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Sports

4.8% Growth in Retail Sales of Sports-Licensed Goods in 2015: Stellar Years for MLB, NBA, NASCAR and MLS

No Olympics? No problem. Sports licensing still thrived in 2015 at just below $14.8 billion in U.S./Canada sales, according to TLL’s Annual Licensing Business Survey. For the second year in a row, sports outperformed every other sector with the exception of entertainment. Its 4.8% increase was double U.S. GDP growth (2.6%) and easily exceeded the 3.6% overall industry-wide growth rate. Sports now accounts for 14.3% of all licensed retail sales in the U.S./Canada, trailing only corporate trademarks (26.8%) and fashion (20.3%) in market share.

The strong year would have been even better but for the fourth quarter retail slump that affected all sectors. And to some extent, the relative weakness of 2015 holiday sports sales had more to do with supply than demand. “Retailers became skittish about taking on inventory and wanted to clear shelves in December,” explains one leading sports licensee. “As a result, they left significant sales on the table, especially for NFL merchandise.”

Property Type: Performance By League

All leagues were up in 2015 but rates of growth diverged from the patterns of previous years.

NFL

NFL sales were up a flattish 3.4% in 2015, as compared to 5.2% the year before. “It was a good year but not a dramatic one with nothing standing out,” according to one of the league’s biggest licensees. Part of the problem was timing. For a league that does its most business in the fall and early winter, the fourth quarter retail slump came at the worst possible moment. Unusually strong NBA holiday sales also came at least partially at the NFL’s expense. The silver lining was the NFLPA (the players’ union) which not only maintained but surpassed last year’s double-digit growth. Even so, sales of products based on licensed player properties account for only about one-third of total NFL sales.

MLB

Last year, MLB surrendered the top spot for licensed sales to the NFL. In 2015, MLB went back to the number one after having its best year in nearly a decade with $3.5 billion in sales, $113 million more than the NFL. Baseball’s impressive 6.9% growth, led by apparel sales, was evidence of a new energy and buzz surrounding the sport fueled by:

  • New stars headlined by the Chicago Cubs’ Kris Bryant who became the first rookie to top MLB in player jersey sales;
  • The return of popular teams like the Cubs, New York Mets, Toronto Blue Jays and Houston Astros to the post-season after years of dormancy. In addition, last year’s darling, the Kansas City Royals, remained a licensing force, especially after completing their mission and winning the World Series; and
  • New Commissioner Rob Manfred’s reorganization of MLB’s inefficient licensing structure, including the consolidation of traditional and digital licensing operations into a single office, which proved a boon to the consumer products division.

NBA

With $2.5 billion, the NBA grew an astonishing 9.1% in 2015, and now accounts for 17.1% of the U.S./Canada market. As impressive as these numbers are, they don’t include the other 35% of the licensing revenues the NBA earns in China, Europe and other global markets. No other U.S. sports league has even come close to the NBA’s international success.

As usual, stars drove NBA sales. But this year, it wasn’t just about Lebron, Kobe and the other usual suspects. 2015 saw the emergence of new star that outshone them all: Stephen Curry, a deadly shooter with an MVP game and off-court personality to match. Curry topped all players in jersey sales. And the licensed sales generated by the NBA Finals’ matchup pitting Curry’s Golden State Warriors against Lebron James’s Cleveland Cavaliers more than tripled the previous Finals record set by the Boston Celtic-L.A. Laker matchup of 2010. But while Curry is the key ingredient, his teammates have also contributed to making Golden State the best selling NBA team—accounting for 28% of all team sales—since Michael Jordan’s Chicago Bulls of the 1990s.

NHL

For sheer spectacle, NHL hockey is second to none. But it’s also a niche sport with the smallest fan base of the big 4 leagues and a market share of only 6.9%. After growing 6.6% in 2014 and 6.9% in 2013, NHL sales were up a disappointing 3.1% in 2015.

In September 2015, the NHL made a series of major licensing moves. In addition to replacing long-time on-ice and replica jersey licensee Reebok with Adidas (starting in the 2017-18 season), the league signed new partnership deals with Fanatics and youth apparel maker Outerstuff that include equity stakes in both companies. The deals augur a new approach to licensing. Giving Adidas exclusivity enables the NHL to pare down its bloated licensee roster. Outerstuff is a longstanding licensee but the new deal changes the arrangement. Before, Reebok sublicensed NHL youth apparel to Outerstuff. Now the NHL will work directly with Outerstuff and be more involved in manufacturing and distribution. Adidas and Outerstuff products will be sold online via Fanatics’ portals.

MLS

MLS accounts for just 4.4% of the market. But that belies the fact that it’s the only pro sports league to post double-digit growth every year since 2004. In 2015, MLS sales rose 16%, surpassing the robust 14.6% growth of 2014. Although jerseys were the main driver, EA’s FIFA 2015 game was a huge seller. The league is also working to cultivate hard goods lines via new licenses with Bleacher Creatures, Oyo Sports, CR Gibson and Victory Tailgate. In all, MLS added 15 new licensees during the year, including ’47 Brand, Antigua Group, Homage, Concepts Sports and Society 43 for apparel and accessories. Expansion is also fueling growth of licensed MLS sales. Expansion franchises in Orlando and New York City, the latter of which plays its home games in Yankee Stadium, joined the league last year. Four others are on the way in Atlanta, L.A., Minnesota and Miami.

NASCAR

After being the only league whose sales declined in 2014 (7.3%), NASCAR grew the most of any league other than MLS in 2015 (10.1%). The turnaround began in January when NASCAR hired Fanatics to overhaul its model for selling licensed merchandise trackside on Sprint Cup race days. Fanatics discarded the old “walk-up” approach in which individual teams sold their own merchandise out of trailers, for a “walk in” set-up in which merchandise is sold in one central specially constructed 60,000 square foot tent assembled in a courtyard-style mall layout at each track. In addition to making it easier to shop, the new model was designed to enhance the fan’s race-day experience.

The so called “Fanatics Trackside Superstore” debuted in July and the results were spectacular and immediate. By year’s end, trackside sales were up 22%. Although all product lines thrived under the new model, hard lines (up 65%), youth apparel (up 40%) and hats (up 34%) benefitted the most.

PGA TOUR

The 2.8% increase of 2015 is consistent with the PGA TOUR’s perennial pattern of steady but modest growth. With $344 million in sales, the PGA TOUR accounts for just 2.3% of the market. As in the past, sales were driven by apparel bearing the TOUR’s celebrated silhouetted golfer in a box logo. Sales of licensed products based on the names and likenesses of individual players like Jordan Spieth and Phil Mickelson do not count as PGA TOUR revenues.

Retail Sales of Licensed Sports Goods, By League, U.S./Canada, 2014–2015
Note: Numbers may not add up exactly due to rounding.
(Figures in Millions)
Property Type Retail Sales, 2015 Retail Sales, 2014 Change, 2014–2015 Share of Sports Licensing, 2015
National Football League $3,403 $3,291 3.0% 23.0%
Major League Baseball $3,516 $3,289 7.0% 24.0%
National Basketball Association $2,536 $2,324 9.0% 17.0%
NASCAR (teams & drivers) $837 $761 10.0% 6.0%
National Hockey League $1,026 $995 3.0% 7.0%
PGA Tour $344 $334 3.0% 2.0%
Major League Soccer $647 $558 16.0% 4.0%
Other $2,478 $2,558 -3.0% 17.0%
TOTAL $14,786 $14,109 5.0% 100.0%

Product Categories: Apparel, Accessories Drive Growth

All three legs of the sports licensing product category “tripod” had solid years in 2015.

Soft Lines

Apparel, accessories and other soft lines accounted for roughly 50% of sales. As usual, jerseys were the workhorse of the soft lines. But while sales of traditional authentic and replica jerseys chugged along at a steady rate, it was the debut of a new genre of jersey that stood out. MLB’s new Cool Base jersey, which uses lighter materials and venting to enhance comfort, “absolutely killed it,” according to one licensee. Look for the other leagues to adapt Cool Base technology in the very near future.

Although apparel accounts for roughly 80% of sales, accessories continue to be the fastest growing segment of the soft lines. 2015 was another fabulous year for headwear across all leagues. “Caps have become not just fan wear but fashion pieces,” explains an NBA source, “and licensees have gotten really good at introducing new styles, fits and silhouettes to keep it fresh.” For example, sales of both fitted caps and loosely fitting “dad caps” were strong throughout the year.

Socks, while still a relatively small part of the accessories market, continued growing at a triple-digit pace in 2015. The sports licensed socks craze began about four years ago. And while a number of licensees are partaking, one company seems to be emerging as the Nike of the segment. In April 2015, Stance replaced For Bare Feet as official on-court socks supplier of the NBA. The long-term deal allows Stance to display its logo on player socks. Stance also has licenses to produce NBA legend and MLB team socks lines.

Hard Lines

Growth in hard lines like trading cards, collectibles, sporting goods, home furnishings and paper goods was far less dramatic. To some extent, 2015 was a transition year for hard lines, especially in the NFL where Panini prepared to take over from Topps as official and exclusive trading card provider for the league (and the NFLPA). The saving grace for NFL hard lines was “homegating,” i.e., the social trend of tailgating and watching football at home, which fueled sales of team-branded home furnishings, paper goods, gifts and novelties.

Other leagues reported better results, particularly NASCAR which saw trackside hard line sales surge 65%. Although everything was selling, sales of 1:64 die-cast metal (Matchbox-style) cars increased 90%, according to NASCAR source. Meanwhile, the NBA reported strong sales in league-branded balls, backboards, rims and other sporting goods. Another hard lines bright spot was headphones, e.g., Beats by Dre’s rollout of six MLB team-branded headphones in the first year of its new partnership with the league. Even so, hard lines remain the smallest leg of the sports licensing triad accounting for less than 10% of sales.

Digital & Multimedia

Mobile is coming on fast but console video games remain the mainstay of the multimedia product line, especially games from EA Sports. Three of the year’s top 10 best-selling games were EA licensed sports games (for PS4, Xbox One, 360 and PS3):

  • Madden NFL 16, which bowed in August and was the second top selling game of 2015;
  • NBA 2K16, which sold 4 million units in its first week and became the league’s single biggest grossing licensed product across all categories for the year; and
  • FIFA 16, which generates royalties for MLS—the league doesn’t yet have its own dedicated game.

2015 also saw MLB recover from the 2013 loss of, 2K, its biggest video game licensee. In addition to retaining its deal with Sony for MLB: The Show, MLB Advanced Media (MLBAM) became the first pro sports league to build and distribute its own console video game. RBI Baseball, which started as a game for Xbox and PS4, is now available on smartphones and tablets. MLBAM also developed a suite of mobile-only games targeting young and casual fans, the most recent of which MLB.com Line Drive debuted in 2015. Other MLBAM games for mobile devices include Home Run Derby (arcade), Ballpark Empire (city builder/social) and Franchise MVP (strategy).

Of course, all of the leagues have been focusing on mobile games for almost a decade. But MLB is the only league that does it in-house. The other leagues rely on their current console licensees (in most cases, EA) to develop mobile versions of their games. Notable examples:

  • Madden NFL 16 for Mobile from EA, essentially a free to play mobile version of the Madden Ultimate Team console game in which gamers pick teams of current and past NFL players and compete in different fora, e.g., full 16-game seasons, Live Events and head to head, earning coins and other in-game rewards that can be redeemed for player packs and other enhancements.
  • Real Racing 3 from EA, a free download with enhancements available via in-app purchase featuring real NASCAR drivers, cars and tracks that gamers use for role-playing to break into NASCAR and compete for the Sprint Cup championship, which has attracted a huge global following since its 2013 release.
  • NBA Live 15 Mobile from EA for iOS and Android, in which gamers build teams of real NBA players and coach them in practices and 5-on-5 competitions. The game relaunched in 2014 after a 4-year hiatus in response to negative reviews. The 2015 game, the second of the revised series, featured improved graphics but flawed gameplay, a weakness the 2016 version (which launched in February) is designed to address.
  • NHL 2K from 2K Sports, costing $7.99 for iOS and Android download featuring real NHL players relaunched in 2014 after a 4-year hiatus. The game has been sharply criticized as a stiff mobile version of 2K’s earlier console game with subpar graphics, functionality and gameplay.
Retail Sales of Sports-Licensed Merchandise, By Product Category, U.S./Canada, 2014–2015
Note: Numbers may not add up exactly due to rounding.
(Figures in Millions)
Product Category Retail Sales, 2015 Retail Sales, 2014 Change, 2014-2015 Share of Market, 2015
Accessories $1,189 $1,099 8.0% 8.0%
Apparel $6,180 $5,782 7.0% 42.0%
Consumer Electronics $349 $339 3.0% 2.0%
Domestics $216 $207 4.0% 2.0%
Food/Beverages $414 $395 5.0% 3.0%
Footwear $689 $664 4.0% 5.0%
Furniture/Home Furnishings $232 $223 4.0% 2.0%
Gifts/Novelties $895 $884 1.0% 6.0%
HBA $216 $217 0.0% 2.0%
Housewares $192 $193 -1.0% 1.0%
Infant Products $292 $290 1.0% 2.0%
Publishing $234 $232 1.0% 2.0%
Sporting Goods $559 $554 1.0% 4.0%
Stationery/Paper $88 $87 2.0% 1.0%
Toys/Games $672 $656 3.0% 5.0%
Videogames/Software $1,661 $1,593 4.0% 11.0%
Other $708 $695 2.0% 5.0%
TOTAL $14,786 $14,109 5.0% 100.0%

Sports Licensing Trends & Growth Areas

While the extent of growth over the past two years (5% in 2014, 4.8% in 2015) may be a bit of an anomaly, the outlook of sports licensing is incredibly positive. The growing popularity of pro sports shows no signs of weakening any time soon. And the growth and diversification of the fan base is creating dramatic new opportunities for licensors and licensees alike.

The Female Factor

For decades, sports licensing has been primarily about selling jerseys and off-field apparel for male fans. While that business remains strong and steady, women represent the real growth area. According to ESPN and other sources, women constitute 40% of the fan base for the major U.S. sports leagues. Sales of women’s products still constitute less than 25% of the total business. But that’s an exponential jump from just five years ago. Meanwhile, faster growth rates on the women’s side, especially for apparel, have become the norm (although the disparity in growth by gender varies by league).

Although it took a while, all of the leagues now recognize the opportunity and have stepped up efforts to engage female fans. Once a side show, female fan wear has become a large, well-oiled operation featuring public relations and charitable campaigns, fashion shows and, of course, plenty of product. For most leagues, the starting point in product development was enlisting Alyssa Milano, the visionary of fashionable sports branded apparel designed for the female form and lifestyle. But while G-III’s Touch by Alyssa Milano remains at the top of every league’s licensee roster, there are now a variety of companies dedicated to cranking out sports-branded fashion wear for female fans—Miss Fanatic, Junk Food Clothing, Meesh & Mia, to name just a few.

The leagues are also asking longstanding apparel licensees to supply more women’s products, both on- and off-field. For example, “as part of new agreements, each MLB licensee is expected to create a more extensive lineup of female apparel,” according to a league source. One league stalwart, New Era, even brought on supermodel Nina Agdal as spokesperson for its MLB women’s line.The NFL and MLB have been at the front of the newest phase in the evolution: engaging well-known women’s fashion designers from outside the sports world to design high-end, stylish products branded with league and team colors and logos. Examples:

High Profile Women’s Fashion Designer Pro Sports Licensees
Designer/Licensee Licensor(s) Products
Victoria Secret PINK NFL, MLB Apparel, accessories
Alex and Ani NFL, MLB, PGA Accessories (bracelets and other jewelry)
Dooney & Bourke MLB Accessories (hand bags and pocketbooks)
Alex Woo MLB Accessories (jewelry)
Pandora NFL Accessories (jewelry)
CoverGirl NFL, MLB HBA (nail polish, cosmetics)

Other New Markets & Models

Sports licensors and licensees are targeting a number of other historically underserved markets. Thus, for example, all of the leagues have or are in the process of expanding their ladies’ apparel lines to include maternity and plus sizes.

Although children’s apparel is hardly a new product line, it’s becoming more of a priority. It’s also undergoing a total redefinition. For the first time, the leagues and their partners are paying serious attention to the young girls’ market, which one licensor compares to the women’s space a decade ago. And as with women, the products being offered for both girls and boys are being driven by a more sophisticated appreciation for quality and fashion. “The kids’ market has been novelty onesies,” notes G-III’s Alyssa Milano. “Kids’ product should be high quality and on-trend.”

One of the things leagues are doing to get more “on-trend” is making more extensive use of new licensing models like cross-licensing arrangements enabling the leagues to generate products combining their own intellectual property with that of other iconic brands, typically characters from children’s entertainment. “For girls 4-10, whether it’s Disney Princess or Hello Kitty or sports, what makes it work is graphics on cute clothes,” says Milano. MLB has been especially active in cross-licensing including a 2015 Star Wars deal patterned after similar successful arrangements involving Peanuts and Hello Kitty.

Events & Hot Markets

Leagues and licensees are getting better at not only recognizing but creating new opportunities to sell branded merchandise via use of “hot markets.” Every league has its own slate of hot market events—the Super Bowl, World Series, NBA Finals, All-Star games, etc. But while all leagues use the model, some do it better than others.

In 2015, nobody did hot markets better than the NBA. Part of it was luck. Thus, the record sales generated by the 2015 NBA Finals discussed earlier wouldn’t have come to pass had not the league’s two biggest stars—Lebron James and Stephen Curry—actually made the Finals. On the other hand, the 87% increase in NBA Christmas Day merchandise sales was the product of skill, not luck. The special parchment color and traditional script jerseys worn by the teams playing on Christmas Day made the cash registers ring Jingle Bells. “The NBA usually sells most in the spring while the playoffs are going on; sales get fairly dormant at year’s end when the NFL takes over,” relates one licensee. “But this year, the NBA had an amazing Christmas program and its fourth quarter sales were unusually strong.”

MLB also got a huge lift from hot markets in 2015. The teams that made it all the way to League Championship Series—Cubs, Mets, Blue Jays and Royals—were among MLB’s most popular (although the fact that they all wear royal blue created unforeseen production challenges for apparel makers). All-Star Game sales were also up 32% at MLB.com Shop and 16% at the ballpark thanks, in part to the specially designed 1800s-vintage pill-box style caps from New Era.

In addition to scheduled events, hot markets can include accomplishments on the field. The window for exploiting these hot markets is extremely narrow when the accomplishment is unforeseen. After all, euphoria over a pitcher’s perfect game has a limited shelf life. But when people know the accomplishment is coming, e.g., Cal Ripken’s streak, there is plenty of time for the emotion—and inventory—to build up. Unfortunately, such hot markets are also pretty rare. In 2014, MLB and the New York Yankees got one in the form of Derek Jeter’s retirement tour. In 2015, it was NASCAR’s turn when legendary driver Jeff Gordon announced that he planned to retire at season’s end. The resulting Jeff Gordon retirement product line proved a windfall for NASCAR sales.

Retail Sales By Distribution Channel

Although e-commerce is on the rise, nearly 90% of retail sales of licensed sports merchandise come from brick and mortar. Mirroring industry-wide patterns, mass/discount is the largest channel, accounting for 37% of all sales, followed by specialty at 33%. The 37/33 split between these two channels hasn’t changed since 2012.

Historically, specialty stores, including big box sporting goods retailers like Dick’s, Modell’s and newly bankrupt Sports Authority, have been the mainstay of the industry providing a steady and reliable outlet for jerseys, caps and other licensed merchandise. But most of the space in these stores is dedicated to non-licensed apparel, sporting goods, running shoes and other products. At the same time, many sporting goods stores have opened league pop-up stores, i.e., shop-in-shops selling league-branded products, within their locations. Of course, in-shop league stores have also popped up at mass retail and department stores, e.g., NASCAR “Race Time” weekend displays at Wal-Marts located in cities where races are held and NBA pop-up shops at Bloomingdales for the February 2015 All-Star Game held in New York City.

The decline of the department store is apparent in the sports sector. After falling from 8% to 7% in 2014, department store sales slipped another 1% to 6% in 2015. Meanwhile, the institutional/venue channel, which includes stadium sales and merchandise sold at events, increased from 7% to 8%. Result: Institutional/venue passed department stores for third largest brick and mortar channel. Expect the gap to widen now that almost all pro sports teams have their own stadium and online stores and an incentive to maximize them, i.e., the fact that revenues from these sales aren’t shared with the other teams.

As in all other segments, the e-commerce channel has been gradually gaining ground in sports. But after edging up 1% in 2014, e-commerce held steady at 11% in 2015.


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