SBJ/Oct. 24-30, 2016/Marketing and Sponsorship

Fanatics-UA to field MLB jerseys in 2020

In what would mark a significant shake-up in Major League Baseball’s licensing business, Fanatics and Under Armour have completed a deal that will see them team-produce Under Armour-branded on-field jerseys starting with the 2020 baseball season.

The deal would mean the end of MLB’s longtime licensing relationship with both Nike and Majestic Athletic. Starting in the spring of 2020, all jerseys will feature Under Armour branding, while Fanatics will gain broad apparel rights across MLB, with an exception being headwear that will remain with Buffalo-based New Era.
Fanatics getting such all-encompassing rights suggests a new model for sports licensing in the U.S., one other properties will surely scrutinize. Industry sources said that Bob Bowman, MLB president of business and media, recently presented the new apparel deal to MLB ownership, which approved it during a conference call earlier this month.

Nike is widely seen on uniform necklines and underlayers.
Photo by: GETTY IMAGES
VF’s Majestic Athletic has held exclusive jersey rights since the 2005 season, but its current deal ends after the 2019 season. VF put its Licensed Sports Group, which includes Majestic, up for sale in March. Meanwhile, the Nike brand has been on the underlayer and neckline of most baseball players since 2009. But as currently envisioned, the two longtime business partners will be without MLB licenses following the 2019 season. While a Fanatics spokesperson would not comment on the deal, he said flatly, “We are not buying Majestic.” Spokespeople for both MLB and UA offered no comment.

An official announcement of the rights deal, which will mark UA’s first uniform deal among the major American pro sports leagues, is expected after the World Series.

Details of the deal are scarce and remained so after news was first reported in SportsBusiness Daily. Sources did say the deal was largely orchestrated by Fanatics and that MLB felt Under Armour was a strong on-field brand. Garnering MLB on-field rights is the most aggressive move yet by Fanatics, offering a vertical arrangement that combines manufacturing and retailing.

As it has amassed licensing and venue retail rights in an unprecedented fashion, Fanatics’ endgame has been the subject of intense industrywide speculation. Sources said that as Fanatics aims toward a likely IPO in 2018, it is targeting additional major sports licensing rights deals. Both a new U.S. Tennis Association/U.S. Open merchandise deal and a five-year Super Bowl deal are expected to be awarded this year.

Fanatics has been an MLB business partner since 2003 and has long provided e-commerce fulfillment for most major U.S. sports properties, including the NFL, NBA, NHL, NASCAR, PGA Tour and hundreds of team sites. While Fanatics made its name in e-commerce, it now must prove that it can meet the considerable retail delivery and team service requirements demanded by a sport that has games virtually daily over a six-month season.

The deal continues a flurry of on-field apparel rights activity affecting U.S. leagues over the past 18 months. In that time, the NBA has transferred on-court rights from Adidas to Nike, while the NHL switched its longtime Reebok sweater rights to Adidas, which owns Reebok. As jersey deals came due, Fanatics was pitching similar vertical models. Fanatics signed a massive 17-year extension of its off-field MLB deal last year, and this new arrangement gives it greater influence over MLB than any licensee.

Being on-field with MLB will give Under Armour increased visibility and associated credibility. It has held limited MLB footwear rights since 2011, and Gear for Sports has produced an Under Armour-branded MLB fanwear line with limited distribution for the past few years. The brand’s stable of MLB endorsers includes big names like Los Angeles Dodgers pitcher Clayton Kershaw, Washington Nationals right fielder Bryce Harper and San Francisco Giants catcher Buster Posey.

“Under Armour considers baseball a very strategic category for its future and it gives them a great public face in the summer to complement their fall and winter team sports,” said former MLB Properties president and Nike executive Rick White, now president of the Atlantic League, and a licensing consultant. “I’ll also be interested to see what Fanatics’ [e-commerce] distribution can do for Under Armour’s licensed and nonlicensed apparel.”

With a new uniform deal complete, baseball ownership has now directed Bowman and the league to conduct a review of its licensed youth business and put that out to bid later this year.

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