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SportsBiz: NCAA merchandise sales drop
Question of the Day
For the college licensing industry, this is make-or-break time.
With football in full swing and basketball ready to start, companies that sell officially licensed college merchandise are hoping for a good autumn to boost an otherwise stagnant year. For the first time in eight years, revenue from college merchandise could fall, barring a surge in sales in the next few months.
“October is absolutely the heyday,” said Derek Eiler, senior vice president and managing director for College Licensing Company. “We are definitely kind of in the throes of it right now from September 1 through November and really into the holidays.”
CLC, a division of sports and entertainment giant IMG Worldwide, controls about 80 percent of the revenue from college licensing thanks to partnerships with hundreds of colleges. The Atlanta-based firm said the market hit $4.3 billion last year but might struggle to top $4 billion in 2009.
Last year, income from licensed merchandise held up despite generally bad economic news in the fall. When the economy went truly south last October, retailers already had placed most of their orders. Sales also were buoyed by the introduction of new women’s apparel lines and an expansion of involvement with Wal-Mart Stores Inc., and it also helped that several big universities raised their royalty rates.
But the first few months of 2009 were grim. Sales of merchandise to college bowl games fell by more than half.
“I think consumers literally drove to a bowl, they slept in their car, bought a scalped ticket and went to the game and went home the next night,” Eiler said. “And they bought nothing when they were there.”
For the most part, revenue from collegiate merchandise is driven by sales of clothing like T-shirts and jerseys. But there is increasing interest in other product categories, such as video games and Snuggies with college logos.
In many ways, the market is insulated from the general economic downturn because customers tend to be more educated and well-off than the general population. Universities also offer a solid economic base for their towns, where a lot of licensed merchandise is sold. Furthermore, collegiate merchandise is so broadly distributed that the loss of one retailer or licensee has a minimal impact on sales.
Nevertheless, Eiler said the industry is bracing itself for some bad news, though he said he doesn’t think there will be a dramatic decline in revenue.
“Based on the overall retail climate, retailers are hanging on to their dollars a lot longer and really chasing hot teams or hot product categories that are selling really well,” he said. “The impact of how those dollars are spent we won’t see until the year’s end. If the tsunami is coming, we don’t see it yet.”
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