Licensed Sports Merchandise Market

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US Licensed Sports Merchandise Market -------------------------------2011

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Globally, the licensed sportswear industry has grown at a rapid pace due to increasing fan base and extended distribution channels. In the U.S., four major sports leagues - National Football League, Major League Baseball, National Basketball Association and the National Hockey League dominate the sports licensing market commanding more than half of total merchandise sales in 2009. In addition more than 300 colleges and universities in the U.S. are involved in collegiate licensing, marketing their rights primarily to the apparel market.

However, the retail sales of licensed sports merchandise declined consecutively in 2009 and 2010, primarily due to slowdown in overall economy and decline in impulse spending of consumers. Retail sales of licensed merchandise are largely via bricks-and-mortar (sporting goods, mass, department, specialty, etc.), online retail channels and event venues.

Some of the major retailers for licensed sports merchandise include Dreams Inc., GSI Commerce, VF Imagewear, Reebok and Nike.

Most of the companies in this space have implemented competitive strategies such as web syndication services, entering into contracts and agreements and license extension to increase their sales. The industry also faces high level of entry barriers such as acquiring licensing rights, procuring web syndications deals, sustaining brand identity and intense competition.

The current report analyzes the US licensed sports merchandising market with a focus on licensed apparel market. The sizing, segmentation and supply chain of the US licensed sports merchandise market has been covered in this report. Further, trends in distribution channels, market shares of leagues and associations and various entry barriers faced by the industry are also discussed in detail. The report has a special focus on the US licensed sports apparel market. The competitive aspect of the market (competitive strategies) is also highlighted and the major companies are profiled with their strategies for this market.

The four major leagues, MLB, NFL, NBA and NHL, dominate the US sports licensed merchandise market commanding X% of total product sales Sales of Leagues (US$ Billion): 2009

Revenue Sources of Leagues

Royalty from Sports Licensed Merchandise (~A% of sales of Merchandise)

Major Leagues & Associations

Major League Baseball (MLB) National Football League (NFL)

Fees from Teams Entering the League (e.g. ~US$B million for MLS)

National Basketball Association (NBA) National Hockey League (NHL) Major League Soccer (MLS)

Collegiate Licensing Co. (CLC)

Tickets and Direct Sales of Sports Merchandise

NFL

MLB

NBA

NHL

 The US sports licensing market is dominated by Major League Baseball, the National Football League, National Basketbal…………….. accounting for B% of the U.S./Canada market for licensed sports merchandise.  The sports licensed merchandise market stood at US$X billion in 2009, with royalty revenue earned by the ………league teams estimating at US$Y million in during the same period.  The average royalty for sports-related licensed goods was H% in 2009 and ……earns higher royalties than other leagues, according to The Licensing Letter.  In the past, the leagues would sign licensing agreements with several companies to make a product. But that led companies to cut …………………………………………………………………..  Before granting any license, the leagues decide whether a product………………………….and whether a product will generate enough revenue to offset the time and cost of setting up a licensing deal.

Source: The Licensing Letter, EPM Communications

MLS

Among the other leagues, MLB has a strong competitive positioning with highest revenue of sports licensed merchandise Major Leagues – Competitive Positioning: 2009 Average attendance

NFL Sales: $D Bn

MLB

 In the US$B…………………………………….. …………………………………………………… ……………………………………………………

Sales: $B Bn

NHL

Sales: $C Bn

MLS

NBA

Sales: $A Bn

0

20

Sales: $E Bn

40 60 Average ticket price

80

Major Leagues – Market Share*: 2009

100

 MLB holds a strong competitive position among……………………………….....……… …………………………………………………… ……….  Although NFL’s sales is lower than those of MLB, ……………..………………….………………… …………………………………………………… …………  MLS priced its tickets…………………………………………… …………………………

NFL

NBA

MLB

NHL

MLS

Others

* Market share on the basis of retail sales of Licensed Sports Merchandise (2009)

Source: Company Reports, The Licensing Letter

Impulsive nature of licensed sports merchandise coupled with a slowdown in the economy resulted in sales decline in 2009 and 2010 US Licensed Sports Merchandise Sales (US$Billion) : 2006-2010

2006

2007

2008

2009

2010

US Licensed Sports Merchandise: Category Break-up (2009)

Apparel

Videogames

Gifts/Novelties

Toys/Games

Footwear

Others

Accessories

 Sales of licensed sports merchandise in the US has witnessed a declining trend from the high of US$B billion in 2008 on account of:  ……………………………………………………  ……………………………………………………  …………………………………………………… and

 ……………………………………………………  Apparel, accessories, and footwear generated N% of retail sales of licensed goods for sports-based properties in 2009.  The best-performing product category for sports licensing in 2009 was ………………………………………………  The reliance of leagues has increased over novelties in the recent past primarily because ………………………….in 2008 and 2009 after rising steadily for most of the past decade

Source: The Licensing Letter

Online channel has emerged as the most lucrative and fast growing distribution channel for sports merchandise licensees US Licensed Sports Apparel Sales (US$Billion) : 2006-2009

2006

2007

2008

2009

US Licensed Sports Merchandise: Channel Break-up (2009)

Discounters

Specialty Stores

E-Commerce

Department Stores

Mail Order

Drug, Variety, Convenience

Others

 Retail sales of licensed sports apparel decreased from US$BB billion in 2008 to US$YY billion in 2009. The underperformance of the licensed sportswear apparel were due to:  …………………………………  …………………………………  Rising costs associated with bringing licensed products to market  Discounters and specialty stores …………………………………………………………………………

 Among all the distribution channels, ……………………………………………………………………………….  Major licensees such as …………………………………………………… ……………………………………………………

Source: The Licensing Letter

Table of Contents 1. Overview of Licensing Market 1.1 Global Licensed Merchandise Market 1.1.1 Market Size 1.1.2 Geographical Segmentation 2. The US Licensed Sports Merchandise Market 2.1 Retail Sales 2.2 Retail Sales by Product Category 2.3 Licensed Sports Merchandise: Supply Chain Analysis 3. Licensed Sports Merchandise: Distribution Channels 3.1 Sales by Distribution Channel 3.2 Factors Driving Growth of Online Distribution Channel 3.3 Strategies to Leverage the Online Sales Channel 4. Entry Barriers - Licensed Sports Merchandise Market 5. The US Licensed Sportswear Apparel Market 5.1 Market Size and Growth 5.2 Royalty Rates 5.3 Positioning of Licensed Sports Apparel Industry 6. Analysis – Leagues and Associations 6.1 Major Leagues Positioning Chart 6.2 Market Share - Leagues and Associations 6.3 Major Leagues – Profiles 6.3.1 National Football League (NFL) 6.3.2 National Basketball Association (NBA) 6.3.3 Major League Baseball (MLB) 6.3.4 National Hockey League (NHL) 6.3.5 Major League Soccer (MLS) 6.3.6 Collegiate Licensing Company (CLC)

List of Graphs Flowchart to Demonstrate the Processes Involved In Licensing Global Retail sales of licensed merchandise (2006-2009) Retail Sales of Licensed Merchandise by Geography (2009) Retail Sales of Licensed Merchandise in the US (2008-2010) Breakdown of Sports-Licensed Out of total US Licensing Market (2010) Retail Sales of Licensed Merchandise by Distribution Channel (2010) Retail sales of licensed sports merchandise (2002-2010) Supply Chain Diagram – Licensed Sports Merchandise Retail Sales of Licensed Sports Merchandise by Distribution Channel (2007-2009) Retail Sales of Licensed Sports Merchandise by Distribution Channel (2009) Online shoppers in the U.S. (2007-2010) Retail Sales of Licensed Sportswear Apparel Market (2006-2009) Average Royalty Rate for Licensed Merchandise Vs Licensed Sports Merchandise: US & Canada (2002-2009) Retail Sales of College Licensed Merchandise in the US (2006-2010) Market share of leagues and associations: 2009 Competitive Positioning of Major Leagues – 2009 NFL - Average Game Attendance (2005-2009) NFL - Annual Retail Sales of Licensed Sports Merchandise (20052010F) NFL - Fan distribution by Gender (2009) NFL - Fan Distribution by Age (2009) NBA- Average Game Attendance (2005-2009) NBA- Annual Retail Sales of Licensed Sports Merchandise (20052010F) NBA- Fan distribution by Gender (2009) NBA- Fan Distribution by Age (2009) MLB- Average Game Attendance (2005-2009) MLB- Annual Retail Sales of Licensed Sports Merchandise (20052010F) MLB- Fan distribution by Gender (2009) MLB- Fan Distribution by Age (2009) NHL- Average Game Attendance (2006-2010) NHL- Annual Retail Sales of Licensed Sports Merchandise (20052010F)

7. Company Analysis 7.1 Competitive Positioning of Major Licensees 7.2 Competitive Strategies of Major Licensees 7.3 Dreams Incorporation

7.3.1 Business Description 7.3.2 Business Segments 7.3.3 Value Chain of Dreams Inc. 7.3.4 Competitive Strengths and Weaknesses 7.3.5 Business Strategies 7.4 GSI Commerce

7.4.1 Business Description 7.4.2 Business Segments 7.4.3 Major Clients 7.4.4 Competitive Strengths 6.4.5 Business Strategies 7.5 G-III Apparel Group

7.5.1 Business Description 7.5.2 Business Segments 7.5.3 Competitive Strengths and Weaknesses 7.5.4 Business Strategies

Tables and Charts NHL- Fan distribution by Gender (2010) NHL- Fan Distribution by Age (2010) MLS- Average Game Attendance (2006-2010) MLS- Annual Retail Sales of Licensed Sports Merchandise (20052010F) MLS- Fan distribution by Gender (2010) MLS- Fan Distribution by Age (2010) ClC- Estimated Retail Sales of College Licensed Merchandise (20062010) Total Revenue of Dream Inc. (2006-2010) Dreams Inc. Business Segments Break-up (2010) E-Commerce Revenues of Dreams Inc. (2006-2010) Revenues from Web Syndication- Dreams Inc. (2007-2010) Revenues of Manufacturing & Distribution Segment- Dreams Inc. (2010) Total Revenues of GSI Commerce (2004-2010) Revenues of Global E-Commerce Segment- GSI Commerce (20072010) Revenues of Global Marketing Services- GSI Commerce (2007-2010) Revenues of G-lll Apparel Group (FY06-FY11) Revenue Break-up by Business Segments- G-lll Apparel Group (FY11) Revenue Break-up by Geographic Segments- G-lll Apparel Group (FY11) Sales by Coalition- VF (2010) Retail Sales of the VF’s Imagewear Coalition (2008-2010)

7.6 Knights Apparel

List of Tables

7.6.1 Business Description 7.6.2 Products & Brands

Retail Sales of Sports-Based Merchandise by Product Category (2009) Entry Barriers for Licensed Sports Merchandise Major Leagues Positioning Chart Competitive Positioning of Major Licensees Retail Strategies followed by different Companies List of Operational Retail Stores: Dreams Inc. Major clients of GSI Commerce Licensed and Proprietary Brand Names of G- lll Apparel Group Principal Licenses of G-lll Apparel’s Group VF’s 5 Coalitions Imagewear Coalition’s owned and licensed brands

7.7 VF Corporation (Imagewear Coalition) 7.7.1 Business Description 7.7.2 Business Segments 7.7.3 Sales Performance

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