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Volume 23 No. 17

Marketing and Sponsorship

Chicago-based agency 4Front plans an aggressive expansion strategy after an infusion of cash from international sports marketing giant Global Sports Commerce.

The funding deal calls for a “high seven figures” capital investment by GSC into 4Front, which was founded in 2007 by industry veterans Dan Migala and Josh Kritzler.

4Front, which has 41 employees, plans to use the capital to almost double the size of its staff as it looks to add overseas clients and potentially other U.S. offices. In addition to its Chicago headquarters, 4Front has offices in Charlotte, Dallas and Denver.  

“We will take our domestic relationships and shepherd them overseas,” Kritzler said. “GSC has such a global footprint and we can now be a conduit to that.”

In return for its investment in 4Front, GSC will take a 50% stake in the company. 4Front will retain operating control and board control of the agency that offers sports consulting, digital, media, ticketing, analytics, innovation and activation expertise, and third-party property sales services. Key 4Front clients include the Chicago Bears, the Minnesota Twins, the Oklahoma City Thunder, Cricket Australia, Feld Entertainment, Hendrick Motorsports, Minor League Baseball and the UFC.

Now, with the infusion of capital, 4Front expects to add to its client base both domestically and overseas. It is nearing a deal with the Irish Rugby Football Union and Tennis Australia and its overseas push will be aided by Singapore-based GSC’s strong presence in Australia, China and India.

“We have access to bundle some of their products,” Migala said. “We will expand our analytical offerings. They have such great global access to data to mirror what we are doing domestically.”

In return, GSC gains a foothold into the U.S. market. GSC has 13 subsidiaries in 16 cities across 10 countries, but its only U.S. presence is a subsidiary office in Wilmington, Del.

“Our partnership with 4Front is all about people and business alignment,” said M S Muralidharan, GSC chief executive officer. “There was an immediate cultural fit with Dan, Josh and the 4Front team from the very first meeting and as we continued to meet, business opportunities manifested within our current and potential new business offerings.”

Some of GSC’s blue-chip global partners include the English Premier League, FIFA, UEFA, La Liga and myriad others through its various subsidiaries. GSC itself last year received $80 million in funding from the KKR investment firm.

The 4Front deal was a year in the making as discussions began last Memorial Day weekend. Migala and Kritzler then took trips to India, Australia and Dublin with the deal closing on May 10.

“We learned that the things they did really well were like puzzle pieces to the things we identified as growth areas for us,” Migala said, adding that access to GSC’s market data and other analytics will help 4Front maintain and attract new clients.

Major League Baseball's transition to Nike-branded uniforms next year was some of the biggest news coming out of the recent Soft Goods Retail Summit in Denver. Details have begun to emerge for next year’s turnover, which will see the 2020 MLB uniforms bearing two Nike swooshes — one on the right chest and over the left back pocket. The Majestic brand was on the left sleeve.

Originally, 2020 was the year Under Armour was set for its first big on-field rights deal, but it unwound itself from that, after some disastrous financials. Moving forward, Under Armour retains footwear rights and the rights to use MLB indicia in marketing, but no specific licensed product rights.

Additionally, the model is changing drastically, from one under which Fanatics sold Majestic-branded jerseys to one where Nike will manufacture and service MLB teams, though Fanatics will manufacture and service Nike-branded MLB togs for retail.

Retail availability is scheduled for Jan. 1. Even before that, Nike is doing an MLB version of its NBA hoodies, a lightweight fleece hoodie for summer. The same model will take effect on NFL fields for the upcoming season, but we’re told from a senior industry source that there is “zero interest” in replicating that model on NBA courts, because of Nike’s footwear business and how interwoven hoops is in Nike’s corporate DNA. We’re also told not to expect any dramatic uniform changes, either in design or fabrication, until the second and third season of the long-term deal.

TARIFF TALES: With so many licensed products manufactured in China, the impending threat of additional tariffs was a black cloud over the show. Around 65%-70% of 47’s headwear is made in China and they could be facing a total tariff of more than 30% soon, said co-owner Steven D’Angelo. “We can’t absorb that big a hit on our own, so the question for all of us is what happens to retail pricing before the end of the year.” Added Outerstuff founder/CEO Sol Werdiger, “We’ve been cutting down there, so maybe only 15% of our products are manufactured there, but when you look at categories like caps, bags and sneakers, there’s got to be a real concern.’’

MLB’s Denis Nolan sent licensees a letter reminding them of selling policies.
Photo: terry lefton
MLB’s Denis Nolan sent licensees a letter reminding them of selling policies.
Photo: terry lefton
MLB’s Denis Nolan sent licensees a letter reminding them of selling policies.
Photo: terry lefton

TO THE LETTER: Over the past four years, nothing has elicited more complaints from licensees than the MLB policy that prohibits them from selling directly on Amazon, the largest internet retailer. Licensees construed that as protection and a form of exclusivity for MLB.com, which is administered by Fanatics. Further confounding MLB licensees was a terse legal letter from Denis Nolan, MLB senior vice president of consumer products, sent to licensees on the morning of the first day of the show. Despite the Amazon prohibition enforced by MLB, licensees were cautioned that they “may not engage in a selling practice that excludes any members of the retail trade for any reason other than poor credit history, known lack of integrity, or disregard for the rights of MLB Properties.’’

While there have been rumors of that Amazon policy easing, along with some inquiries (though no litigation) into its legality by licensees, Nolan said he did not expect the Amazon policy to change soon. Asked for clarification after the show, and after we had obtained the letter, an MLB spokesman would not say what elicited the letter, adding that the missive “spoke for itself.” Few licensees would concur.

Premium brands such as Vineyard Vines are outperforming the market. Silver Crystal (below) is testing a kiosk system at MLB ballparks that allows fans to order customized products and have them shipped to their homes.
Photo: terry lefton (2)
Premium brands such as Vineyard Vines are outperforming the market. Silver Crystal (below) is testing a kiosk system at MLB ballparks that allows fans to order customized products and have them shipped to their homes.
Photo: terry lefton (2)
Premium brands such as Vineyard Vines are outperforming the market. Silver Crystal (below) is testing a kiosk system at MLB ballparks that allows fans to order customized products and have them shipped to their homes.
Photo: terry lefton (2)

VIRTUAL INVENTORY: Silver Crystal is testing a kiosk ordering system at the MLB stadium shops of the Arizona Diamondbacks, Chicago Cubs, Cincinnati Reds, Cleveland Indians, Milwaukee Brewers and St. Louis Cardinals, in which fans can order customized licensed hard goods, which are then shipped to their homes. Included in the test are drinkware from Boelter Brands, leather goods from Ricoh, blankets from Northwest, and cornhole games from Wild Sales.

TOP SHELF: At a time of continued retail consolidation and licensed product sameness, premium apparel brands which have ventured into licensing, like Vineyard Vines, johnnie-O and Loudmouth Golf, were lauded as outperforming the market. “The premium licensees, the better brands, are really showing some growth with the different looks, different distribution and a customer base and price points they bring with them,” said Mike Napolitano, MLB vice president of consumer products. “So we’re seeing growth with that aspirational customer.”

Vineyard Vines senior director Greg Sim said he received inquiries from half a dozen clubs during the show to replicate the small store the company opened at New York's Citi Field this year.

LICENSING LINES: ’47 Brand — which now wants to be known as just ’47, but we haven't gotten used to that — has renewed its 40-year-old MLB licensing-rights deal through 2025. The new agreement carries a greater degree of exclusivity for hot-market goods … Among the things that caught our eye were the MLB slides from new licensee iSlide, being sold in eight ballparks and through Fanatics for around $50. The company, founded six years ago by Reebok alum Justin Kittredge, already has licenses from the NBA, NASCAR, Overwatch League and 45 colleges … When MLB moves its HQ offices from Park Avenue to the former Time & Life Building on Sixth Avenue in Manhattan, a ground-floor retail location will be part of the new spot. Nolan said details on the store are still TBD but called it an ideal retail location. We note that Fanatics operates brick-and-mortar stores for the NBA and the NHL in Manhattan.

Terry Lefton can be reached at tlefton@sportsbusinessjournal.com.