The 40-plus MLB licensees that gathered here last week for a licensing summit were happy with solid sales so far this baseball season and enthusiastic about the influx of young stars and the renaissance in Chicago, where the Cubs have the best record in baseball and the
White Sox are also in first place.
Still, even with all the buoyant news on the sales front, a series of industrywide question marks left some of the league’s largest apparel licensees ranging from unsettled to questioning the very structure and future of the $15 billion licensed sports business.
Retailers that were once industry fixtures, such as The Sports Authority (463 stores) and Sports Chalet (47 stores), shutting down recently are the latest examples of a retail landscape that is changing at a rate far exceeding sales growth. Fanatics’ buying spree of e-commerce, brick and mortar, licensing and manufacturing rights from each large sports property in an attempt to roll up the business has every licensee of those leagues alarmed. Within MLB licensing ranks, the efforts by parent VF to sell Majestic was also unsettling, since it’s one of MLB’s biggest licensees and has held exclusive authentic jersey and outerwear rights for every MLB team since 2005.
Individually, any of those concerns would cause agita. Collectively, those nettlesome questions produced a level of uncertainty among MLB licensees very much at odds with their positive sales reports. Accordingly, it’s the most anxious time in the sports licensed industry since the late ’90s, when the big licensed sports apparel brands like Starter and Pro Player went bust, and the leagues transitioned to footwear brands as their largest apparel licensees.
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The Cubs have everyone in the industry thinking of a Series win that could shatter records.
Photos by: TERRY LEFTON / STAFF (4)
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“Sure, there’s flux in the market,” said
Steve Armus, MLB senior vice president of consumer products — who added that through April, MLB’s top eight retailers were outpacing same-store sales from 2015, while team-store sales were up a healthy 13 percent — “but for us, business is still very positive.”
Similarly, while official MLB on-field cap rights holder New Era couldn’t keep up with demand for its new BP caps during spring training, “We’re all trying to figure out what the future looks like,” said Bill Adams, New Era vice president of U.S. sales. “Because of those three factors [retail, the pending Majestic sale, and Fanatics’ expanding presence] and e-commerce growth, forecasting is difficult and everyone’s looking not to step on land mines. You know there’s going to be concerns when someone controls as much real estate as Fanatics does now, whether or not that concern is warranted.”
While it’s surely a moving target, the latest rumors on Majestic at the show have VF selling it off in parts, with the on-field piece going to one of the performance footwear brands already in the MLB fold, Nike or Under Armour. That would leave Majestic’s large mass-merchandise business available to another licensee, presumably one already serving that retail channel.
“There are some profound changes coming to the sports licensing landscape and across retail,” acknowledged Forever Collectibles founder and CEO Michael Lewis. “Since I can’t control any of them, we’ll stick to our own business and see how we fit.”
Outerstuff founder and CEO Sol Werdiger said that with e-commerce growth as a leading catalyst, the licensing industry is in transition.
“It’s a pivotal time and with all the consolidation by retailers, now it’s a matter of licensees and brick-and-mortar retail having to build scale too, in order to compete,” said Werdiger, whose equity sales in 2014 to The Blackstone Group private equity leave Outerstuff well-positioned to do some consolidating of its own as the sports licensing industry shifts.
“Our business is good, but if you look inside and outside of sports, retail is uneven, and everyone’s waiting for it to all play out,” said Evan Kaplan, MLB Players Association director of licensing and business development. “You got a lot of uncertainty and even some fear, but the only real certainty is that things are changing.”
> BEAR BOOSTERS: With the Cubs well-stocked with young talent, the floor of the show was filled with Cubs merchandise and dreams about the potential sales boom that would accompany the team’s first World Series title since 1908. “It comes up in every conversation we have,” said MLB’s Armus.
The Red Sox’s 2004 championship, which ended an 86-year championship drought, was MLB’s biggest hot market ever. Forever Collectibles’ Lewis said that the unfulfilled “if-win” orders from the 2003 “Bartman Cubs” were 50 percent bigger than those Red Sox.
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Vantelin’s Yankees-branded braces will sell in team shops.
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“A Cubs win would be the biggest hot market ever across any league,” said John Sabo, Fanatics senior vice president and general merchandise manager. “The logistical problems that would create, which we’d certainly like to have the opportunity to find out about, would be whether production capacity could handle demand, and even before that, whether there’s enough royal [blue fabric] out there. So far, we’ve been assured that there is.”
> BRACE YOURSELF: An easy winner in our continuing “never seen a logo on that before” quest were the MLB-licensed knee, wrist, ankle, back and compression support braces from Vantelin. Retail pricing ranges from $35 to $70 for the back support.
Distribution will begin soon in the New York Yankees stadium stores and other team shops. Still, since the Vantelin brand is owned by Japanese pharmaceutical giant Kowa, we’re thinking there may be some ties there that can be used to place the product in chain drug distribution, where it really belongs. Non-logoed braces are already in about 500 retail stores across America. Marketing support includes a TV campaign on MLB RSNs and other cable outlets, along with a digital campaign, including BAM sites, wherein Vantelin will sponsor a daily injury update.
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Sol Werdiger (left) and Michael Lewis suit up in Forever Collectibles jackets. LEFT: A Yankees sport coat from Loudmouth Golf.
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> LICENSING LINES: Stance socks continues to make noise in what had been largely a commodity category, and is moving on-field with MLB starting with July’s Home Run Derby and All-Star Game. In Boston, Stance was showing its first brand extension: licensed boxer shorts, available in mid-June, with a $34 MSRP. NBA boxers are expected in time for holiday shopping. … Two manufacturers were showing licensed sport coats.
Loudmouth Golf began in green grass distribution, so its fetching nouveau prep designs, recently modeled by the likes of
John Daly and
Bill Murray, definitely take the high road, with a $495 MSRP for the sport coat. Loudmouth’s line also includes shorts, skirts, leggings and pants and are available at some MLB team shops and online. At the other end of the pricing spectrum was the top half of Forever Collectibles’ logoed suits, which will be sold as a novelty, with a price tag around $120. Where would those fit within Forever’s traditional sports specialty or big box channels? “Realistically, we think most of these will be sold online,” Lewis said. … Nobody needs another T-shirt licensee, but everyone wants to be green, right? Thus,
SustainU, which fashions its American-made togs from recycled cotton and polyester, was on-site as MLB’s newest T-shirt licensee and drawing attention. “They’ve got a unique story to take to retail,” said MLB’s Armus. We’re sure it’s helping that former Majestic President
Faust Capobianco IV lists himself as a consultant to SustainU. “A compelling story aimed at the right audience: millennials,” Capobianco said.
Terry Lefton can be reached at tlefton@sportsbusinessjournal.com.
