NFL, Nike Agree To 10-Year Licensing Deal With Fanatics For Fan Merch
Fanatics starting in '20 will "produce and sell replicas" of NFL merchandise for consumers, either online or through retail stores, after team owners "approved a plan to split the rights to sell Nike's merchandise between two companies instead of one," according to Ken Belson of the N.Y. TIMES. Nike, which "now has the rights to produce and sell products worn by the players and coaches on the field, will provide that gear only to outfit the teams" beginning in '20. By bringing in Fanatics to make and sell Nike merchandise for consumers, both leagues "hope the arrangement will lead to an increase in sales of licensed goods." Nike "currently pays the owners a percentage of the wholesale price of all NFL-related merchandise that it sells." Fanatics will "pay the NFL a percentage of the wholesale price of goods it will provide to stores like Dick's and Modell's, and a percentage of the retail price for everything it sells directly to consumers." The retail price is "typically twice as much as the wholesale price." Fanatics "expects to introduce a wider range of products than is now available from Nike." Sources said that with Fanatics taking over the production and sales of all Nike merchandise for adults, sales are "projected to rise" by about 50% over the life of the deal (N.Y. TIMES, 5/24).
WIN-WIN: NFL Senior VP/Consumer Products Michelle Micone said that the goal is to be "able to get gear into the hands of fans as fast as possible when new storylines spur demand -- like when an unheralded rookie becomes a star player, or a team that was expected to perform poorly ends up having a breakout season" (RECODE.net, 5/23). Fanatics Founder Michael Rubin said, "Everything that’s sold to the fans is made by Fanatics, and we can then get the merchandise to the fan much more quickly. From a fan’s perspective, broader assortment of merchandise, quicker delivery of merchandise and it’s really going to make the fan experience better overall.” Rubin said the NFL wanted a “a better model for the fan” with the “innovation and the marketing” from Nike and “maximizing the transactions for the fan” with Fanatics (“Squawk Box,” CNBC, 5/24). ESPN.com's Darren Rovell wrote the deal for Fanatics means there is "no need to stockpile inventory of players that are expected to be good and also allows the company to immediately produce on demand as players emerge." It "theoretically means that the company will never be out of stock, as long as raw materials are available." NFL owners also will "make money from both sides of the deal, as they own a small piece of Fanatics" (ESPN.com, 5/23).