In a one-on-one conversation, podcast with International Sports Convention, Marty Malysz as an industry leader and voice discussed aspects of sports licensing and sports business in the changing landscape. Listen to the full podcast here.
How Licensing Market Works in Sports
Licensing in sport starts with a trademark or brand. That brand itself is the mascot and the team name. That is the brand owner who owns that mark and has registered it.
Brand owners must register their intellectual property in every territory around the world. There are 41 different classifications. It is a legal and important business issue. It is defensive to prevent other people from using it. Historically, brands who have not registered their trademarks properly faced many challenges.
Brand owners who pour their heart and soul into brand need to keep it so no one else can use it. They enforce the brand and own the brand.
Licensees are people who translate the IPs into products. Licensees can be quite substantial and large companies.
Every brand wants good quality licensees, and they need to be careful with choosing their licensees. Brands needs to consider which licensees are working with other clubs, who can make quality merchandise as well as have a good grasp about in the market.
On the other hand, licensing agents are people who represent the brand owner and negotiate deals. They can find and run success programs, conduct deals on behalf of the brands.
Agents are great gap fillers to be able to manage the brand by having a specialty company that use multiple companies that work with brands. They are paid on commission based on success of brands. They must have a substantial amount of licensing activity to have a licensing department as well.
Sports industry has hundreds of companies they work with which is thousands of products that need to get to market with approved licensees and manufacturers.
The theme behind sports licensing
The real theme in sports licensing is to engage fans and ensure that brands have good product available in the market. It is all about the number of dedicated fans that brands have. Some brands can even have up to 1 Billion fans online. To build that affinity with the brands, through branded products is crucial because people want to be associated with those clubs or brands.
Fans can buy the licensed merch or consistently wear it, which reflects well on brands. Branded sports product to fans are extremely valuable, especially to the fans who cannot get to the stadiums. Extension of the brand keeps customers engaged especially the ones that are far away.
For licensees having approved content available and to be able to do well in sports league helps sales and for brands, it builds authentic fans and customers. We provide the approval system for Chelsea Football Club that tracks all the products, preapproved artwork and tracking royalties to manage every facets of licensing management.
There is a lot of rules that go along with licensing. The real challenge is to predict how much product is going to sell. At the same time, licensees do not want to sell out too quickly, but they don’t want to have too much inventory to get stuck with.
The weekly tournaments for example, US Masters, Rugby Union leagues, Tennis tournament, or Golf tournament are the difficult licensing programs to predict for licensees. Having enough products sold at the event, through the retailers in local area as well as internationally for those who cannot be present there, are crucial parts of forecasting how many fans are going to be engaged.
As unpredictable 2020 has been, lots of in-person games and matched have been canceled, and a lot of products did not sell through. League licensed merch maker Northwest Company took a big blow and filed for bankruptcy when the projection didn’t pay off and quality control went down.
Three tips and insights into future of licensing in sport
Finding a way to be together-
The biggest issue in a post pandemic world is to address and getting sports enthusiasts together. It’s a unique challenge to get teams reconcile when fans are not present in the stadium. This is where sports licensing plays a big role, with sports licensed merchandise help fans feel the connection even when they can’t show support to the clubs at matches.
Fantasy sports and betting-
Engaged a lot of people who are not able to get to games. It’s now legalized in the USA and help engage with players and teams.
Embrace E-gaming is the next step for brands to engage tomorrow’s fans. Clubs think games are good and are right. Fans of games know their players and their statistics better than anyone.
How does Dependable Solutions help sports brands, leagues and licensees keep ahead of the curve?
Sport transcends the entire world and so do brands. DSI can stay ahead of the curve in adopting latest technologies. The ever expanding DSI team is able to keep up with constant innovation and changes in security, data protection, exchange data. The goal is to ensure DSI’s client base is making the most out of our solutions and assimilate the tech that we produce to solve their challenges.