Editor’s note: This story is revised from the print edition.
Fanatics’ takeover of the sports licensing business is continuing, with the company expanding its collection of apparel rights to include manufacturing and sales of NBA replica jerseys. What sources said is a 10-year-plus deal begins in October before the 2017-18 NBA season when Nike takes over as the league’s on-court apparel licensee.
More than 95 percent of NBA jersey sales are in the replica or “Swingman” (non-authentic) categories. Nike will sell authentic (on-court) NBA jerseys with a $300 retail price. However, beginning in October replica rights will be split between Nike, offering a “Swingman” jersey (currently priced at $110 by Adidas), and Fanatics, which will market screen-printed, adult-sized replicas priced between $65 and $70, according to Raphael Peck, Fanatics Branded president.
Final pricing was still being determined last week, he said.
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Most NBA jersey sales are in the replica category, which Nike and Fanatics will split.
Photo by: GETTY IMAGES
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Fanatics distribution for those jerseys will be limited to league and Fanatics-affiliated sites, along with NBA team sites, team stores and arena shops. Team retailers are expected to get a first look at those jerseys during this week’s NBA licensing meetings in Las Vegas.
Fanatics takes over the rights for lower-priced replicas from Adidas, which is departing after this season as NBA uniform rights holder after 11 years. Sal LaRocca, NBA president of global partnerships and longtime merchandising chief, said Fanatics was granted jersey rights to accelerate widespread direct-to-consumer availability for replica jerseys, which are one of the league’s most staple licensed consumer products. The expectation is that Fanatics will be better able to chase “hot market” demand surges, which has never been Nike’s forte as largely a shoe company.
“There’s consumer expectation that if a player gets traded or has a run like Jeremy Lin a few years ago, that you can immediately buy his jersey,” LaRocca said. “That product’s become almost synonymous with having to be available 24/7, but the existing model did not serve that demand.”
Peck said Fanatics will keep sufficient undecorated jersey “blanks” on hand in two separate U.S. warehouses in order to meet hot-market demand. The garments will be decorated domestically.
While reluctant to say exactly how quickly Fanatics will be able to turn around jerseys to meet unexpected demand, Peck said “we are building a chase engine that will be significantly faster than our predecessor. And we are making our commitment to owning enough inventory that will allow our chase engine to scale.”
Fanatics also sees additional opportunities for NBA jerseys targeted at women. Based on focus-group research, it plans to market three separate types of NBA replica jerseys for women: a standard tank jersey, refitted for the female silhouette; a short-sleeved jersey; and a fashion jersey with a slightly higher retail price, to be released in time for the All-Star Game every February.
“The female NBA fan has been significantly underserviced, so we see a significant opportunity,” Peck said.
Fanatics’ NBA replica jerseys won’t carry a Nike swoosh on them. Unlike next season’s NHL replica jerseys, which will carry Fanatics branding on the apparel itself, the NBA replica togs will only have Fanatics branding on hang tags and inside neck labels. Some retailers have already privately begun to chafe at the idea of selling jerseys with a competitive retailer’s brand on them.
With NBA replica and the other rights amassed recently, Fanatics — a company thought of as an e-commerce fulfillment house — now owns some of the most valuable rights in sports apparel licensing, along with equity stakes from the leagues it is servicing. For some time, Fanatics has administered e-commerce for all four major stick-and-ball leagues, along with NASCAR, for which it also runs event merchandise sales. Next season, Fanatics will be manufacturing and selling replica jerseys for the NBA and NHL. By 2020, it will have those same rights for MLB replica jerseys. All are long-term deals.
“It’s a great model for Fanatics, because it’s getting close to exclusivity across leagues,” said Frank Vuono, who headed NFL consumer products during the explosion of the sports licensing market in the 1980s and ’90s. “They are becoming more vertical, so they can pay the big (league) royalties and still make some money. For the smaller guy, you worry about stifling creativity, and filling every distribution channel. But it’s smart for Fanatics and smart for the leagues to have a piece of that. You do wonder what the long-term impact will be.”
