSports.net .
B. What to do for licensees who don't drop ship
If an NFL licensee will not drop ship for you (likely 80 of the 100 won't drop ship for you), then the issue becomes how will you buy product from them because they aren't going to sell you things one at a time as you receive the orders.
(i) One option would be for you to buy the minimum amount of product (the amount would vary widely from company to company) and have it stored/warehoused at a company of your choice who would act as your shipper. There are lots of such companies in every city. But I suspect this is not something most e-tailers are interested in because they don't want to run the risk of sitting on unwanted merchandise they can't sell.
(ii) In this case it seems to me that the best solution is to find yourself a good "distributor". As I wrote in
Part 6, distributors buy product from the licensees, store it in their warehouse, and then sell to retailers. If you are an e-tailer this could work very well for you. Furthermore, most good distributors would actually have a drop ship program that would work exactly as I described above, namely: You take the order. You process the transaction. You communicate the order to the distributor (and the great thing with this is you only have to work with one company so figuring out a way to automate the process only needs to be done once). The distributor will actually drop ship the product to the end customer and charge you for the product plus shipping & packaging.
So the key would be to find a distributor of licensed sports products who carries a wide range of NFL products, but more importantly for you, Dallas Cowboys products (or whatever team(s) you wish to sell. So you will want to find either a BIG distributor which carries all sorts of NFL team products and a wide range of different products for each team, or you want to find a distributor in the Dallas/Texas area who may not carry many NFL teams but has a wide selection of Cowboys merchandise (just using Dallas and the Cowboys as an example of course). Regardless of where you are, here are 3 BIG distributors you could contact and you can find out from them if they would work with you on a drop ship basis AND what range of Dallas Cowboys (fill in team name here) product they have.
1.
West Coast Novelty (warehouses in CA and TN)
2.
Maurice Sporting Goods (based in Illinois)
3.
Casey's Distributing (warehouse in Nebraska - a great company & great people). Casey's website even lets you go online right now and see the 225 Dallas Cowboys items they have in stock and how many of each are in stock!!!
4.
Sports Images (warehouse in MA) - Sports Images carries a wide varieties of lines and their website's "Inventory" option lets you search by team and see prices and if the item is in stock or not.
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The following distributors were added after I originally published this blog:
5.
Big Apple Card Company (facility in FL)
A huge selection of licensed of hardline and softgoods products from the major leagues (NFL, MLB, NBA, NHL, College) as shown in their remarkable catalogue.
6.
Merling Wholesale (warehouse in MD) Merling's website even lets you go online right now and see the 39 New York Giants items they have in stock and how many of each are in stock!!!
7.
Sports Merchandising Network, Inc. / Team SMN is a wholesale distributor of a wide variety of licensed merchandise. You can see the pricing and search for products by league, team and product - all without even logging in.
8.
SportsWorld Distributors is a wholesale distributor of a wide variety of licensed merchandise, especially ancillary gift items. You can search for products by league, team and product - all without even logging in. All prices shown on the website are suggested retail prices.
9.
TNT Media Group is a distributor of sorts - they buy from licensees and sell to the likes of Walmart, Target, Barnes and Noble, Bed Bath and Beyond, and GSI Commerce. They specialize in buying certain types of products - they initally focused on publishing products but have expanded beyond that at this point in time. They have strength in selling to e-commerce sites, and have a strong relationship with
GSI Commerce which runs the NFL, MLB, NBA, NHL and NASCAR e-commerce websites among many others. But they are not necessarily the sort of distributor who small retailers would buy from.
New info re GSI as of March 2012: Please see this blog about selling to the online stores of the various major leagues - it tells the story of GSI Commerce and the transition to Kynetic in the last half of 2011.
The downside of working with a distributor is, of course, the fact that they are going to charge you more than if you bought directly from the manufacturer (the licensee). But you only want to buy things one at a time so as I said earlier, only perhaps 20 of the 100 licensees would be structured to sell to you in the drop-ship manner you want. Ultimately working with a distributor should meet almost all of your needs and your biggest issue will be to figure out how to charge YOUR customer the right amount for shipping BEFORE you have passed the order on to the distributor - in this case UPS has incredible software for people just like you and you could actually build that software into your e-commerce solution.
I hope that you now understand Drop Shipping in the context of licensed products, and that the Wictionary now makes that much more sense in its definition of Drop Shipping: "To deliver goods for a business directly to its customers, as though the business owned a relevant inventory, but the manufacturer or wholesaler is the real source of that delivery."
23. I’m an artist (or I represent an artist) and I’d like to produce licensed artwork such as limited editions and/or posters…
I spent almost 15 years in this area of licensed sports. And as a result I have a lot of knowledge on this particular subject. But it’s a long, sometimes complicated story and I really need to understand what you are trying to do before I can offer you advice. Ultimately this is an area of licensed sports where you would do well to hire me as a consultant for a day or two and we will go up one side of the issues and down the other.
Part of the discussion would certainly center around when you do and don’t need a license to produce artwork, and this discussion would include the applicability of two court cases to what you are trying to accomplish.
Case #1: Case #1 was ETW Corporation vs. Jireh Publishing Inc. This involved artist Rick Rush (Jireh Publishing) who painted a picture of Tiger Woods winning the 1997 Masters golf tournament, and Tiger Woods marketing company (ETW Corporation). The issue wasn’t whether or not the artist had a right to sell the original art (because this was already accepted/established as a First Amendment Right), but whether the artist had the right to sell reproduction prints of the art. Remarkably, the artist won the case in Federal District Court in Ohio on April 10, 2002 as well as the appeal to the US Court of Appeals for the Sixth Circuit June 20, 2003. Here is the
New York Times article about the initial decision and a
summary of the appeal ruling.
Case #2: The second case (University of Alabama vs. Daniel Moore) involves a team/school (Alabama) instead of an individual (Tiger Woods) and was between an artist, Daniel Moore, and the University of Alabama. Please see the
Vanderbilt (University) Journal of Entertainment and Technology Law blog with respect to the Court’s decision.
I’ll leave it at that for now – if you are interested in producing sports related artwork, consider hiring me as a consultant.
24. I was wondering if you could explain to me how the deals between entrepreneurs with an idea and existing licensees are structured? I want to manufacture and distribute a licensed product and I fully understand that I will not be able to become an NFL licensee myself. If I had an agreement with an existing licensee, would I only be able to sell to them?
Sometimes it’s easiest to simply repeat someone’s question – my guess is that if one person has asked this question, others may have more or less the same question…
What the person asking this question is getting at is they don’t just want to “sell their idea” to an existing licensee, presumably because they understand that they will get a very small piece of the pie. Instead they want a bigger share, and thus they would like to “control” the product by making it and selling it to an existing licensee.
My answer may be one that most entrepreneurs don’t want to hear, but here goes.
The NFL/MLB/NHL/NBA requires that each licensee be responsible for the manufacturing of the product that they sell. This doesn't mean they have to own the factory, but it means that the licensee is the one who contracts with the factory to have the product made - the licensee must "do the deal" with the factory. What the leagues are guarding against is exactly what you are suggesting - they do not want cases where an unlicensed person/company manufactures a licensed product and then sells it to a licensee. It may seem like a subtle difference but the intent of the leagues is clear on this one - you can't do what you're suggesting.
I have left NCAA out of the above because the NCAA licensing is done by one of four bodies depending on which school (CLC, LRG, SMA or the school itself) and because there are so many licensees (University of Texas alone has 750-1000 licensees - more than NFL + MLB + NHL + NBA combined), it's possible that you might be able to do what you are suggesting with colleges almost on a school by school basis because it's too much for the licensing body to enforce the rules. But I would still caution you that the NCAA licensing body would almost certainly have the same wording/intent as the pro leagues - namely not to allow an unlicensed company to manufacture a licensed product and then sell it to a licensee.
The only other way to look at this is for you to reach an agreement with an existing licensee. The agreement will feel very one sided - they hold all the cards (it's their license, their risk, their sales force, their marketing, their manufacturer, their capital being invested) and you hold only the "idea" card, but it's still possible to do a deal as long as you're not too "greedy" (sorry that sounds negative but no other way to state it). Almost impossible for me to suggest what "not too greedy" means, but maybe 3% of wholesale goes to you???
But please be prepared that almost all licensees do not want to have anything to do with people who come knocking on their doors with ideas and shoo them away for all sorts of reasons, but there may be someone out there who will listen to what you have to say.
I would be happy to explain this process further to any readers interested in finding an existing licensee with whom they might be able to work, but only if you understand that any deal that might be negotiated will be a very one sided deal.
25. Do all teams share royalties equally?
NFL: Yes – each team gets 1/32 of the royalties (see Part 1 for an estimate of the per team amounts). We have all heard the stories/rumors that Jerry Jones, the owner of the Dallas Cowboys, has argued long and hard for royalties to reflect the actual sales by team vs the principle of equal shares, but he has yet to win this battle.
MLB: Yes – each team gets 1/30th of the royalties
NHL: Yes – each team gets 1/30th of the royalties
NBA: Yes – each team gets 1/30th of the royalties. That being said, I once heard that a new team gets to keep whatever their brand earned for the 1st year or two, or at least that was the case for the Toronto Raptors and Vancouver Grizzlies. The thinking behind this would have been that it encouraged a team to promote their brand hard AND it allowed a new team a slightly larger revenue slice since the thought would be that new teams might generate a disproportionately large amount of royalties in Year 1 and 2.
NCAA: Each school gets their own share. I have been told that if a school uses an outside licensing body (CLC/LRG/SMA), then the school gets 50% of the royalties and the licensing body gets the other 50%. This makes sense to me because the school is saving a large administrative cost and any royalties they receive is therefore almost all “profit”, but I don’t know the 50% figure to be a fact.
26. Selling to various retailers – how much do they mark up the price?
The following are some basic rules of thumb re pricing of licensed sports products. I know there are exceptions to every rule, and times are changing, but here are some very rough rules of thumb.
A. Bricks and mortar stores and e-tailers
When bricks and mortar stores and e-tailers sell your product to John Q Public, they are typically doubling the price (a practice called keystoning). For instance, if you sell a product to a store for $10, they will turn around and sell it for $20.
B. Team stores
When you sell to team stores (aka concessionaires), they are likely to triple the price. For instance, if you sell a product to a team store for $10, they will turn around and sell it for $30.
C. Catalogues
When you sell to catalogues, they are likely to raise the price by a factor somewhere between double and triple. For instance, if you sell a product to a catalogue for $10, they will turn around and sell it for $25.
D. Wholesale Clubs
When you sell to Costco, Sam’s Club and the “wholesale clubs” , they are likely to raise the price by a factor of 50% - a smaller margin than almost all other retailers. For instance, if you sell a product to a wholesale club for $10, they will turn around and sell it for $15-ish.
And there you have it….
If you made it this far, guess what Dear Reader – you made it to the end of Part 12 and I will send you a note giving you the day off tomorrow. I congratulate you – that’s a lot of reading!!!
I suspect I will have more to say on licensing in the coming weeks and months, so please stay tuned to this Blog, but any new comments will not be in the form of the 12 Part Series which is hereby officially closed (and the crowd went crazy!).
Thanks for making the effort and as always, comments are welcome and encouraged!
Signing off,
Scott Sillcox
PS from fall 2023: In case you weren't aware, I created and constantly maintain a 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 full 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). There is nothing like it anywhere on the internet, and I update the database weekly, oftentimes daily.
Virtually all 2500+ company records have a contact name with title, phone number and email address. In many cases, I list up to six contacts within the company. What's more, many of the records have a Linkedin url so you can learn much more about that contact including if you know people in common.
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 for soft goods, check out this terrific and highly searchable resource at www. LicensedSports.net .
PPS from fall 2023: I am a very active consultant to people looking to learn more about the licensed sports product industry - you can
find the full detail here. I spend almost every day in the licensed sports product field and I work with between 300 and 500 clients each year. There are three primary ways I work with people:
1. Hourly telephone consulting
2. Full day face-to-face meetings where I will go almost anywhere in North America to spend a full day with you and giving you a fire hose amount of information that is directly applicable to your circumstances.
3. I have a bundled package of services for those people who know that they want to work with an existing licensee.
So
visit here for more detailed info and let me know how I can help you move your idea forward.
