chapter 9 Licensed and Branded Merchandise

Objectives To understand the structure of the licensor– licensee relationship To recognize the various segments of the licensed and branded merchandise industry To realize the importance of licensed and branded merchandise for revenue generation, the development of organizational brand equity, and the enhancement of fan identification To identify the impact of changing styles and trends and of manufacturer and organizational competition on the licensed and branded merchandise industry

Licensed Products Items of clothing or products bear the name or logo of a popular collegiate or professional sport team. In FY 2004, licensed product sales for both NFL and MLB reached $3 billion, $2.6 billion for colleges and universities, $2.5 billion for NBA, and $1.5 billion for NHL. NFL is the world’s 7th-largest brand in terms of licensing, behind Disney, Warner Brothers, and four others. Sales from apparel specifically designed for women makes up 15% of MLB totals, 10% of NBA totals, and 5% of NFL totals. The colleges and universities that sell the most licensed products and apparel generate about $7 million/year in sales, 6% of which involves the sale of replica jerseys.

Licensed Products: Clothing Clothing styles are a transmitted code that can impart meanings of these aspects: –Identity –Gender –Status –Sexuality Licensed and branded apparel communicates on each of these levels and is based on the premise that fans will purchase goods to draw them closer to their beloved organizations and athletes.

Licensed Product Relationships The licensees –They are manufacturers of licensed products. –They include well-known sport apparel and footwear companies such as Nike, Reebok, and Russell Athletic, prominent video and computer game manufacturers 989 and Electronic Arts (EA), and hard goods manufacturers like Artcarved jewelry, Mead stationery, and Pinnacle trading cards and memorabilia. The licensors –Licensees pay licensors (teams and leagues) for the right to manufacture products bearing team and school names, nicknames, colors, and logos. –Sport organizations transfer the right of use of their names, marks, and logos to other companies so that these companies may use them in producing products for sale.

Industry Structure Professional league licensing: NFL, MLB Collegiate licensing: CLC Players’ association licensing: MLBPA Licensing programs of other sport organizations: USOC and Roots International licensing: Manchester United Licensing in professional individual and tour sports: Dale Earnhardt Sr.

Branded Merchandise Those products bearing the name of the clothing manufacturer Appealing to the youth market Fashion over function for sport manufacturers

Current Issues and Trends in Licensing and Branding Brand identity –Measures of meaning, prestige, and social standing in consumer society. –Teams establish valued perceptions through the redesign of their uniforms, marks, and logos. From January 1995 to August 1997, 25 teams introduced redesigned logos or uniforms. Rebranding: Changing to communicate different message (continued)

Ethical Conduct of Licensees, Licensors, and Manufacturers Grassroots basketball Exploitation of college athletes by colleges Exploitation of the worker in the manufacturing of licensed goods Native American mascots

Product Innovation in Trading Cards Topps was preeminent card maker until 1981 Market flooded after antitrust ruling Special features of card manufacturers: –Memorabilia inside –Special sets –High-end card sets