NEW YORK, NY; DECEMBER 15, 2015—Sports licensing rarely has a runaway hit that moves the needle up for the entire segment the way Star Wars is doing for entertainment licensing this year (see Fearless Forecast: Entertainment Licensing).
Historically, sports are more likely to face a negative impact from a strike, lockout or other labor dispute, or a public relations crisis (abusing girlfriends/wives, health issues such as concussions) than to experience a sudden surge.
Sports licensing is also spread across leagues, teams, and players most of whom have more or less local followings. So an uptick from, say, a team that hasn’t won a major title in some years or a player who achieves a record in his or her sport isn’t going to have as big an impact on the segment, nationally, as a whole.
All of which adds up to why sports licensing has essentially plateaued. For most leagues, teams and athletes, upsides are incremental and opportunistic. In the most extreme cases (a no-hitter, running record yardage in a single game, and so forth), the opportunism turns into a game of beating the pirates — lower case “p” intentional — who invariably seem able to be on the street with t-shirts before the game is over; this compares to licensees who will take days if not weeks to celebrate a sudden occasion.
Most of the upside activity in sports coalesces around a handful of trends we’ve seen over the past several years:
- Personalization. Put your name on your favorite player’s team number and colors. Embroidery, heat transfers, and various types of instant printing are available in-store while you wait (not long) and online.
- The Players Associations are becoming more aggressive. Many of their efforts center on marketing tie-ins that may or may not have licensing components. But even NFL and MLB Players Associations’ presence as exhibitors at Licensing Expo in Las Vegas this past June spoke to the higher profile they are seeking.
- Co-branding players using both their pro team and college insignias; PGA co-branded college, NFL, MLB , NBA and NHL golf gear; cartoon characters and leagues, and so on.
- International. American sports aren’t as developed internationally as are entertainment properties, but the NBA has been notable for its efforts at exposing kids in other countries to basketball. And the NBA, MLB and NHL all have some games being played in other countries as part of their efforts to increase overseas audiences and, ultimately, merchandise sales. Hockey merchandise sales continue to grow. Soccer is growing, albeit from a very small base; professional soccer has made slow but steady inroads in the U.S. but is invariably looked to as “the next big” whatever. (Some of us remember when global superstar player Pele was going to turn soccer into a mainstream American sport.)
- Women. Alyssa Milano can’t be given enough credit for changing the attitude of the major leagues about what women will buy. It’s not about an oversized jersey women can wear as a nightshirt. And it’s not about pink. It’s about apparel designed and fitted for women, with a fashion-forward look that also appeals to the fan interest. Growth in the segment is slowing, but it still has substantial momentum. When it plateaus, it will be at a high level.
- Growth in the stature of additional sports ranging from hockey and soccer to tennis and golf to lacrosse and jai-alai. (I recently heard of several schools offering bocce; I don’t see a big licensing opportunity there. Yet.)
Kids are the mystery ingredient for sports merchandising’s next growth spurt. For kids who play sports, the family budget is allotted to little league uniforms and gear. And its difficult to differentiate kid-oriented licensed sports merchandise in the way that women’s merchandise has achieved.
Ira’s Fearless Forecast: Barring any major catastrophes, labor stoppages, health issues or morals-based PR challenges, and thanks mostly to price increases, retail sales of licensed merchandise based on sports properties will continue modest growth of 2%-3% annually for 2015 and 2016.
Ira Mayer, former publisher and executive editor of The Licensing Letter, conducts competitive research and consults for companies in the licensing business; you can contact him by clicking on the “Contact” button above left.
October 15, 2015: If Walmart investors are “startled” by the retailer “slashing its sales forecast for the year,” as The New York Times reports today, they haven’t been paying attention. “Sales will be flat this year, Walmart said at a meeting with investors in New York. The retailer previously said that it expected net sales to grow 1-2 percent for the current fiscal year, through January,” according to The Times.
Bad news? Of course. Startling? It shouldn’t be.
Walmart and others previously reported softer-than-expected back-to-school sales, which are generally a harbinger for the holiday season. But retailers overall tend to be optimists at the beginning of the year, as they talk it up to vendors and investors. The optimism gets toned down when reality sets in beginning in the calendar third quarter.
Sticking with Walmart and looking at the last few years:
October 15, 2014, from CNBC: “[Walmart] Chief Financial Officer Charles Holley, at a meeting with investors and analysts, said he expected Wal-Mart’s sales to rise 2-3 percent from $473.1 billion last year. The company said in February it expected net sales growth to be at the lower end of its 3-5 percent forecast.”
October 14, 2013, from FoxBusiness: “The world’s largest retailer missed sales projections and issued soft guidance for the holiday season.”
And yes, there was good news in 2012, when the company “narrowed” its projections — raising the lower end and maintaining the higher end.
Modifying projections in the face of changing realities is critical to business planning, and Walmart is hardly alone in doing so. They get the lion’s share of coverage because they have the lion’s share of the market and because so many businesses — especially those in licensing — are so dependent on the company’s orders.
But investors, suppliers, and others shouldn’t be “startled” when the numbers head south. There’s a pattern here and an easy lesson: Don’t forget to adjust your beginning-of-year forecasts for reality as you go. Just like Walmart.
Need competitive research to keep your licensing projections on track? To enter new markets? For legal proceedings? Contact firstname.lastname@example.org.
Brooklyn has been coming on strong at Surtex, the trade show for licensing and selling original art, for several years. This year, it seemed as though every third booth at the mid-May show and at the co-located National Stationery Show (NSS), had a sign up proclaiming a Brooklyn provenance.
Granted, Surtex and NSS take place in New York City; Brooklyn is part of New York City, even if most people think NYC synonymous with Manhattan (full disclosure: I live in Brooklyn). And Williamsburg, a hip neighborhood in Brooklyn, is home to many artists, their studios and galleries.
Add relatively cheap rents in nearby Industry City (still in Brooklyn). This is a cluster of large former industrial buildings with high ceilings, huge windows looking out on New York harbor (or the Gowanus Expressway on the even cheaper side), and heavy-duty floors. Here the streets are home to a host of adult video stores, a large cheap green grocer, Costco, and a MicroWarehouse. Artists, letter presses, and even some small manufacturers are inhabiting that group of buildings, which are being rehabilitated—and exhibiting at Surtex and NSS, which can feel like a local show until you note the letter presses and other exhibitors from Baton Rouge, LA; Minneapolis, MN; Worthington, OH, and elsewhere. Far elsewhere.
Indeed, Brooklyn appears to be a mindset as much as a physical location. Looking at his work, I asked Mitsushige Nishiwaki, pictured here at Surtex, where he lived in Brooklyn. He laughed. “I live in Tokyo. I thought if I exhibit in New York, I need to have New York art.” His work is based on pictures he finds in magazines. He has several pieces about specialty donuts. “There’s a famous shop in Williamsburg,” he told me. “I add a little humor to the pictures.” His company is Etching Art Design; click here for his designs from Paris, London, Italy, and elsewhere. He’s had gallery shows in various cities including New York, and has a clothing licensee in France for a 2016 collection; I suspect there will be others.
Holstee, a Stationery Show exhibitor, brings together a variety of trends in the art/artisanal sector: Based in Brooklyn; designing products with sustainability as a guiding principle; providing fair wage employment in third world locations. Prime example: The company’s Upcycled Wallet is “vegan” product (I admit I don’t know what that means other than that it’s not leather) that “provides the impoverished with fair wage employment while simultaneously reducing waste in Delhi.” Holstee’s City Leaf Map posters seem like a licensable design.
One of the ironies of these two shows being co-located is that many of those at the Stationery Show, including Holstee, really are designers making or sourcing their own products and selling directly to retail or on their websites. Many could be licensing their designs over in the Surtex aisles, a notion which interests some but not others.
For example, Graphic designer Cayla Ferari and engineer John Breznicky’s company LinePosters makes posters, glasses, t-shirts, and stationery based on Ferari’s line drawings of mass transit maps. They started selling wall decals based on a line version of the NYC subway map in 2011. They’ve added other cities, and some generic transportation-themed designs such as spoked bicycle wheels. Ferari says they like the control of making their own goods, including laser cutting coasters and doing their own printing. They have some specialty retail distribution and “for best selection” suggest their website.
Other exhibitors are more opportunistic. CrownJewlz, which offers a range of notepads, die-cut stickies, and other stationery items by a variety of more traditional artists, obtained a trademark for UglySweaters paper and stationery products (see photo at right). I’d expect to see a host of beyond-sweaters products this year, given the success of ugly sweaters last holiday season. Why not stationery?
I’m surprised that Disney, Nick, Peanuts, and others with entertainment/character properties haven’t licensed the Pop-up Snow Globe Greetings cards made by Up With Paper (download the 2015 Everyday catalog to see examples, though this doesn’t do them justice; the effect is quite good). Or maybe they have in the past and I just haven’t seen it — the product has been around since 2005. It’s paper with a clear plastic globe that comes collapsed in an envelope. Monika Brandrup-Thomas is VP/Creative Director, based in Guilford, CT.
Finally among the exhibitors that caught my eye: Berlin’s L.M. Kartenvertrieb & Verlags GmbH uses original designs by Juan Carlos Espejo to evoke images of Marilyn Monroe, Charlie Chaplin, Audrey Hepburn, Andy Warhol, and others for 3D bookmarks, rulers, door hangers, luggage tags, and other products.
For my (and others’) comments on how this might play out, see Hiroko Tabuchi and Ken Belson’s story in The New York Times. What’s your take?