A New Jersey Idea

by , Jun 22, 2012, 12:48 PM
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No, this isn’t about the State of New Jersey or breeding Jersey cows or sordid activity “down the Shore,” but rather the huge business of licensed apparel. As the recent kerfuffle between Nike and Reebok attests—the former won a judge's order temporarily blocking the latter from using Tim Tebow's name on New York Jets apparel—this is not a game for the faint of heart. 

And the stakes are huge: Licensed apparel is an estimated $12+ billion industry in the U.S. and Canada. Four major sports leagues, the National Football League, Major League Baseball, National Basketball Association and the National Hockey League, dominate the sports licensing market in North America. In addition, hundreds of colleges and universities in the U.S. are involved in collegiate licensing, marketing their rights primarily to the apparel market. 

But allegiances shift constantly as players switch teams. St. Louis fans, remember that warm and fuzzy feeling you had when you wore an authentic Cardinals baseball jersey with Albert Pujols’ name plastered on the back? Sorry, he’s an Angel now! Which begs the question: What does that mean for the Pujols Cardinal jersey? Is it a collectible or, upon his trade, did it instantly become obsolete and therefore of little to no value to both retailer and consumer?

And what about the New York Knicks’ Jeremy Lin? His jersey collected some serious coin during the “Linsanity” phenomenon, quickly becoming the NBA’s bestseller. Not only that, but a “Jeremy Lin” search at eBay yielded over 6,000 results, including signed playing cards, jerseys, and T-shirts. But now that the team and its suddenly-famous point guard have settled in, lost a few games (and been swamped in the Big Apple by Tebowmania), what’s the value of a Jeremy Lin jersey now?

What does all of this have to do with planning? Plenty, because licensed apparel represents a potentially very valuable media platform. These clothes are walking billboards for the teams and the players. Given the amount of marquee player trades, I estimate that 5-10% of all the licensed apparel is ultimately wasted, and that translates into a nearly $1billion in lost sales. 

We’re talking not only baseball, but football, hockey, basketball, soccer, golf, MMA/UFC, tennis. Even NASCAR.  I also wonder what they do with the caps made for the Super Bowl or World Series losers. In the case of the World Series, Super Bowl, Stanley Cup, etc., they typically have two sets printed up—declaring each team the winner. The major sports leagues also produce official hats and shirts for the players and staff of each team in championship games—usually about 300 items per team.  Merchandise is also printed and ready to be shipped to sports retailers in the winning market.

That’s a lot of misprinted, wasted merchandise.  Retailers will no longer want to carry it in their stores, and, therefore, lose valuable revenue. And according to Mintel, nearly 44% of those surveyed will not wear team branded clothing unless it’s from their favorite teams, regardless of which player’s name is on it.

Given the service nature of our business and our quest to find creative solutions to problems such as this one, we employed our trade unit to purchase obsolete jerseys earmarked for disposal from one of our retail clients. We were able to pay our client full book value, despite a cash market value that was substantially less. We then sold the apparel in alternative markets and through tertiary distribution channels.

But we shouldn’t stop there. There is a goodwill opportunity here. For example, we could collect all the obsolete jerseys and apparel from every retailer and sports team around the country, and then employ the services of our sports and event marketing unit and ask them to create pop up stores in several key markets, perhaps in stadium parking lots. We could work with local communities to raise awareness. Even bundle product and offer parent/child deals, where an adult jersey is sold with a discounted or free version in a kid’s size. Turn on the social media machine to get word of mouth started. We could solicit free airtime from the regional sports networks and local stations. And sell all of that apparel at a great discount with a portion going to charity.

The international Christian humanitarian aid group, World Vision, already works with Major League Baseball, the NFL, and the NBA to collect misprinted merchandise and distribute it to people living in impoverished nations (MLB used to require the destruction of shirts and hats proclaiming the wrong champions, but two years ago they began donating their postseason apparel).

The merchandise doesn’t go to waste, people living in poverty receive new, clean clothes, and the clothing makers recoup tax credits for the charitable donations. Some of the money earned could even help buy off any royalty shortfalls. 

Selling the vast majority of unsold product can benefit everyone involved. Capitalism and goodwill can exist side by side, and $1 billion-plus won’t have gone to waste. Consumers and retailers are equally happy. And clients have a creative solution, which makes for a very happy agency.

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