HOW TO NAB AN NBA LICENSING DEAL
January 13, 2009 by Andy Socrates
The NBA hears a thousand offers from pitchmen trying to get their chotchkes emblazoned with Jerry West’s famed red, white and blue silhouette. Here are a few tips to set yourself above the pack.
Be ready. Do you have a great idea for a product? A cool keychain or bracelet? Before you even go to the NBA, have a working prototype. You might make the best quality product out there, but if the NBA cannot see what it physically looks like, they will most likely take a pass, according to a former NBA employee who dealt with licensing. Drawings, even highly detailed computer renderings, won’t cut it. The NBA’s buying department is inundated with phone calls and proposals all day. Don’t be one of the thousands that get hung up on.
Strength in numbers. The product better not be a one-time deal either. You should be ready to show that you are prepared for mass production. Have deals or commitments with manufacturers ready to go, or at least be able to show you have the necessary relationships. In addition, show you’ll be able to make their deadlines and deliver the product on time.
Full disclosure. The NBA will want to understand a number of key things from your company before any deal is struck. They will want details about the product or product line, and if it’s compatible with the league’s image. Keep that in mind when crafting your product. They will want to know about your distribution network, as well as long-term plans and capabilities. Be ready to spill your guts regarding your financial stability and ability to remain afloat. The NBA doesn’t want deadbeat partners.
Getting the word out. Have a marketing game plan ready. Sure, the NBA has its own marketing muscle, but the league will want to know what you bring to the table. Don’t go in with the cliched television and radio idea, either. Be ready to point to trade magazines and niche publications where your products would benefit from ads. Sponsoring smaller events might go over well. Perhaps you can get your product in a catalog, or create your own catalog for the line.
Look for exclusivity. The NBA Store in New York and the league’s Web site sell “vendor-exclusive” products. These are products that are just sold by the NBA, and not found in other retailers such as Wal-Mart or Foot Locker. These exclusivity deals work well with smaller parties because there is fewer demand for volume. You don’t have to satisfy the requests of thousands of chain stores, just one Web site and a flag-ship store in Manhattan. One example is the Gabriel Urist jewelry set created specifically for the NBA Store. He created the team logo and championship trophy necklaces for sale in an extremely limited quantity.
Know the rate. In general, royalty payments amount to between 5 percent and 14 percent of sales. This is usually applied to the licensee’s wholesale price, and not the retail price. A shirt that is sold in the store for $25 may have a wholesale price of $10. The licensee has to pay the NBA an advance when the contract is signed, and often has to pay 25% of an agreed upon guaranteed royalty. The guaranteed royalty is the amount of money a licensee has to pay the NBA regardless of how many products are actually sold.
Quick fling. The NBA also licenses out its name for short-term periods, such as during the All-Star game or at specific overseas events. Even big-wigs such as Adidas can only stick with the league as the official maker of team jerseys for so long. The league will switch manufacturers if Nike or Reebok make a better offer.
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