A Whole New Ballgame
The Modern Sports Fan and the New Realities of Sports Licensing.
No business entity has the contracts in place and capability to alter the global sports licensing landscape over the next decade more so than Fanatics. Founded in 1995 and led by longtime industry dealmaker turned NBA minority owner Michael Rubin, the Jacksonville, FL, company operates more than 300 online and offline stores, including the e-commerce businesses for the NFL, MLB, NBA, more than 200 collegiate and pro teams, NASCAR, MLS and PGA.
The Fanatic-al Approach
Fanatics’ rise in the sports licensed apparel space was created by a seismic shift in the segment, investments by the leagues themselves in its business, and an emerging formula centered on delivering on-demand consumer requests for garb, no matter where they reside or what teams they root for every day.
This Fanatic-al approach creates higher margins, fewer closeouts of traded player jerseys and diminishes inventory concerns caused by sourcing too many garments of a promising team only to see the squad deliver a horrible season. With Fanatics in the fold, traditional licensed sports retailers have the ability to stock only narrow and deep assortments from the hottest teams and players.
From a vendor perspective, Fanatics enables major athletic brands to retain their on-field or on-ice brand exposure without worrying about the heavy lifting of producing and servicing a vast, diverse licensed sports apparel spectrum.
In April 2017, Fanatics announced it was acquiring VF Corp.’s Licensed Sports Group (LSG), which includes current MLB uniform maker Majestic Athletic, for a reported $225 million. The company is likely to partner with whomever assumes MLB on-field rights, starting with the 2020 season. Earlier this summer, it was speculated that Nike would take over the league uniform/licensing deal originally struck with Under Armour with an official announcement coming during MLB All-Star Week. But that never materialized.
Last November, Fanatics extended its omnibus NHL rights deal to 2034 that already encompassed replica jerseys and championship apparel by adding global e-commerce rights, exclusive of China, and rights to manufacture, market and sell the league’s “Center Ice” collection of name and number apparel with the exception of authentic (on-ice) jerseys. Those will continue to be marketed and sold by Adidas. Additionally, the expanded deal granted Fanatics NHL headwear exclusivity within the North American sporting goods retail channel.
Fast-forward to May 2018. In a matter of days, Fanatics opened an office in Germany, sealed a contract with Formula1 and inked a 10-year partnership with the NFL and N ike. Starting in 2020, Fanatics will have the licensing rights to make and distribute all Nike NFL adult products (jerseys, sideline apparel, fan gear) on NFLShop.com, at stadium stores and in brick-and-mortar locations. Nike retains its exclusive NFL on-field supplier contract for uniforms, base layers and sideline apparel with the exception of headwear. According to the New York Times, citing an unnamed source, NFL merchandise sales are projected to rise 50 percent over the life of the Fanatics’ deal.
The strength of Fanatics has led many suppliers to become stronger niche players, honing their licenses in on one or two specific leagues or on the collegiate market, where there is a lot of buzz. Read on for a few more trends shaping the landscape.
The Digital Sports Fan
While some see declining TV ratings and aging audiences as danger signals when it comes to the Millennial fan base, a recent report from McKinsey&Company reveals that Millennials enjoy spectator sports just as much as other generations. Millennials still watch live games — as many per week as Gen-X sports fans (approximately 3.4 per week). Virtually all own a smartphone, meaning much of their viewing, including highlight clips, is done on mobile devices. Fifty-six percent of Millennials stream sports on websites and apps and 60 percent say they check scores and sports news on social media.
Younger sports fan consume digital content voraciously and marketers who develop digital strategies to connect with them can benefit from these strong fan bases.
Style And Biz Trends
Collabs are a key style trend. This Fall, Carhartt and ’47 are bringing a new collaboration to the NFL. The headwear assortment will feature durable Carhartt duck material in signature colors: brown, navy and classic black on classic headwear silhouettes.
On the “fashion” side of the sports licensing business, “Style and product innovation [are significant]… while not pricing our product outside of what the market will bear,” says Doug Wood, CEO of Tommy Bahama, which has seen its licensed products for NCAA and NFL teams take off. “Too often, companies need to hit price points by taking quality out of the product, at Tommy Bahama that is never an option. A key trend in the market right now is bringing performance fabrics and innovation to sportswear that has only been expected in the active market.”
At Teamwork Athletic Apparel, Chris Kollmeyer, product development manager, says versatility in product offerings is critical for the brand. “Licensed apparel is no longer a tee shirt and hoodie market,” says Kollmeyer. “Being able to provide different licensed styles is important. This is especially true in the women’s market, where fashion is becoming more important for licensed apparel.”
And, he adds, “Ensuring that the products being sold are not knockoffs is significant. With retailers like Amazon opening up to overseas sellers, this issue is more prevalent, and hurts both the licensors and the legitimate licensees. It’s also very difficult to police.”
Not Just a Fantasy
Fantasy sports, aided by digital tech, has exploded in the mainstream. The growth yields not only product marketing opportunities but also fans who may become ardent fans of players and teams in far-reaching cities. Fantasy Sports is a $7.22 billion industry, according to research conducted by Ipsos Marketing for the Fantasy Sports Trade Association (FSTA). There are 59.3 million fantasy sports players in the United States and Canada, the largest number of participants recorded in the 14-year history of the FSTA study.
Over $1 billion is spent by Fantasy Sports players on “ancillary” activities and goods, including draft parties, Sunday pizza deliveries and fan merchandise. Fantasy sports participants are fiercely loyal to the players they draft, with 73 percent saying they have purchased merch related to their fantasy teams. Research shows that fantasy participation is 29 percent female.
“Ensuring that the products being sold are not knockoffs is significant,” says Kollmeyer. “With retailers like Amazon opening up to overseas sellers, this issue is more prevalent, and hurts both the licensors and the legitimate licensees. It’s also very difficult to police.”
The LeBron Factor
In late July Nike unveiled a new Icon jersey for the Los Angeles Lakers. Go to page 22 in the full issue below to see data revealing the top jersey sales by player in each league. Last year the top NBA jersey belonged to Golden State’s Stephen Curry. With James now taking his talents from Cleveland to Los Angeles, it seems a good bet that his Lakers jersey will top the list next season. As superstar players continue to move to new teams, “player movement” is a merch selling trend all on its own.
In a World Cup year it’s more evident than ever — global athletes are resonating in the U.S. Check out the chart on page 22 in the full issue below to see the world’s most famous athletes. Only one U.S. athlete is in the Top Five.