The following is an excerpt from TLL’s feature story on sports licensing. See the complete run-down here, including breakdowns by league, product category and distribution channel.
While the extent of growth in retail sales 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.
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.
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.
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.”