Sector watch: Sports
Sports is one of the highest-profile property types in the licensing business, and the easiest to relate to one of the primary drivers of licensing in general: EMOTION. All licensing is built on emotion, be it trust in a brand, the sense of humor associated with a character appreciation of a piece of art or design, or, in this case, identification with an athlete, team, specific sport or lifestyle. Whether on the professional, collegiate or amateur level, sports engenders the kind of emotion that translates into retail sales.
According to LIMA’s annual Licensing Industry Survey, Sports is one of the four largest pillars of the business, accounting for 12.7% of retail sales generated by licenses in North America in 2010, or $11.8 billion. That trails only Characters, Corporate Brands, and Fashion among the major property types tracked by LIMA. Those sales brought in $645 million in revenue to the licensors, according to the LIMA survey. (It should be noted that the LIMA survey treats the collegiate market as a separate classification that generated $3.6 billion in retail sales, and $196 million in royalty revenue in 2010.)
Sports licensed merchandise is sold through virtually the entire spectrum of retail distribution, ranging from department stores and mass merchandisers, drug stores and supermarkets to big box specialty chains of all sorts – toy, apparel, crafts and others — sporting goods and other specialty stores, online retailers. The four major U.S. sports leagues – National Football League, Major League Baseball, National Basketball Association and National Hockey League – dominate the business in the U.S. Some athletes themselves – Michael Jordan and Tiger Woods come most immediately to mind – have built licensing businesses on their own names and personas.
In many cases, the business has become increasingly global in nature. Merchandise licensed from European soccer clubs such as Manchester United and Barcelona is licensed and sold around the globe. The U.S. leagues each have licensing businesses in other countries. By all accounts, the NBA is the league with the highest percentage of its business outside the U.S., reportedly approaching 40%, spurred by rapid expansion in China in conjunction with its global apparel partner adidas for the 2008 Olympic Games.
While apparel and footwear are the biggest drivers of the sports licensing business, another major contributor is videogames and interactive media. However, the business is undergoing a major transformation, as the leagues and their licensees are faced with the challenge of adapting their content and business models to the rise of social media and online gaming, as console games decline as a percentage of the business.
Sports licensing is only one of nine property classifications broken out in the LIMA Annual Business Survey, which is available free to members, and can be purchased for $295 by non members. Click here for more information and to download the report.