The Bugg Report - Sports Licensing Magazine - Edition 1

OUR FAVOURITE LITTLE HEROES ARE BACK IN 2015 WITH 50 NEW PLAYERS TO sport & licensing

www.buggtoysandlicensing.com sport licensing - edition 1

COLLECT!

From the Editor Welcome to the first edition of our new magazine dedicated to the Sport Licensing Industry, here in Australia. IBISWorld states that Sports in Australia account for $15bn in revenue and employs over 100,000 people through 9000 businesses!

Given the popularity and significance of this industry, along with the development and introduction of a range of new sporting competitions, such as the Big Bash League, now is a great time to introduce a dedicated magazine to Sport Licensing.

The popularity of sport in Australia can not be denied, with so many sporting codes to choose from including Australian Rules Football, Rugby, Cricket, Soccer, Golf, Basketball and Motor Racing, to name just a few. Our goal is to bring you a wide range of information relating to all things Sport Licensing, which will include feature interviews, commentary, market updates and much much more.

In this edition you will see interviews with Scott Bingley (Licensing Essentials) and Stuart Coventry (Big Bash League), a market update from the AFL and some exciting updates from Australian Rugby Union, Burley Sekum, Hunter Products, Sherrin and the NRL. As always we really hope that you enjoy our magazine and would very much appreciate your feedback on things that you find engaging and insightful as what you think we can improve.

We would love to hear your feedback, so please email editor@buggtoysandlicensing.com with your input.

For all relevant contacts please refer below: Media releases: media@buggtoysandlicensing.com Feedback/suggestions: editor@buggtoysandlicensing.com Advertising/bookings: bookings@buggtoysandlicensing.com Bugg Sport & Licensing is published by Bugg Marketing Solutions Managing Director – Tony Bugg – tony@buggsolutions.com.au Editor in Chief – Matthew Bugg – matt@buggsolutions.com.au Bugg Marketing Solutions Phone/fax: +61 3 9769 3963 Email: info@buggsolutions.com.au Address: Unit 5, 24-26 Woods Street, Beaconsfield VIC 3807 Postal: PO BOX 491, Berwick VIC 3806 Bugg Toys & Licensing has been compiled as a guide to Toys and Licensing.

The views and opinions provided are based upon the views and opinions of its writers. In no way is Bugg Toys & Licensing a factual guide to Toys and Licensing and does not take responsibility for how the information provided is used by its consumers.

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Contents

04

AFL market update

06

Big Bash League feature interview with Stuart Coventry

11

Licensing Essentials Feature Interview with Scott Bingley

14 16 18 BUGGtoysandlicensing.com

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Micro Figures

Footysuits

Following the successful launch of the AFL Micro Figures in 2014, the AFL are pleased to announce that our little heroes will be back, bigger and better for 2015. After a long pre-season, your favourite footy heroes will once again be brought from the stadium to the supermarket aisles in collectable fashion, just in time for the Toyota AFL Season launch.

A Footysuit is a 100% cotton, all-in-one, baby jumpsuit that is designed to depict the complete playing outfit of your favourite hero! With features including printed logos to ensure there is no rubbing on the inside of the garment and shoulder and leg openings using YKK press studs; these Footysuits are guaranteed to create plenty of laughs and smiles! You are never too small to dream!

With all new collectability including past Norm Smith Medallist’s, accessories, new Guernsey designs and marquee players, the new range is sure to appeal to all AFL fans, big and small.

Dorel – Car Booster Seats

Awarded AFL Product of the Year in 2014, the AFL are thrilled to once again partner with The Promotions Factory in offering fans the opportunity to continue their AFL Micro Figure collection.

We look forward to continuing to create excitement within schoolyards, sporting clubs and even offices as die-hard collectors make critical player trades, interact with their new all-star team and enjoy the additional fun elements of the 2015 AFL Micro Figure range.

AFL Micro Figures will be available exclusively at Coles and Coles Express.

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With pre-season training having kicked off and a new season ahead, Mother’s Choice is thrilled to announce the release of their latest range of Booster Seats, specially designed for the little - biggest fans. The range includes booster seats featuring Fremantle, West Coast Eagles, Hawthorn, Collingwood, Essendon, Carlton and Richmond colours and will be available at Target online store as well as selected Club stores before the 2015 season starts.

Penguin – Footy Kids Series

The Footy Kids series, written by Lorraine Wilson, was first published in the 1980s.

The 2015 series ‘reboot’ will see the picture books brought into colour. New stories, illustrated by award-winning artist Dave Follett, will captivate the next generation of AFL fans. All eighteen picture books, one for each AFL Club, will follow a young footy fan’s love for the game and, more importantly, the love for their Club. Delighting young fans and their parents alike, the Footy Kids series will be published in June.

For more information contact Jessica Hatz, AFL Licensing Manager at jessica.hatz@afl.com.au or on (03) 9643 1791

As the KFC T20 Big Bash League (BBL) transitions into its off-season and planning begins for BBL05 we are fortunate to speak with Stuart Coventry, the current CEO of the Melbourne Renegades.

From a humble beginning and some hurdles along the way, the BBL has now established itself as one of the world’s premier domestic competitions with the entertainment factor as one of its primary platforms.

Network TEN are the exclusive broadcaster and have embraced the competition and their TV product as full of excitement, colour and entertainment. Their use of statistics and key International cricket stars of past and present, along with wonderful female presenters and boundary riders is a breath of fresh air for the viewing audience, as competition is fierce across all BBL franchises.

We pose some questions to Stuart about the competition and also his local franchise.

Season 5 is shaping up to be another break out success.

As the BBL enters planning for it’s fifth season, how do you think it stacks up globally against similar competitions elsewhere?

The BBL has it all – great TV coverage, combines worlds best players from local and international, exciting entertainment and atmosphere.

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Channel 10 have embraced the BBL League, how do you see their support and what is your view of the product they are bringing to your viewers?

Network TEN provides an outstanding live coverage, proof being the massive TV audiences every night of the BBL. Live sport is commercially valuable with ad rates soaring.

The entertainment aspect of the sport has been all-important, how have the Renegades tackled this and how have you engaged you fans?

We provide the full adrenaline experience from when you enter Etihad Stadium – massive fan engagement activities, music, pyro, freestyle MX and a great game of T20 cricket. This season a FMX rider completed the world’s longest backflip ramp to ramp jumping 120ft. This would never have been possible at previous cricket games.

From all reports the BBL League has resonated well with families. Is this your primary target audience?

T20 cricket appeals highly to families and kids and non-traditional cricket followers.

The target audience is definitely kids and families. What we are finding is the audience demographic is wide, proving the popularity to all ages.

The inclusion of International stars has added significantly to the competition.

What’s the plan for BBL05?

We can play two internationals and are deep in the recruiting phase, sourcing the best available within our recruiting strategy.

There has been discussion around fielding two teams in Melbourne. How do you see the Melbourne market in the next three years?

70% of the broadcast eyeballs are down the eastern seaboard. Two teams in Melbourne are vital as the competition expands.

Has the league been able to engage significant Sponsors over the past five years?

This season, there is record sponsorship revenue for both the League and Clubs.

Where do you see the merchandise program for BBL05?

The BBL has had 28% growth in venue merchandise sales and this will only increase as teams increase supporter bases.

By the numbers can you give us some idea of the key drivers for the league, including viewing audience, spectators and key highlights?

Viewing audiences grew 3% to almost 950,000 average per match, peaking at 1.9m for the BBL Final. Attendances increased across all eight teams which included four sold out matches. Even with record average TV audience numbers, the competition is only four years old, so there is much upside to come.

What is your expectation for BBL05?

Big crowds, huge TV audiences, amazing cricket matches and even better at match entertainment.

Thank you for your time Stuart.

We will check in with you again during BBL05 and get an update on the Renegades and the competition in general.

From all reports it looks like the competition is heading for great things.

For more information visit www.melbournerenegades.com.au and www.bigbash.com.au

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Visit our web site to find out more about these and many other official supporter products.

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Scott Bingley is a veteran of the Sport Licensing business. He is the founder and owner of Licensing Essentials (LE), which he has run as Managing Director for the past 20 years.

Sports Licensing is the fourth largest retail sector globally and is roughly 12% of retail sales for licensed merchandise. The category delivers some 17.5 billion dollars each year.

Australia is regarded as a Sport loving country and all of the core sports including the AFL, the NRL, Soccer, Rugby, Cricket, Tennis, and V8 Supercars all have a strong support base and the merchandise programs, which are associated with each sport, generate many millions of dollars of retail sales each year.

LE are one of the leading players in this business and as we launch our very first Sports Licensing edition of Bugg Toys & Licensing, we speak to Scott about his business, his thoughts on the industry and what the future holds for LE in this field.

LE is fortunate to have a significant part of the Sports Licensing merchandise business, in terms of potential to grow, do you see Sports as a growth opportunity over the next 3 years I clearly see our Sports Consumer Products business as essentially driven by the accessory purchase due to the nature of our license. We should be a complimentary program to the key apparel activations for each sporting code. We are fortunate to hold current rights for most of the key sports and it is our challenge to bring innovative product to market and in turn secure placement across all distribution channels. Our approach of course is different depending on whether we are dealing with the Clubs, Specialty chains or with key mass-market partners.

Our product appeals to a wide demographic and is an impulse of gifting opportunity for all retailers. Based on current retail landscape there is significant growth opportunity for LE .

No doubt, the AFL is one of the biggest sports in the country. What roles do the AFL stores and the clubs play in connecting the supporter base to the merchandise opportunities.

I see the AFL stores and Club stores network as the primary bricks and mortar interface between the clubs and the supporter. AFL stores offer the consumer a one-stop shop

for all things AFL. It provides an experience where consumers can shop the entire apparel and accessory ranges. They play a critical role in connecting the supporter to their team and the code in general. They are a little bit like a concept store approach. More retailers across all license platforms should engage this approach.

We hear a lot about the emerging online platform these days as a conduit to market. How do LE use this medium and what percentage of your sales are realised via online activities?

LE has recently been appointed to manage the online platform for the AFL stores.

Bricks and Mortar will always be the key, however online is important and plays a complimentary role. As the AFL is a national sport our online offer allows supporters in regional and outlying areas to gain direct access to the product. We provide a high level of personalization to our online purchases and we can gift-wrap each item. LE is continually developing new and exciting product that is best in category. Our pricing is also regarded as best in market.

We are also currently investing heavily in the redevelopment of our corporate online platform. This will also offer the consumer another opportunity to purchase our products. We will be bringing some innovative new product to market this year, which will focus heavily on personalization.

We regularly see boutique sporting events being staged in our local market i.e.

Manchester United playing the Melbourne Victory in soccer, special round robin tennis challenges featuring the 4 top world players etc do you see an opportunity to bring a very specific merchandise program to market that would resonate with the sporting consumer?

Yes, once you have the sporting fan engaged in the event via ticketing etc. the next logical opportunity is to offer them a merchandise program that taps into their being at the event. Being in the moment is very powerful.

It is up to the venues to think about allocating space to allow for these types of programs.

LE is well positioned to develop product for these one off events. Sometimes the accessory purchase is forgotten. It becomes very apparel driven. In my view not every one wants a t-shirt. In terms of our core ranges I definitely see a shift towards mass retailers being more open to accessory driven programs.

The Cricket World Cup is currently playing out on our shores. Do you see these world events as significant opportunities and how do you decide on the direction that you will pitch your merchandise programs?

LE is very open to represent global events such as the current Cricket World Cup. Events such as the Rugby World Cup, The Australian Open and others are definitely on our radar.

A classic example here is the State of Origin, we were fortunate to pick up rights for this event some 7 years ago . We have expanded the offering significantly and the distribution channels here. Cricket World Cup is another stand out example of our ability to execute.

Coles, BWS, Dan Murphy’s and Liquorland have committed to strong presentations of the World Cup product.

Target Australia has been appointed as the mass-market partner for AFL merchandise programs. Where would you like to see both the soft goods and hard goods ranges over the coming two AFL seasons?

The opportunity exists for Target to develop an AFL store inside the Target business.

As the appointed mass-market partner they need to own this business under their slogan

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“Target Loves Footy” There is no doubt that with 300 stores across the country they can develop both a soft goods and hard goods story that will offer the footy supporter easy access to AFL merchandise. LE currently has a very diverse range of hard goods, including, gifting, glass ware, flags, puzzles etc. My vision is for us to be in a position where we can manage an accessory section in Target stores that will complement the apparel program during this season and next.

The Australian Open of tennis was recently played in Melbourne. We understand more than 700,000 patrons came through the gates. It is rumoured that Tennis Australia will extend the event even further in subsequent years with a new footbridge across to Birrarung Marr. The merchandise opportunity is already significant do you see the depth and breadth of the merchandise showing significantly more growth over the next two to three years?

Yes, LE has worked closely with Tennis Australia and VBM to deliver a balanced range of accessory merchandise. For the first time this year, there was an entire wall dedicated to LE product at the Australian Open merchandise pavilion. It sold exceptionally well! I see this trend continuing to evolve where we become even more involved in the merchandise mix. Tennis Australia has significant data relating to attendance and the demographics of the crowd. With in excess of 700 thousand

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attending the Australian Open there is a ready-made audience. It’s up to us to develop and put the best product in front of the consumer. We see big upside both for the Tennis lover and also the individual country supporter. Tennis Australia are fortunate to have a very mature business here the upside is significant. The offer must be very different each year. We have invested heavily in our ability to develop and deliver here at LE. Our expert procurement team, Brand team, logistics and distribution network work closely together to allow us to do what we do.

After our stunning win in the recent Asian Cup of 2015, where do you see football in the next 3 years?

I see it as an exciting opportunity for all of us. As the crowds continue to grow for both the local competition and also the world competitions, the merchandise opportunities also follow. The merchandise program is generally with the clubs at present with some wider programs in retailers such as Rebel and A Mart etc. Bottom line is, the stronger the code becomes the greater our opportunity becomes for merchandise. We have a dedicated brand manager, Julian who works directly with the clubs to develop product and promotional opportunities, this is another example of how LE resources certain areas of the business where we see the need. Julian builds relationships and this is where the programs start.

State of Origin will explode onto the sporting calendar shortly. This annual event, which is staged across three games, attracts sell out crowds for all three battles. What does the merchandise opportunity look like, do the hard-core fans buy into a State vs State platform outside of their regular NRL team of choice?

Yes this is your classic state versus state rivalry. The fans are passionate about their team and they can’t wait to get to the game.

We were fortunate to pick up the rights 7 years ago when the program was very small. LE has been able to grow this into a multi-million dollar business. We have been innovative and developed new products, CDU programs and expanded significantly our distribution options. It would be good if we could have a different team winning the event or premiership each year!

For the two biggest sports the AFL and the NRL, where do you see the TV rights heading and will the next round push these sports even further?

This is not my area of expertise, however they are securing a lot of money for the rights!

This money is being spent on the game which can only be beneficial. Bottom line the codes are becoming more commercial and more professional. I am a supporter and a business owner and the Revenues from the TV will continue to keep the game growing.

The structure of the competitions in terms of

teams and where they are based is another pillar that influences the TV rights outcome.

For us, we need to be focused on developing product for 36 teams and then working out how do we get that product to the consumer.

We need to adapt to the competition.

I believe this is one of our strengths. I think at the end of the day, it must be for the fans.

Where do you see LE’s sporting business in the next three years?

Sport is an important platform for our overall business. Whilst we have other priorities in the entertainment, kids, Music and Liquor space, our diversity allows us to attract brands. Importantly our apparel business continues to grow. We will deliver in excess of 500,000 adult T’s in 2015. This will show the market that we can represent other sporting brands in this category.

Sport remains the most significant part of our business and I would like to think that it will always remain a priority for us. We do it all under one roof, and our team and our ability to develop and deliver best in class product will ensure that a local company can represent our iconic sporting brands for a long time into the future.

Thanks you Scott for a much closer look into the Sports business. Clearly LE is committed to this market segment with some exciting and innovative programs. It looks like 2015 will be another big year for you.

For more information contact Licensing Essentials on +61 3 9754 0754

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