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Pro Sports Licensed Retail Sales Score 5% Increase in 2014: Most Leagues Grow, Driven by Apparel

This is a golden age for pro sports in North America. You can see it in not only the record TV ratings and attendance figures, but also at the cash registers. According to The Licensing Letter’s Annual Licensing Business Survey , retail sales of licensed sports goods topped $14.1 billion in 2014. Sports properties now account for 14.1% of all licensed goods sold in the U.S. and Canada, the third highest market share behind only corporate trademarks/brands (26%) and fashion (20.3%).

Surprisingly High Growth in 2014

That sports grew in 2014 is no surprise. The sector has increased steadily every year since 2010. But the extent of growth in 2014 is surprising. At 5.0%, sports posted almost twice as much growth as in 2013 (2.8%) and more than any other licensed property type other than entertainment/character (which increased 6.0%). Its growth was also double the overall 2.5% rate achieved by the entire licensed goods market in the U.S. and Canada in 2014.

One reason for the 2014 surge is the sales generated by event licensing from not one but two big international events: the Winter Olympics in Sochi and the World Cup in Brazil. The normal boost these events generate every four years was intensified by the deep runs the U.S. teams made in each tournament. “U.S. hockey jerseys sold like crazy for those two weeks in February,” according to one retailer; “and the same thing happened with soccer jerseys in June during the World Cup.” And let’s not forget the lift that our neighbors to the north enjoyed when the Canadian hockey teams (both men and women) won gold in Sochi.

Property Type: Performance by League

While they certainly created more than their normal share of excitement and energy, the Olympics and World Cup sales represent just a tiny fraction of the market. At the end of the day, sales of licensed sports goods in the U.S. and Canada are all about the major pro sports leagues. And in 2014, almost every one of those leagues had a good to excellent year.

NFL: The Ray Rice and Adrian Peterson scandals hurt the NFL’s image but not its selling power. In 2014, retail sales of NFL merchandise totaled just a shade above $3.2 billion, a 5.2% increase. Even as electronic games declined economy-wide, the NFL achieved 10% growth in game sales. One League insider described 2014 as “the perfect storm for multimedia.” Electronic Arts, the League’s main electronics licensee, had a great year launching Madden NFL 2015 , Ultimate Madden and two other successful NFL games. Mobile downloads grew even faster than the console games. Apparel also increased, albeit not as dramatically.

MLS: At $558 million, Major League Soccer accounts for just 4% of the sports licensed merchandise market. But it’s also the only league posting consistent double-digit growth. In 2014, MLS sales rose 14.6% (after growing 13.5% in 2013). The 2014 World Cup accelerated the growth of soccer’s popularity in the U.S. The MLS has also done a skillful job of promoting itself and acquiring licensees. Adding to the appeal are the two new teams that start operations in 2015, including a New York City franchise that plays its home games in Yankee Stadium.

PGA: Golf, both men’s and women’s, continues to grow at a steady pace. In 2014, PGA Tour sales increased 4.3% to $334 million; the LPGA grew at a similar rate but continues to make up less than 25% of the pro golf market in North America (although women’s golf is growing dramatically in Asia, especially South Korea).

NASCAR: 2014 was a bad year for NASCAR. After falling 5.0% in 2013, licensed sales of NASCAR driver and team merchandise were off another 7.3% this year ($761 million). Although the new playoff system improved the racing, TV ratings and race attendance continued to decline; and in December, Sprint announced that it was ending its sponsorship of NASCAR premiere race series after the 2016 series. Things got so bad that NASCAR and NASCAR Team Properties called in long-time partner Fanatics to completely reorganize its business model for selling trackside merchandise, with courtyard-style tents to replace the traditional team merchandise trailers.

Retail Sales of Licensed Sporting Goods, by League,
U.S. and Canada, 2013-2014
Note: Numbers may not add up exactly due to rounding.
(Figures in Millions)
League Retail Sales, 2014 Retail Sales, 2013 Change, 2013-2014 Share of Sports Licensing, 2014
National Football League $3,291 $3,128 5.2% 23.3%
Major League Baseball $3,289 $3,212 2.4% 23.3%
National Basketball Association $2,324 $2,195 5.9% 16.5%
NASCAR (teams & drivers) $761 $820 -7.3% 5.4%
National Hockey League $995 $933 6.6% 7.1%
PGA Tour $334 $321 4.3% 2.4%
Major League Soccer $558 $487 14.6% 4.0%
Other $2,558 $2,342 9.2% 18.1%
TOTAL $14,109 $13,438 5.0% 100.0%

Product Classification: Apparel Continues to Drive Growth

As usual, in 2014, about 70% of sports licensing sales were generated by a “tripod” of product types:

Soft lines, which most of the leagues count as including not only player and off-field apparel but also accessories like caps, grew 5.8% and constituted 49% of all sales in 2014. Jersey sales, the traditional workhorse of the soft line, were solid. But several leagues reported unexpectedly strong growth in caps. Baseball caps were huge for the NBA and wool caps were the star of the NFL stable. Socks, of all things, were the other accessory to show surprising strength in 2014.

Continuing previous trends, women’s apparel was the fastest growing segment of the soft lines. “Shrink it and pink it” has been replaced by the drive to provide fan apparel that women can wear during and after the game as well as replica player apparel that works for the female form. Although progress varies by league, women’s goods now account for roughly 18% to 25% of all licensed sports apparel sales—although one retailer insisted that, for the first time in years, men’s actually grew faster than women’s sports apparel in 2014.

Hard lines, like trading cards and collectibles, which constitute roughly 7% of sports sales, declined in 2014. In addition to the general decline in gifts/novelties and paper/ stationery (the two product categories that make up the bulk of hard good sales), 2014 was a transition year for trading cards, especially in the NFL where Panini is getting ready to take over for Topps as the NFL’s exclusive trading card licensee starting in 2016.

Multimedia, including video games, grew 2% segment- wide and constituted 11% of all licensed sports goods sales. In reality, sports licensed video games would have actually declined in 2014 but for the strong growth by the NFL and NBA and the EA games. Most of the other leagues struggled on the multimedia side.

This is especially true of MLB. In 2013, MLB’s most important video game licensee, 2K, notified the League of its decision not to renew its license, leaving Sony-produced MLB: The Show , a series that can’t be run on Xbox systems, as the only officially licensed MLB computer game on the market. 2014 was a transition year. In the spring, MLB released a new version of a 1980s-vintage console game called ” RBI Baseball ’14. ” The game was conventional but the release was anything but, because it was developed by MLB’s own digital arm—marking the first time a major pro sports league has developed its own console game. Getting MLB multimedia back on track is one of the key challenges that new Commissioner Rob Manfred faces in his first year on the job.

Trends & Growth Areas

Expect sports to keep growing in 2015 and beyond, but at a more modest clip (roughly 2% to 3%) than in 2014. “Sports is evergreen and doesn’t tend to fluctuate from year to year,” according to one source. Potential trends and growth areas to keep an eye on in the years ahead:

Domestics and housewares: Two product classifications with enormous potential for growth in the sports realm are domestics and housewares. The potential for growth is greatest for pro and college football to the extent that it’s being driven by “homegating,” a social trend that aims to bring the traditional stadium tailgate party to the home. Homegating is generating new demand for team-branded napkins, curtains, tablecloths, paper cups and plates and other home goods. “Licensees are already positioning themselves to dominate the homegating space,” according to one NFL source.

Kids and plus sizes: Having finally recognized the economic potential of women, expect the leagues to go after other underserved segments of the market, especially in the soft lines. “Children’s apparel and plus sizes represent the real growth areas of sports licensing,” notes one licensee.

Player licensing: Structurally, major pro sports league licensing is conducted by two different licensors: the league licenses the team names, logos and trade dress; and the players license their own names and images. Historically, licensing by the leagues has accounted for the lion’s share. But while player licensing still represents a fraction of the pie, the players’ side is growing faster. This is most clearly exemplified in the NFL where League sales grew 3% to 5% in 2014 and NFLPI sales increased about 10%. The NFLPI also made strides to ensure future growth. In addition to signing 29 new licensees during the year, the NFLPI continued to pioneer agreements allowing the players to license their names and images independently of the NFL. Examples:

  • Collaborating with the NCAA to license college jerseys of current NFL stars like Tom Brady (University of Michigan) and Russell Wilson (University of Wisconsin); and
  • Licensing the names, likenesses and numbers of popular players for products that don’t have NFL team names, logos and trade dress, such as “spirit jerseys” for women or downloadable video images for the Temple Run 2 mobile game.

Another dimension of player licensing is individual licensing by high profile athletes seeking to create their own lifestyle brand a la David Beckham and surfing champion Kelly Slater.

Special events & hot markets: Look for licensors to keep developing products for “hot markets,” such as:

  • Sportswear and gear for off-field activities, such as MLB batting practice jerseys;
  • Alternative team jerseys and special uniform designs for events like all-star games;
  • Products created for special events or commemorations, like the Derek Jeter retirement farewell tour; and
  • Even products tied to memorable—or at least market – able—quips and quotes like Marshawn Lynch’s “I’m Only Here So I Don’t Get Fined” t-shirts and caps.
Retail Sales of Sports-Licensed Merchandise, by Product Category, U.S. and Canada, 2013-2014
Note: Numbers may not add up exactly due to rounding.
(Figures in Millions)
Product Category Retail Sales, 2014 Retail Sales, 2013 Change, 2013-2014 Share of Market, 2014
Accessories $1,099 $1,039 5.8% 7.8%
Apparel $5,782 $5,467 5.8% 41.0%
Consumer Electronics $339 $323 5.0% 2.4%
Domestics $207 $208 -0.4% 1.5%
Food/Beverages $395 $364 8.5% 2.8%
Footwear $664 $638 4.0% 4.7%
Furniture/Home Furnishings $223 $224 -0.5% 1.6%
Gifts/Novelties $884 $966 -8.5% 6.3%
HBA $217 $210 3.2% 1.5%
Housewares $193 $194 -0.5% 1.4%
Infant Products $290 $283 2.5% 2.1%
Publishing $232 $234 -0.8% 1.6%
Sporting Goods $554 $521 6.3% 3.9%
Stationery/Paper $87 $89 -2.8% 0.6%
Toys/Games $656 $643 2.0% 4.6%
Videogames/Software $1,593 $1,562 2.0% 11.3%
Other $695 $473 46.9% 4.9%
TOTAL $14,109 $13,438 5.0% 100.0%

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