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Volume 21 No. 30
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MLB buzz: Nike taking over for UA; Fanatics' disruption

From the MLB Soft Goods Retail Summit, Boston

While Nike wresting Major League Baseball on-field apparel rights from rival Under Armour beginning with the 2020 season generated the most buzz at the recent MLB licensing summit, the overall themes of change and disruption were hard to ignore, as was the expansion of Fanatics’ grip on sports licensing overall.

In addition to Fanatics’ dramatic and continuing disruption and consolidation of sports licensing, through an MLB lens, the seismic shift was even more pronounced considering the summit came less than six months after top MLB business-side executive Bob Bowman was bounced and around four months after MLB abruptly dismissed Steve Armus and Greg Sim, its two most senior licensing execs — each of whom had been with the league more than 20 years. Sim, incidentally, was at the show in his new role as senior director at Vineyard Vines.

Licensing and merchandise executives are anticipating Nike’s expected move into on-field baseball apparel in 2020.
Photo: terry lefton / staff

Having adroitly amassed rights to the point that by 2020 it will control authentic jersey rights at retail for MLB and the NFL, as well as replica jersey rights for MLB, the NFL, NBA and NHL, Fanatics remained the biggest story, of course, with many club reps and retailers trying to learn what they could about the pending MLB shift from Under Armour to Nike.

Having all of those rights with one company is unprecedented and tantamount to having the keys to the castle across pro sports licensing. There are two new models now in bold relief: Nike is further retreating from licensing, satisfied with on-field branding that will net it TV exposure for both MLB and the NFL by 2020; and Fanatics’ message that it can manage the quick turns and hot-market capabilities critical to sport licensing better than any footwear company ever will.

First Look podcast, with MLB discussion beginning at the 11:15 mark:

Across a sampling of team reps, manufacturers and retailers at the show, reaction ranged from incredulity to acceptance that Fanatics could service all of those important rights. 

“That’s a big wait and see,” said a team merchandising executive. “More important to us is that Nike and Fanatics are now working together to a large extent. That’s going to make competing awfully difficult, if not impossible in a lot of areas.”

Meanwhile, MLB emerges as a winner, having switched uniform rights to Nike from Under Armour, a company now under financial distress, which was not the case when it negotiated the deal in 2016.

“They were a different company when they did the deal — it’s just not affordable for Under Armour anymore,” said a senior industry source familiar with the pending deal. He added that Under Armour would save a minimum of $50 million by exiting the MLB deal.

A separate source familiar with the deal termed it 80 percent done, with a possible unveiling at or around the July 17 MLB All-Star Game. It’s also interesting to note that former Nike sports licensing executive Randy Burdette is now working full time at Fanatics as senior vice president and general manager of Nike football, after consulting for some time. 

In an attempt to gather perspective, we asked a senior licensing exec at a large property if he was able to describe the amount of change that has occurred within sports licensing during the past two to three years.

Interesting and eye-catching licensed products again took center stage, including kids wear by Tiny Turnip, MLB socks by Stance and shirts from outgoing apparel sponsor Under Armour (below).
Photo: terry lefton / staff (3)

“That,” he said, “is your ‘Mission Impossible.’” 

PUTTING A LID ON IT: Other than MLB’s shifting on-field rights, the future of distressed licensed products retailer Lids was much discussed in Boston, and Fanatics was again dominating the conversation. Lids’ parent company Genesco Inc., a retail conglomerate, very publicly put the 1,200-location retailer up for sale in February. Lids in recent years has faced declines in both profits and foot traffic at the malls in which most of its stores are located. 

Non-binding bids were due to investment bank/advisory firm PJ Solomon last week, and multiple industry sources identified Fanatics as an interested party, along with other separate bids from two of Lids’ biggest suppliers: New Era and ’47 Brand.

Two questions are now paramount:

Could a company, including any of those three, convince any sort of venture capital or private equity firm to invest in brick-and-mortar retail, especially at the mall?

And are Lids’ pieces, particularly its e-commerce operation, more valuable as stand-alone assets, which would suggest liquidation as a better course?

ANGEL AT RETAIL: Dual success as a pitcher and hitter has propelled Los Angeles Angels pitcher/designated hitter Shohei Ohtani into a retail phenomenon, perhaps even in excess of his on-field prowess. Tony Stevenson, the Angels’ director of merchandise, said the team has been hard-pressed to keep up with demand for apparel, especially jerseys, with overall sales increasing well into the double digits and already outselling Mike Trout, widely considered the game’s best player.

There are around 50 to 60 separate Ohtani items for sale at Angel Stadium now. Trout has about twice that many, but that discrepancy will shrink during the season’s second half. In the works: an Ohtani rally monkey.

Stevenson said that Japanese citizens are flying over for weekend trips that include a visit to Disneyland and separate games at the “Big A” — one to see Ohtani pitch and another to see him bat. And, of course, Japanese-American fans have a new hero.

“He’s reached cultural icon level for them, and their gift-giving nature is so ingrained, we’ve seen people come in and buy 20, 30 items to give to friends,” Stevenson said. “We’re definitely seeing new and different kinds of customers at the stadium.”

SHOW-STOPPERS: After many years in non-apparel licensing, Mike Napolitano has moved from MLB vice president of hard goods to vice president of soft goods. Napolitano has been with MLB since 1995. … A few new retail-specific programs from MLB see ’47 Brand and Outerstuff supplying kids apparel to J.Crew’s “crewcuts” line. A direct licensing deal with Express and its trendy Homage brand has placed MLB-logoed clothing at that retailer. … Other products worthy of note in Boston: Loudmouth Golf’s “argyle-esque” cap design collaboration with New Era. Due next spring at around $25-$30 for a “one-size-fits-most” adjustable 9Forty cap. Also new for Loudmouth: licensed activewear “skorts” with MLB indicia, priced at $45. No NFL license yet, but the Dallas Cowboys are in the fold, with product plans being developed. … Considering MLB’s aggressive aim on the youth market, the fanciful designs from Tiny Turnip, a San Clemente, Calif., company, seem appropriate. Tiny Turnip began by selling kids clothing to players’ wives, and after a few cease-and-desists letters, now finds itself a licensee.