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Volume 21 No. 34
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Fanatics generates $20 million for NFLPA

The NFL Players Association’s high-profile Fanatics deal delivered $20 million to the union in the most recent reporting year but also served to depress fees from companies like Nike that became sublicensees as part of the new apparel framework. Nike’s payment to the union, for example, fell 89 percent to $1.1 million. Overall the Fanatics contract is a net plus for the union’s bottom line.

The NFLPA signed the Fanatics deal in 2016 and last fall renewed with a host of what it is now calling sublicensees like Nike, Outerstuff and Dallas Cowboys Merchandising. The annual report the NFLPA filed with the Department of Labor last week, which covers the 12 months ended Feb. 28, 2018, is the first to reflect a full year under the new apparel arrangement in which Fanatics makes all the products for the sublicensees.

It mirrors deals Fanatics has struck with other unions such as the National Basketball Players Association and leagues like the NFL and the NHL, in which the licensee has taken over most retail categories and manufactures the products.

“It is an opportunity to consolidate under one vendor,” said Gene Goldberg, a former NFL licensing executive. “It is going to yield, in theory, an opportunity to generate more revenues.”

What it has certainly done for the NFLPA is to shift its reliance on a handful of retail firms to almost entirely Fanatics, a trend that should be even more pronounced moving forward. In the fiscal 2017 year, Nike, Outerstuff and the merchandise arm of the Cowboys delivered $17 million to the NFLPA. In the most recent filing for the fiscal 2018 year, the figure was $2.9 million and a good share of that came from marketing payments to players, not royalties. By contrast, of Fanatics’ $20 million, $18 million is guaranteed royalties.

Entities like Nike and Outerstuff still work with the union on apparel design and other matters, but most of the work, and thus payments, run through Fanatics.

Overall NFLPA commercial revenue rose slightly to $170 million, from $167 million, according to a review of the NFLPA’s last two annual reports. Both figures set new highs for the NFLPA commercial arm.

An emerging category is production services, a result of the union’s ACE Media, launched in 2015. The media outlet creates sports-related lifestyle content. In the most recent fiscal year, Amazon paid the NFLPA $1 million for production services from ACE. In all, production services and digital media delivered $2.5 million to the union, compared to just under $1 million the year before.

The union’s assets were $514.7 million on Feb. 28, according to the latest LM-2, resources the labor group is sure to grow before its current collective-bargaining agreement runs out in three years. When the last CBA expired in 2011, shortly before a lockout, the NFLPA had $311 million in assets.