After "several years of being in the licensing business
strictly for the exposure," Nike is "making a serious run at
the licensed sports apparel market" by combining its Sports
Specialties and Organized Team Sports to form Nike Team
Sports, "a standalone business unit charged with making
profits in a badly oversaturated and overlicensed market,"
according to Terry Lefton of BRANDWEEK. The new unit will
sell "labeled" goods in department stores and specialty
retailers, while Sports Specialties-branded products, which
will be expanded beyond headwear, will be in "other
distribution points," such as mass merchants. Nike will
also "grow distribution" to other areas, such as college
bookstores, where it can leverage its college sponsorships.
In the past, Nike has used licensing "as a marketing
vehicle" and its apparel "runs never meet league minimums,"
meaning that the company has had to "pay penalties."
Lefton: "Now, word has come from on high that Nike licensing
has to eventually support itself to justify the big fees [it
is paying out]." One senior licensing exec who has "worked
extensively" with Nike: "This is coming in no small part
from [CEO] Phil Knight saying 'You either turn it around and
make money or we're closing it up." Sports Specialties GM
Mark Hampton will lead the unit and Organized Team Sports
head Steve Nichols will be "second-in-command." Internal
estimates have the new unit "doubling revenues within three
years," with sales between $200-400M (BRANDWEEK, 11/23).
