- Zephyr Graf-X:
This quality headwear maker, known for large stock and quick
service and delivery, has licenses from the NHL and CLC
and gets high marks from both.
- Top Of The World: With
its Cappello cap, TOTW joins Zephyr as a headwear company
that is "setting the bar" for headwear, combining fan-friendly
looks with fashion.
- Nokia: Nokia's
face plates for cell phones are turning up as a popular
promotional and premium item. A natural offshoot for a telecommunications
YEAR IN REVIEW: A Hard Look In
Not to draw too large a comparison between the situation of the
Ewing-less Knicks and the year that just passed for the sports licensed
category, but both can be described with a single phrase: "A year
The industry, faced with the loss of a major manufacturer for the
second year in a row and continued flat sales, took a hard look
in the mirror and, based on its self-assessment, started to hammer
out new ways to conduct business.
"Clearly when you lose two of the key players [first Starter, then
Pro Player] in the market, it is not a positive sign for the industry,"
said Stu Crystal, vice president, consumer products for MLS and
a former employee of Starter. "But it wakes up the leagues and demonstrates
they need to be partners and not just look at short-term revenue
and who's the highest bidder. Now they are setting up programs where,
if the licensees focus and do a reasonable job, they can be successful."
One component of the new approach to business has been to reduce
the number of licensees. Leagues have been paring down their lists
of partners, with numbers cut almost by half in some instances.
"When you reduce your licensees, you reduce the amount of product
that's out there, and increase the creativity of those that remain,"
said Chris Heyn, senior vice president of the NBA's global merchandising
A manufacturer's ability to get product to market was often a key
factor in determining its fate. Being able to capitalize on hot
markets was essential to success in the last year. Companies set
up for quick turnarounds, like Gear For Sports and Majestic, thrived.
The events themselves helped out as well, with opportunities like
the St. Louis Rams' surprising football season and MLB's Subway
In addition, licensees tried to exert greater control over their
destinies by instituting vendor "micromanagement" programs. Haddad,
for example, has been working with retailers to help manage their
assortments and get the right product in place at the right time.
"There's more of a strategy now with managing," said Jack Haddad,
president, Haddad Apparel Group. "Every league will get bigger sales
if retailers are willing to pay attention to managing inventories."
Product-wise, fans seemed to rebuff fashion and return to basics.
"General fan merchandise is less important than authentic merchandise,"
Heyn said. "Core customers want what's on-court."
The other leagues agreed that fan preferences ran toward the authentic
side last year. Besides jerseys, the headwear category was very
strong, with CLC and MLB in particular reporting outstanding sales.
Electronic games also were consistently cited by the leagues as
While many manufacturers report the licensed business is still
difficult, most licensees believe the worst is behind them.
"We've seen the bottom, and we're turning the corner in the overall
licensed business," said Mark Hampton, president of Nike Team Sports.
TAKING STOCK: Losing Players
Few public companies are engaged in the licensed business today.
Those that remain have had the luxury of other business segments-branded
apparel, non-apparel-to fall back on when licensed struggled. Nike
is well off its 52-week high, although footwear and troubles in
Europe can be blamed for the difficulties. VF Corp. met estimates
for its just-passed quarter and is stable and strong. Champion is
to be sold by parent Sara Lee Corp. any day now, part of SLE's strategy
to divest itself of non-core businesses.
FUTURE WATCH: A New You?
With some fundamental changes in their business strategies, industry
executives will now discover if they made the right moves.
Most believe vendor management programs have a good chance for
success. "I believe it is a foreshadowing of things to come," said
Brian Jennings, group vice president, consumer products marketing,
NHL. "To manage a category efficiently, buyers have to pay attention
to individual achievements, milestones, winning teams. They're pushing
the onus onto the manufacturers, while giving more access to store
information like never before. It's a template to be used in the
In addition to the assist with managing assortments, retailers
will look to vendors who can get them product in a hurry.
"Retailers will work with licensees who can turn product, those
who can react quicker and in-season," said Karen Smith, director
of marketing, licensing and outfitting for Champion.
The leagues' culling of their licensees should help ensure that
retailers will have fewer, but better, partners to choose from.
Along with a continuation of the trend toward fan merchandise,
many predict a market for more expensive apparel.
"The trend seems to be more toward better items with more detail
and higher price points," said Faust Capobianco IV, senior vice
president, Majestic Athletic. "It offers retailers more options."
Co-branded kids' apparel, with kids' specialists partnering with
authentic sports brands, also is expected to do well.
Industry watchers will be keeping an eye on the WWF which, under
the direction of former NBA licensing exec Donna Goldsmith, is looking
to expand to upstairs markets, and the XFL. The league, debuting
in February, has eye-catching logos and plenty of marketing resources.
Perhaps most importantly, the leagues and licensees need the support
of the retailers.
"We have to energize retailers to see the opportunity of getting
back into the sportswear business and show them that margins can
be good," said Chris Heyn, senior vice president of the NBA's global
merchandising group. "The opportunities are many. There are a lot
less people in the business and those who are left are finding success."
"Licensed seems to be gaining momentum again, driven by demand
from fans who are coming back to it," Capobianco said. "Retailers
can and have recommitted to the business. Our customers have become
more profitable, and even lean on it now as a growth category."
An interesting phenomenon: When the individual professional
sports leagues and collegiate licensors provide estimates
of their annual sales, the sum total of all of the figures
exceeds the estimated size of the overall sports licensed
product market by close to 100 percent. Talk about "fuzzy
Frankly, it is virtually impossible to put an accurate dollar
figure on league sales given the number of licensees and the
range of products involved-and the markdowns that have been
part of the category for the last few seasons.
However, this much is clear: the NFL remains the sales leader
among the leagues, although down just a bit from last year.
MLB, a close second, continues its renaissance with help from
the Subway Series. The collegiate market, led by CLC, is the
least vulnerable to fickle fans and the most "evergreen" of
the properties. The NBA, in fourth position, has improved
substantially from its post-lockout hangover last season and
should continue its rebound this year. With a new on-ice deal
with The Hockey Company, the NHL should see some improvement
Rounding out the top 10 are NASCAR, whose rocket-growth has
finally leveled off; WWF, with just slightly decreased sales
last year; IMS; CART, in the midst of relocating its licensing
division; and MLS, coming off of a year marked by increased
television exposure and marketing.