The Licensing of Sports Business Merchandise

Mark 491/M Spots MarketingSection M

Bryan Barbieri

Prepared by:

Name(s) Student Number(s): Jason Beaton 5673992

Marie-Lianne Claude 9097929 Camila Kwong 5707633

Sean Zimmermann 6049265

Date Due: Date Submitted:

April 2nd 2009 April 2nd 2009

EXECUTIVE SUMMARY............................................................................................................................2

PROPERTY RIGHT OF TEAM NAMES AND LOGOS.........................................................................................3STRUCTURE..................................................................................................................................................3

1. Profit losses.........................................................................................................................................42. Oversaturated markets........................................................................................................................53. Economic downturn............................................................................................................................5

LICENSE CATEGORIES..................................................................................................................................7

PLAYER LICENSING..................................................................................................................................9

INDUSTRY ANALYSIS/TRENDS.....................................................................................................................9PLAYER LICENSING – GENERAL.................................................................................................................10

Player Licensing – NHL........................................................................................................................10Player Licensing – NFL........................................................................................................................11Player Licensing – MLB.......................................................................................................................12Player Licensing – NASCAR.................................................................................................................12Player Licensing Case: Tiger Woods...................................................................................................13

EVENT LICENSING...................................................................................................................................13

FIFA WORLD CUP.....................................................................................................................................13THE OLYMPICS...........................................................................................................................................14WIMBLEDON TENNIS..................................................................................................................................17

COUNTERFEITING...................................................................................................................................18

THE EFFECT OF COUNTERFEIT MERCHANDISE ON LEAGUES.......................................................................18THE COALITION TO ADVANCE THE PROTECTION OF SPORTS LOGOS.........................................................19

NHL.......................................................................................................................................................19NBA.......................................................................................................................................................20MLB.......................................................................................................................................................21NFL.......................................................................................................................................................22

BIBLIOGRAPHY.........................................................................................................................................22

APPENDIX 1 :...............................................................................................................................................24

Executive Summary

The sports licensing industry is worth an estimated 16.6 billion worldwide and is one of

the fastest growing industries in the entertainment business. Today, fans want to be as

close as they can to their favorite team or athlete. Sports merchandising is not limited to

an athlete’s name but also to his/her likeness.

In this report, four different areas will be examined. First, team and league licensing will

be explored to show how their licensing is handled. At a more specific look, player

licensing will be discussed to see how each of the professional leagues, as well as

NASCAR handles licensing of individual athletes. Finally, the discussion will lead into

Event Licensing and how such events as The Olympics, Wimbledon, and FIFA deal with

their licensing.

Not to forget, as much as licensing is a 16.6 billion dollar industry, counterfeiting of these

products occur daily. Counterfeiting will be looked at to see how it has affected the

business and what is done to prevent as much of it as possible.

League and Team Licensing

*For the purposes of this section leagues will include the MLB, NFL, NBA, and NHL

Property Right of Team Names and Logos

Legislation by American courts in the 1970’s proved that teams acquire property

rights (through both team names and logos), and these rights expanded into the sale of

merchandise. Following this, each of the leagues set out to register all of their team

names and logos within their expertise. For example, the NFL registered team names,

logos, the designs of the helmets, and the patterns and colors of the uniforms for each of

the teams in the National Football League. Ever since this legislation passed, each of the

professional sports leagues has an approved properties division that controls all aspects of

the collective licensing of these trademarks and brand names. The structure of the

departments’ agreements will follow in the next section. 1

Moreover, professional teams are responsible for the marketing efforts associated

with their own brands. For new franchises, this means deciding on the name, logo, and

colors associated with their team. For older franchises this implies developing new logos

or changing color patterns to fit the tastes of a changing market. However, it is important

to keep in mind, that while the teams may create their own respective images, it is the

leagues that control their rights through the properties department. 2

StructurePrior to the new millennium, the leagues used a multi-license format. Some of the

leagues had over 250 licensees using their logos, with no contractual agreement as to

what territory of products the licenses covered. This format seemed practical at the time 1 Sports Licensing and Merchandise. Cohen, Susan L. Editor & Publisher. New York: Dec 5, 1992). Vol. 125, Iss. 49, p. 20T (3pp.) Retrieved from Proquest Business Database.2 Marketing: From Sharks to Hornets, Team Logos Help Sports Apparel Score. Grossman, Laurie M. Wall Street Journal. (Eastern Edition). New York, N. Y.: Feb 3, 1992. P. PAGE B1. Retrieved from Proquest Business Database.

because sporting goods and related products were struggling all throughout the 80’s. The

leagues wanted to increase awareness of their brand and grow through volume. For the

first half of the 90’s this strategy appeared to be working3:

NHL: Sales doubled between 1990-1992 to reach $200 million. This occurred

after a period in the 1980s whereby the league could not give away product, let

alone sell it.

NBA: Sales of licensed apparel in 1984 were $10 million. By 1991, sales jumped

to $440 million. 4

MLB: Sales of the Chicago White Sox apparel went up from $16 million in 1990

to $80 million in 1991, after the club changed their uniform design (i.e. logo and

colors).5

However, the executives failed to foresee the many pitfalls to this plan and by the

early 21st century the leagues were forced to restructure their properties department, due

to slumping profits, oversaturated markets, and an economic downturn.

1. Profit losses

A former executive of one of the licensees for the NFL describes that there was an

overload of product due to the current license structure. The many competing licenses,

that more often than not had very similar products, were forced to compete on the basis

of price. This created an unprofitable royalty structure that saw industry profits

(approximately $13 billion dollars) get cut in half towards the end of the 90s: “At the

Super Bowl in San Diego in 1988, we sold T-shirts for $7.50. We sold the same T-shirt at

the Super Bowl in San Diego in 1998 for $5. And there were 11 other licensees selling T-

shirts at that Super Bowl." – Tom Shine, Logo Athletic 6

3

4 Marketing: From Sharks to Hornets, Team Logos Help Sports Apparel Score. Grossman, Laurie M. Wall Street Journal. (Eastern Edition). New York, N. Y.: Feb 3, 1992. P. PAGE B1. Retrieved from Proquest Business Database.5 Marketing: From Sharks to Hornets, Team Logos Help Sports Apparel Score. Grossman, Laurie M. Wall Street Journal. (Eastern Edition). New York, N. Y.: Feb 3, 1992. P. PAGE B1. Retrieved from Proquest Business Database.6 A Winning bid? Hilary Cassidy. Brandweek. New York: Jan 22, 2001. Vol. 42, Iss. 4, p. 40-46 (3 pp.). Retrieved from Proquest Business Database.

2. Oversaturated markets

As mentioned above, licensees sometimes had to compete with 11 other

companies within the same product category. When products became unprofitable

retailers cut the amount of shelf space allotted. All of this created an environment

wherein the licenses had trouble meeting their minimum guarantees set out in the

contracts. Eventually, because of the over-licensed product categories many of the

licensees were forced to declare bankruptcy. For example, under the old deal the NFL

saw Starter, Pro Players and Apex (all of which sold in all channels) go out of business.

Chuck Zona, the NFL’s Sr. VP for the Consumer products division, said, “We need to

stabilize the business, and we need to restore profitability. We need to have a business

model that will work for all of our partners: clubs, retailers and licensees." 7

3. Economic downturn

An economic collapse led to the consolidation of many retailers and distributors.

Because of this, the professional sports leagues were forced to deal with how they got

their products to market at the mass, medium, and class levels.

The leagues found answers to these problems with the creation of an exclusive-

licensing model, providing partners sole rights to particular licensing categories. For

example, the new business structure saw the NFL go from “250 hardlines and 50 apparel

licensees in 1999, to 100 hardlines and six apparel licensees in 2004”. In comparison to

the multi-license format, the exclusive model would look more like this 8:

Exclusive license format

7 A Winning bid? Hilary Cassidy. Brandweek. New York: Jan 22, 2001. Vol. 42, Iss. 4, p. 40-46 (3 pp.). Retrieved from Proquest Business Database.8 Freifeld, Lorri. "Sports Licensing Roundtable." Jan 1, 2004. Global license. 31 Mar 2009

<http://www.licensemag.com/licensemag/article/articleDetail.jsp?id=80491>.

Previously, the multi-license structure accelerated the life cycle of certain

products. However, through exclusivity leagues could manage their business more

efficiently and get products to market that a) placed supply in line with the demand of the

marketplace, and b) are consumer centric. To do so the professional sports leagues are

becoming very selective when choosing who comes into the business structure, by

analyzing the potential licensees’ financials, production capabilities, and

distribution/channel management strategies. Further, appropriate licensees are picked

based on criteria that they share the same idea as to where the brand can be developed

and are more receptive to the leagues business structure. This sort of business

arrangement creates a mutual dependence, whereby licensees are given more

responsibility to maximize the value of the brand in exchange for the power that will let

them best leverage the qualities of the league. 9

To put this all in perspective, let us take a look at the licensing structure of Major

League Baseball. From the above table, it is evident that they are focused on “Strategic 9 Freifeld, Lorri. "Sports Licensing Roundtable." Jan 1, 2004. Global license. 31 Mar 2009

<http://www.licensemag.com/licensemag/article/articleDetail.jsp?id=80491>.

Exclusivity”. New Era manufactures all headwear, while Majestic Athletic handles

practice wear and outerwear. Lastly, each of these companies is “baseball-centric

(therefore better focused on the consumer), profitable and aggressive”. 10

Lastly, having fewer producers creates a better economic situation. Under the old

model, the leagues had 15 companies producing the same t-shirt which watered down

prices. Now, leagues can control the price of the product and charge higher prices,

because with fewer producers they have a more legitimate product. This corrected the

problem discussed earlier by creating a better royalty structure where both leagues and

licensees could be profitable.11

License Categories

Based on information obtained from each of the leagues online stores there are 11

distinct product lines, including: Men’s, Women’s, Kids, Media (videogames, DVDs,

trading cards), Footwear, Collectibles, Home/Office (pillows, bedspreads, lamps,

posters), Hats, Jerseys (home/away/3rd, Retro), Player apparel, and Fitness (Tailgating is

an NFL Specific category for car ornaments). The new business structure has allowed

leagues to tap new segments of the market and create new license categories. Besides the

ever-popular team jerseys, hats, and t-shirts, leagues have expanded the scope of their

licenses to include the following items: children’s blanket sleepers, sweat shirts and

sweat pants, neckties, leather jackets, wool jackets, satin jackets, replica football helmets

and watches, to name a few. 12 Licensees are working closely with the leagues to develop

new categories that help them hit market segments that have not been touched. For

example, the NFL and Reebok were able to establish several new properties that targeted

a more traditional market (Gridiron Classics line of retro apparel) – which was also

featured through the NBA licensee agreement. Moreover, the largest growth

opportunities for most leagues have been video-games. Brian Jennings, an NHL

10 A Winning bid? Hilary Cassidy. Brandweek. New York: Jan 22, 2001. Vol. 42, Iss. 4, p. 40-46 (3 pp.). Retrieved from Proquest Business Database.11 A Winning bid? Hilary Cassidy. Brandweek. New York: Jan 22, 2001. Vol. 42, Iss. 4, p. 40-46 (3 pp.). Retrieved from Proquest Business Database.12 Sports licensing and Merchandising. Cohen, Susan L. Editor & Publisher. New York: Dec 5, 1992. Vol 125, Iss. 49, p. 20T (3pp.). Retrieved from Proquest Business Database.

executive, attributes this and the decline of the trading card business to the liking of

interactive toys by the younger age cohorts. Other growth opportunities for the various

leagues and categories are featured below.

Player Licensing

Industry Analysis/Trends

Sports license merchandising has been rapidly growing throughout the years. As

of 2007, this industry (retail sales of licensed merchandise based on sports leagues, teams

and personalities) was worth $16.6 billion dollars worldwide and $13.7 billion was

generated in the US/Canada. 13

The four major leagues in US/Canada are NFL, NBA, MLB, and the NHL. MLB

leads the way in retail sales of licensed merchandise earning $3.2 billion. 65% of sales of

MLB merchandise come from apparel and headwear. 13

RETAIL SALES AND ROYALTY REVENUE FOR

MAJOR U.S. SPORTS LEAGUES, U.S. & CANADA, 2007

(Dollars In Millions)

Retail Sales Of

League# of

Teams

Licensed

Merchandise

Royalty

Income

MLB 30 $3,300 $150

NFL 32 $3,250 $148

NBA 30 $2,050 $94

NHL 30 $800 $36

MLS 14 $300 $13

Source: The Licensing Letter Sports Licensing Report

www.epmcom.com/sports

In recent years, the four major professional sports leagues have reduced the

number of licensees, rather seeking long-term exclusive agreements instead (Deals with

Reebok by the NFL and NBA to produce various branded merchandise). Reebok is the

official jersey provider for the NFL, NBA, and NHL. Approximately 51% of retail sales

of licensed goods are in the form of apparel, accessories (including caps) and footwear.

10% of retail sales stem from video games and software, though for some leagues or

sports organization, it can be as high as 15%. 13

13 Brochstein, Martin. The Licensing Letter Sports Licensing Report. EPM Communications. <http://epcom.com/sports>.

Player Licensing – General

Player licensing is essentially the licensing of their names or likeness in posters,

apparel, toys, video games, etc. Fees are often generated based on a percentage of each

item sold. Player’s names are protected based on right of publicity (trademark of a

player’s name). More specifically, right of publicity does the following 14:

Protects and control use of his/her identity for commercial purposes

Laws govern by most states cover unauthorized use of all recognizable aspects of

a person, including image, name or nickname, biographical data, distinctive

feature such as voice or walk (celebrity’s persona)

Usually licensor (player) and licensee sign license agreement granting permission

A large part of any license agreement includes quality control, specific use of

trademark, term, exclusivity, and royalties. 14

Player Licensing – NHL

The National Hockey League Players’ Association (NHLPA) is responsible for

taking care of licensing agreements in terms of players’ names and likeness. The

NHLPA has a Group Licensing Program where Players exclusively “authorize the

NHLPA to use, license, sub license the use of their name, signature, picture, biographical

sketch and playing record.” If there is a League or Club licensing arrangement, the

League or Club must receive written consent before using a player’s name and/or

likeness. Certain items such as retail trading cards are jointly licensed because it

14 Rosner, Scott R. and Shropshire K.L. The Business of Sports. Toronto: Jones and Bartlett Publishers, 2004.

incorporates images of current Players in NHL Club uniforms. Neither the NHLPA nor

the clubs shall license any such retail trading card licenses solely unless the other declines

to participate. However, the NHLPA and the Clubs will continue to negotiate their own

royalty payments in their respective license agreements. 15

Player Licensing – NFL

The National Football League Players’ Association (NFLPA) has a subsidiary

called PLAYERS INC. whose responsibility is marketing and licensing. The PLAYERS

INC represents 1,800 active and 3,000 retired players. PLAYERS INC negotiates

licensing of player names and images in trading cards and collectibles (bobbleheads,

figurines, pennants, video games, fantasy football, apparel, novelties, and other retail

licensed products). PLAYERS INC grants licensees the right to use players’ names,

numbers, likenesses, and images. As a result, they receive a percentage for the licensing.

For example: Video game percentages are typically between 5-9% of the retail price.

Royalties are distributed equally among the players in most cases. The most lucrative

deal that PLAYERS INC has entered was an agreement with Reebok to make NFL

players jerseys for every single team. The retail of those jerseys has exceeded $240

million in 2003. 16

Football video games has grown to $350 million in retail sales (Licenses include

Sega, Sony, Microsoft, EA) and this includes using player images and likenesses on game

packaging as well as for print, radio, internet, and television advertising. In 2004,

Electronics Arts (EA) was given sole rights to anything videogame related. The deal was

extended in 2008 until 2013. 15

Player Licensing – MLB

15 NHL and NHLPA. Collective Bargaining Agreement. NHLPA. <http://www.nhlpa.com>.16 Rosner, Scott R. and Shropshire K.L. The Business of Sports. Toronto: Jones and Bartlett Publishers, 2004.

In Major League Baseball, players sign annual contracts with the MLB Players’

Association to market their names and likenesses on merchandise. Any firm that is

seeking to use the names or likenesses of more than two MLB players in connection with

a commercial product, product line, or promotion must sign a licensing agreement with

the MLBPA. The license grants the use of players’ names and/or likenesses only; it does

not grant the use of any MLB team logos or marks. In terms of royalties, players receive

pro rata share of licensing revenue, regardless of popularity or stature. The player’s share

is determined by his actual days of MLB service in a given season. There is also an

option to opt out of the agreement, however this is rarely done. 17

Player Licensing – NASCAR

NASCAR controls the licensing of membership (including drivers and their

crews, team owners, speedway owners, and corporate sponsors). NASCAR has licensing

agreements with many of the drivers and driving teams and they also control most of the

merchandising. Each driver is entitled to controlling his/her name and likeness, but most

assign those rights to their respective driving team. Some examples of drivers controlling

their own name and likenesses are Jeff Gordon and the late Dale Earnhardt. 16

Player Licensing Case: Tiger Woods

As we have now concluded, sports licensing is not just about an athlete’s actual

name, but what kind of likeness or personality they have. Tiger Woods is one of the

greatest golfers to have ever played the game. Not only that, he is a marketer’s dream

because of his positive attitude, his will to win, his drive for success, and his devotion to

his friends and family18. In Tiger Woods’ case, he is willing to give his good name to

products that he truly believes in and that represent him best. He is sponsored by Nike,

17 Rosner, Scott R. and Shropshire K.L. The Business of Sports. Toronto: Jones and Bartlett Publishers, 2004.18 eHow Business Editor. How to get Endorsements Like Tiger Woods. eHow.com <http://www.ehow.com>.

Gatorade, American Express, Gillette, and was previously with GM19. His squeaky clean

image helps to further enhance his association with these products, as well as his 100%

commitment to his sponsors. Tiger Woods also lends his name in his own version of EA

Sports golf videogames and he even has his own Gatorade sports drink. His annual

earnings from endorsements alone are estimated at $100 million 20 and this truly depicts

how lucrative sports licensing can be.

Event Licensing

Throughout the sports industry, there are hundreds of different licensing

agreements that are unique to each individual event. As a result, we will only discuss 3

different licensing agreements for 3 major sporting events.

19 DiCarlo, Lisa. Six Degrees of Tiger Woods. Forbes.com. <http://www.forbes.com>20 Collyer, Krysia. My endorsement is bigger than your endorsement. TheThunderBird.ca <http://thethunderbird.ca>.

FIFA World Cup

FIFA has appointed Global Brands Group as its exclusive retail, licensing and

event merchandising representative worldwide in 2007 until 2014. During the 2006

World Cup, the cumulative TV audience exceeded 26 billion people. It is Global Brands

Group’s job to ensure that the brand can reach these viewers in the most effective manner

possible. Also, with over 73,000 broadcast hours and a reach of 214 countries, Global

Brands Group is trying to reach this audience by marketing the newly created FIFA

branded retail outlets which will be the FIFA World Official Stores located all over the

world. 21 These stores will sell all FIFA related products ranging from soccer balls to T-

shirts in order to continuously push the brands exposure across the world.

Global Brands Group also plays a key role in the sales process for identifying and

negotiating with potential licensees. Once a licensee is found, their job is to monitor the

licensee’s promotional and sales activities as well as approving the final use of the

Official event logo on officially licensed products.

Since each World Cup is every four years, all licensing agreements are to be

agreed upon for 4 year terms. For example: During the 2003-2006 period, (the previous

world cup) 92% of the total revenue ($3,238 million) came from event-related revenue

($2,986 million) such as TV broadcasting rights, marketing rights, hospitality rights and

licensing. More specifically, licensing represented 4% of the total revenue representing a

total of $93 million.22 This revenue originated from multiple sources such as profit

sharing payments, royalties from licensees, royalties from event stores, sale of medals

and coins and product licenses. With Global Brands Group on board, FIFA believes that

it will be able to increase its licensing revenues 11% for the following 4 year term due to

their aggressive worldwide marketing campaigns. (ex: the opening of FIFA worldwide

retail stores.)

21 FIFA Master Licensee. Global Brands Group. <http://www.globalbrandsgroup.com/en/ >.22 FIFA Master Licensee. Global Brands Group. <http://www.globalbrandsgroup.com/en/ >.

The Olympics

The licensees of the Olympics pay between 10-15% of their products sales as a

royalty in exchange for the right to use Olympic marks, imagery, themes to add value to

that company’s product. 23 However, the licensee cannot use the Olympic marks in order

to create a direct relationship with the Olympic movement or the Olympic Games. They

can only use the Olympic marks, imagery or themes to create a relationship between the

company’s product and the Olympic Games.

Olympic Licensing has 3 levels:

IOC or Worldwide Licensing Programs: The IOC will grant its licensees the right

to use the IOC mark, image or themes to develop and create various products

and/or educational material pertaining to sport and the Olympic Games for the

public.

Olympic Games: They grant licensees the right to use the Olympic mark, image

or theme to create souvenirs for the public so that they can bring home a memory

of the Olympic Games. This right is given with the intention that the company

will produce these souvenirs in a social responsible manner. Should they violate

this principle; the licensing agreement will be terminated. In 2007, prior to the

Bejing Olympics, “PlayFair’s” licensing agreement was terminated because they

violated four labor- laws in their Chinese factories while producing souvenirs.24

NOC or National Licensing Programs: Grants licensees the right to use the

Olympic team marks, image, or themes to create souvenirs pertaining to the

national Olympic team for the general public. Once again, the souvenirs must be

produced in a socially responsible manner.

23 Olympic Licensing. The Olympic Marketing File. <http://info.hktdc.com/olympics/licensing.htm>.24 Wade, Stephen. Company loses Olympic license. OrlandoSentinel.com. <http://www.orlandosentinel.com/sports/orl-olybrief3107jul31,0,2429383.story>

In order to successfully choose a licensee, the committee must sort through several

requirements in order to select a candidate. During the 2008 Olympics in Beijing, the

following criteria were used to select a licensee:

Licensees will be selected based on marketing research, qualification assessment

and first hand research conducted on this company.

Financial status, quality control management, design ability, production capacity,

environmental protection, anti-counterfeiting measures, marketing strategy, after-

sale services and logistics are all requirements that the committee thoroughly

reviewed for each potential candidate. They look at all these factors because they

only want to consider a quality/successful company so that it reflects China in a

positive way.

Licensees must have the ability to pay guaranteed payments and royalties on time.

This is to ensure that the Olympic Games have some financial stability.

As for contract renewals from prior Olympics, decisions will be made based on

past performance such as Return on Investment. (ROI)

For royalty payments, licensing agreements include a royalty advance and a minimum

guarantee. The advance itself is non-refundable.25

Olympic Marketing Revenues 2001-2004

25 Beijing 2008 Olympic Games Licensing Programme. Chinese Olympic Committee. <http://www.2010commercecentre.gov.bc.ca/StaticContent/documents/Licensing/ExampleBeijingLicensingProgram.pdf>.

As depicted above, the Olympics are funded through 4 main sources of revenue:

Broadcasting, corporate sponsorship, ticketing and licensing. During this 4 year period,

total revenues were $4215.5 million whereby 2% of this revenue came from licensing.

($93.5 million)26 Please note that this is the most recent data available. The newest data

will only be produced a year after the Beijing Olympics.

Wimbledon Tennis

Wimbledon is one of the most historic sporting events in the world. All licensing

agreements pertaining to Wimbledon deal directly with the All England Club since they

are the owners of the brand. The All England Club started their licensing program in

1979 and now involves 25 licensed companies worldwide. When choosing their

licensees, the All England Club makes sure that there partners reflect the elegance and

prestige that Wimbledon brings to Tennis. Such partners include Fila for footwear and

Rolex for watches. All UK licensees are represented on the Wimbledon shop that is

located on-site and is open all year round, 7 days a week. Wimbledon apparel represents

a significant percentage of their total licensed retail sales of 45 million pounds27 and each

apparel licensee is selected into one of five main groups: Classics, (vintage) Performance,

Lifestyle, Authentic and Kids wear.

Wimbledon has just recently embarked on an international licensee program

whereby 34 Wimbledon shops can be found in 14 locations throughout China. More

specifically, 2 Wimbledon shops were open in Beijing in order to take advantage of the

traffic caused by the 2008 Beijing Olympics.28 China was granted the right to sell

products with the Wimbledon name assuming that it was done in a socially responsible

manner. Furthermore, Wimbledon has also granted India a license to market towels,

jewelry and other accessories since this is a rapidly growing market for consumer

branded goods. Also, a Japanese company called Namco was given the licensing rights to

the new computer tennis game called “Grand Slam.” In the U.S. market, the Wimbledon 26Marketing Revenue . International Olympic Committee. <http://www.olympic.org/uk/organisation/facts/revenue/index_uk.asp>. 27 The Championships, Wimbledon. Wimbledon. <http://www.wimbledon.com/en_GB/media/infosheets/merchandising.pdf>.28 Merchandising. Wimbledon. <http://www.wimbledon.com/en_GB/media/infosheets/merchandising.html>.

brand is licensed to 3 apparel companies: LBH for tennis wear, Little Miss Tennis for

kidswear and IBA Hartmax for blazers and tailored suits.

The UK is considered to be where Wimbledon’s largest fan base is located and

thus is their biggest market. There are 10 UK based companies that are granted the right

to license tennis and luxury products. However, each year new companies are brought in

as licensees in order to reflect the latest styles and trends. For example: Rodenstock is

Wimbledon’s official licensee for sunglasses. They were chosen due to their innovative

ideas such as developing the first ever Wimbledon kids sunglasses.

All official suppliers for Wimbledon have the right to use the Club’s logo and

make reference to their association with Wimbledon through advertising and promotions

all over the world. For example: Polo Ralph Lauren is the official outfitter of Wimbledon

and has the right to outfit all on-court officials with their own polo’s with the association

of the Wimbledon brand.29

Counterfeiting

Licensing and merchandising is an essential part of the business of sports. They

produce revenue and re-enforce fan identification and belonging. More and more, the

stadiums are filled with fans wearing their favorite teams’ jerseys, caps, tracksuits, socks,

and more. The diversity in the amount of merchandise available for fans is increasing at a

rapid pace. Due to the popularity of branded products, the production of counterfeit

merchandise is also on the rise. This type of merchandise violates the trademark

production, and distribution rights of many leagues.

29 Official Suppliers. Wimbledon. <http://www.wimbledon.org/en_GB/about/infosheets/officialsuppliers.html >.

The effect of counterfeit merchandise on leagues

Counterfeit merchandise is to make a copy of, usually with the intent to defraud;

forge. 30 The protection of licensed merchandise for every sports team is extremely

important for the leagues. Purchasing counterfeited merchandise is stealing funds from

the league and teams thus, directly effecting fans. These funds are necessary for the

growth of a league or club, to develop talent and improve services for fans and players.

Also, fake merchandise has a negative effect on the teams’ brand reputation. The

merchandise may not always represent the brand image of the league or team. Authentic

merchandise is sold at a higher price because of the quality of the product and the

elements that are added to make the product legitimate such as holograms. Counterfeit

merchandise are usually sold at a lower price because of its low quality, slit neck labels,

wrong colors and high production quantities. Licenses are sold to specific merchandisers

and a decrease in merchandise revenue will not only affect the partnership with the

teams, but the employees’ jobs that produce merchandise. Teams are trying to protect

their rights by enforcing laws against these illegal activities. Leagues are taking matters

into their own hands by issuing warnings to fans, especially during major sporting events.

There are more police patrolling around the event in order to prevent fake merchandise

sales. Trademark infringement laws protect phrases and words, as well as team colors.31

To limit product knock-off’s, teams are now pursuing counterfeiters with a legal letter

warning them to stop selling counterfeited products or they will have to resort to legal

action. (See Appendix 1).

30 Counterfeit. The Free Dictionary. <http://www.thefreedictionary.com/counterfeit>.31 Licensing officials Watching for Counterfeit Merchandise. Ksl.com <http://www.ksl.com/?nid=148&sid=2190127>.

The Coalition to Advance the Protection of Sports logos

Formed in 1992, the Coalition to Advance the Protection of Sports logos (CAPS)

is an alliance that regroups The Collegiate Licensing Company, Major League Baseball

Properties, Inc., NBA Properties, Inc., NFL Properties LLC, and NHL Enterprises, L.P.

This alliance protects the trademark rights of the 5 sports leagues and sues all companies

who produce merchandise that is unauthorized by the leagues. Teams do not deal directly

with counterfeit issues, they report to the leagues that will take the matter in hands. CAPS

have created guidelines that help consumers differentiate between authentic and fake

merchandise for each individual league.

NHL

Since 1993, Caps has helped seize more than nine million pieces of fake NHL

products, a value of more than $329 million. 32 The popularity of hockey generates great

merchandise demand therefore in order to ensure authenticity; the NHL has developed

quality control guidelines such as:

Licensed products must have a holographic stickers or hangtags with a specific

sequential number.

Apparel has sown-in labels with the Official Licensed Product Logo, as well as

the name of the licensee.

The NHL official Licensed Product Logo has to be visible and has to include ®

next to the Shield at all times.

The products must all have the right trademark designation (TM or ®)

The products must all include the copyright notice: © NHL32Yahoo! Finance. NHL Issues Warning to Fans: Beware of Counterfeit NHL Winter Classic Merchandise. <http://finance.yahoo.com/news/NHL-Issues-Warning-to-Fans-bw-13927892.html>

NBA

The NBA is composed of 30 teams. The NBA Properties, Inc. (NBAP) has the

licensing rights of the NBA. The NBA has created and implemented programs, like the

NBA Holographic Hangtag and sticker Program in order to protect, register and create

their merchandise and services. Here are ways that you can identify NBA Licensed

Merchandise:

The goods require an NBA-branded holographic hangtags/stickers attached with

the following specifications:

a) 2D surface hologram of NBA Logo is not color controlled (not blue, white and

red);

b) Bouncing balls all light at the same angle; or

c) Misaligned edge shows hand application of hologram to hangtag.

Need to have licensee information attached to the product (e.g., Reebok, Mitchell

& Ness, New Era, Majestic, etc.).

The printing/embroidery, overall quality of the goods or material and the colors

are of high quality.

NBAP products use the "TM" or ® symbols next to NBA or NBA member team

logos.

MLB

The MLB has the MLB Properties, Inc. as a licenser, controlling the use of

trademarks and copyrights of products and services of the MLB. They regroup all the

Major League Baseball entities; the Office of the Commissioner of Baseball, the

American and National Leagues of Professional Baseball Clubs, the individual Major

League Baseball clubs and their affiliated and related entities. The MLBP ensures the

authenticity of their products by requiring official labels on the products, such as

hangtags, holograms, licensee identification and other notices on all licensed goods and

services. Counterfeit merchandise may or may not have the following characteristics:

No Genuine Merchandise™, Authentic Collection™, or Authentic Diamond

Collection™ hangtags.

No official sewn-in labels on headwear or embroidered products.

No copyright or licensee notice on screen-printed products.

No ™ or ® trademark notices on non-embroidered products.

No regular season or Post-season holograms on products.

Products are defective or marked "irregular".

Labels are ripped or torn.

Inferior quality materials, screen printing or embroidery.

Colors that run into each other or are uneven.

NFL

Composed of 32 teams, the NFL uses official hangtags as well as specific holograms on

their licensed goods. The same characteristics as the MLB apply for the NFL.

Representatives from the NFL estimate that they lose a significant amount of money each

year to hawkers using NFL teams' names, although they could not provide an exact

number. Anastasia Danias, an attorney for the league, said that U.S. businesses lose about

$250 billion a year in revenue because of the counterfeit market. 33

33 Clamping down on Ravens counterfeit merchandise <http://www.sun-sentinel.com/news/politics/elections/bal-md.merchandise16jan16,0,2348185.story>

BIBLIOGRAPHYBrochstein, Martin. The Licensing Letter Sports Licensing Report. EPM Communications. <http://epcom.com/sports>.

Carofano, Jennifer. Team Player: Exclusive deals with the NBA and NFL are pumping up apparel sales and increasing brand visibility. Footwear News: FN. New York: Oct 25, 2004. Vol 60, Iss. 42, p. 52. Retrieved from Proquest Business Database.

Cassidy, Hilary. A Winning bid? Brandweek. New York: Jan 22, 2001. Vol. 42, Iss. 4, p. 40-46 (3 pp.). Retrieved from Proquest. <http://proquest.com>.

Cohen, Susan L. Editor & Publisher. Sports licensing and Merchandising. New York: Dec 5, 1992. Vol 125, Iss. 49, p. 20T (3pp.). Retrieved from Proquest. <http://proquest.com>.

Collyer, Krysia. “My endorsement is bigger than your endorsement”. TheThunderBird.ca 29 Mar 2009. <http://thethunderbird.ca>.

Carofano, Jennifer. Team Player: Exclusive deals with the NBA and NFL are pumping up apparel sales and increasing brand visibility. Footwear News: FN. New York: Oct 25, 2004. Vol 60, Iss. 42, p. 52. Retrieved from Proquest Business Database.

DiCarlo, Lisa. “Six Degrees of Tiger Woods”. Forbes.com. 30 Mar 2009 <http://www.forbes.com>.

eHow Business Editor. “How to get Endorsements Like Tiger Woods”. eHow.com 30 Mar 2009. <http://www.ehow.com>.

Freifeld, Lorri. "Sports Licensing Roundtable." Jan 1, 2004. Global license. 31 Mar 2009 <http://www.licensemag.com/licensemag/article/articleDetail.jsp?id=80491>.

Grossman, Laurie Marketing: From Sharks to Hornets, Team Logos Help Sports Apparel. Score. M. Wall Street Journal. (Eastern Edition). New York, N. Y.: Feb 3, 1992. P. PAGE B1. Retrieved from Proquest. <http://proquest.com>.

Loveday, Samantha. “Counterfeit merchandise warning for NHL fans." January 22, 2009. Licensing.biz. 26 Mar 2009. < http://www.licensing.biz/news/2523/US-Counterfeit-merchandise-warning-for-NHL-fans>.

NHL, "NHL POWERED BY REEBOK STORE LOCATED IN NYC." NHL.com. NHL. 31 Mar 2009 <http://www.nhl.com/ice/page.htm?id=26423>.

NHL and NHLPA. “Collective Bargaining Agreement.” NHLPA. 29 Mar 2009. <http://www.nhlpa.com>.

Rosner, Scott R and K.L Shropshire. The Business of Sports. Toronto: 2004. P.183-187.

Unknown Author. “Beijing 2008 Olympic Games Licensing Program”. The Free Dictionary. 27 Mar 2009. <http://www.thefreedictionary.com/counterfeit>.

Unknown Author. “Counterfeit”. The Free Dictionary. 27 Mar 2009. <http://www.thefreedictionary.com/counterfeit>.

Unknown Author. “FIFA Master Licensee”. Global Brands Group. 27 Mar 2009. <http://www.globalbrandsgroup.com/en/pdf_content/property_sheets/GBGBSSFIFA290507UKV1.1.pdf>.

Unknown Author. “Holograms & Copyright”. International Hologram Manufacturer’s Association. 27 Mar 2009. < http://ihma.org/content/hologram-copyright.php>.

Unknown Author. “Licensing - History”. FIFA.com. 30 Mar 2009. <http://www.fifa.com/aboutfifa/marketingtv/marketing/licensing/history.html>.

Unknown Author. “Licensing Officials Watching for Counterfeit Merchandise." November 20, 2007. ksl.com. 26 Mar 2009. <http://www.ksl.com/?nid=148&sid=2190127>.

Unknown Author. “Marketing Revenue”. International Olympic Committee. 30 Mar 2009. <http://www.olympic.org/uk/organisation/facts/revenue/index_uk.asp>.

Unknown Author. “Merchandising”. Wimbledon. 29 Mar 2009. <http://www.wimbledon.org/en_GB/about/infosheets/merchandising.html>.

Unknown Author. “Official Suppliers”. Wimbledon. 29 Mar 2009. <http://www.wimbledon.org/en_GB/about/infosheets/officialsuppliers.html>.

Unknown Author. “Olympic Licensing”. Tdctrade.com. September, 2001. 30 Mar 2009. <http://info.hktdc.com/olympics/licensing.htm>.

Unknown Author. “The Championships, Wimbledon”. Wimbledon. 29 Mar 2009. <http://www.wimbledon.com/en_GB/media/infosheets/merchandising.pdf>.

Unknown Author. “Wimbledon Need to Know”. Wimbledon. 29 Mar 2009. <http://www.licensing.biz/brand-profiles/54/Wimbledon>.

Wade, Stephen. “Company loses Olympic License”. OrlandoSentinel. 27 Mar 2009.<http://www.orlandosentinel.com/sports/orlolybrief3107jul31,0,2429383.story>.

APPENDIX 1 :

March 22, 2006

Sender Information:Coalition to Advance the Protection of Sports LogosSent by: [Private][Private]Coeur d'Alene, ID, 83814, USA

Recipient Information:[Private]Day Late & Dollar Short SoftwareTemple, TX, 76502, USA

Sent via: Certified Mail, rRe: Unauthorized Use of CAPS Members' Trademarks

Dear Owner:

This letter is sent on behalf of the members of the Coalition to Advance the Protection of Sports logos ("CAPS"), in connection with the protection and enforcement of the names, logos and trademarks (hereinafter "Marks") owned and/or licensed by The Collegiate Licensing Company; Major League Baseball Properties, Inc.; NBA Properties, Inc; NFL Properties LLC; and NHL Enterprises, L.P. ("CAPS Members"). The CAPS Members own and/or license all rights, title and interest in the Marks of their respective organizations. Because of the foregoing rights, no one is authorized to manufacture, advertise, offer for sale and/or sell any products bearing the Marks of the CAPS Members without the express written permission of the relevant organization.

It has come to our attention that you are manufacturing, advertising, selling, and/or offering for sale unauthorized software bearing the Marks of the above-mentioned CAPS Members, in violation of state and federal laws.

Your use of such Marks of the CAPS Members constitutes trademark infringement and unfair competition in that purchasers of the products in question will erroneously believe that such merchandise is licensed, sponsored or authorized by the CAPS Members. In addition, your use of the Marks will dilute the distinctiveness of the CAPS Members' Marks by trading upon the goodwill and reputation which the public associates with their Marks. It will also interfere with the merchandising and licensing of their Marks.

The CAPS Members demand that you and each and every person or company affiliated with you:

1. Immediately and permanently discontinue the manufacturing, advertising, selling and/or offering for sale any unauthorized software bearing the Marks of the CAPS Members;

2. Advise us in_writing of your compliance with the foregoing and furnish us with the following information within ten (10) days:

a. A list describing each item which utilizes any of the CAPS Members' Marks manufactured and/or sold by you, including sales price;

b. The date you began to manufacture, distribute, offer for sale and/or sell the unauthorized software;

c. Confirm that you are the manufacturer of the items described in (a) above. If you are not the manufacturer please provide the name, address and telephone number of the manufacturer and/or supplier of the unauthorized software;

d. The names and addresses of the owners and/or officers of your business and/or any affiliated company or business.

3. In addition, please forward to our office your remaining inventory of all unauthorized software described in (a) above.

If you do not agree to the points set forth above, the CAPS Members will have no choice but to take further action against you, as is necessary to protect the CAPS Members' valuable intellectual property rights. The statement of facts set forth in this letter is not intended to be, nor shall it be deemed to be, a full and complete statement of the facts in this matter. Nor is this letter intended to be a complete statement of the CAPS Members' rights, and shall not be construed as a waiver of any legal or equitable rights or remedies, all of which are expressly reserved.

Very truly yours

[Signature]

[private]Administrator

LUA/hs

cc: CAPS Members

Source: CAPS Coalition Shoots Down Software Developerhttp://www.chillingeffects.org/trademark/notice.cgi?NoticeID=4073