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When handing out licenses, MLB plays small ball
Published October 24, 2005
While the NBA, NFL and NHL contracted with Reebok when it comes to licensing, MLB has aligned itself with smaller companies that have domestic production specializing in the quick-turn, fluctuating demands that are normal in the licensed apparel market.
MLB passed on offers from footwear companies for an omnibus license like the kind that has put Reeboks logo on NFL and NHL jerseys. When MLB bid out its on-field apparel rights last season, smaller firms such as New Era continued as the exclusive on-field headwear, and Majestic grew its jersey rights from half to all MLB teams.
Nike ended up with compression wear, along with limited apparel and cap rights. Reebok originally lost out, but subsequently came back and landed a small footwear license. For MLB, smaller is beautiful.
Annual revenue for New Era and Majestic are less than the marketing budgets for Nike and Reebok. We went with the industry specialists who are best at what they do, said Tim Brosnan, MLB executive vice president of business. We thought we could grow the business with them and really serve those markets.
The scenario is even more intriguing when you consider that the point man for MLB licensing is Howard Smith, a former Reebok marketer. Companies like New Era and Majestic are Boston Whalers, zipping around a harbor of giant cruise ships, said Smith, MLBs senior vice president of licensing. If Adidas or Reebok doesnt ship a cap, no one knows it. If New Era isnt shipping, someone in Derby, N.Y., isnt eating.
When the game is healthy, marketing provided by footwear brands isnt missed as much. The surge in retro jerseys last year and caps this year proved MLBs primary apparel licensees Majestic and New Era can handle exponential volume shifts.
The MLB model is clearly more of a long-term play, and theyve done a good job dividing by channels of distribution, said Scott Dickey, an MLB licensee as K2s president of licensing and promotions. Theyve got their bases covered.