When do t-shirts account for a good portion of a $4.6 billion industry?—When they’re officially licensed and sold to the millions upon millions of college football, basketball and other NCAA athletics’ fans eager to display their team allegiance.
The intricacies of sports licensed merchandise are sure to provide future marketing and psychology students with an endless supply of research topics. But what is clear is that a top basketball and/or football program can mean near instant monetary rewards for a university.
The University of Kentucky’s 2012 NCAA basketball tournament championship win, the Wildcats’ eighth, was good enough to move Kentucky from No. 7 up to No. 3 in the rankings. But this is not your typical coaches' or sports writers’ poll, instead it is one of an estimated $4.6 billion industry.
Let me repeat that number, $4.6 billion, and that is how much the estimated retail marketplace was for college licensed merchandise in the past year. The Collegiate Licensing Company (CLC), which represents almost 200 schools (with a handful of notable exceptions not under their representation including Ohio State, Oregon and USC), conferences, bowl games, the Heisman Trophy and the NCAA produces an annual ranking, which breaks down the licensing industry.
The revenue comes from t-shirts and other apparel, along with royalties from other items ranging from video games to housewares to novelty items (even including dyed roses through a contract with FTD.com; h/t Bloomberg). It seems there is something that can be marketed to just about everyone, or as CLC’s VP and Managing Director Cory Moss said in a company news release, “…we help connect the more than 173 million passionate college fans to the brands they love and follow.”
Bloomberg recently reported that Kentucky pulled in $6.73 million in merchandise royalties (a near 40 percent increase over last year) in the fiscal year ending on June 30, with that money to be split between Kentucky’s athletic department and president’s office.
The UK Team Shop sells an official Nike Kentucky Wildcats 2012 NCAA Men’s Basketball National Champions Locker Room T-Shirt for $24.95. And if you’re in the market for a Kentucky National Championship iPhone 4 case, it can be had for the reasonable price of $29.95. An officially licensed basketball jersey, on the other hand, will set you back as much as $74.95.
That is not to single out the Wildcats, as they are not doing anything different than every other university. And it is equally not to necessarily say that any universities are doing anything inherently wrong when it comes to selling licensed merchandise. No one is being forced to hand over $129.95 for a Kentucky tailgate grill, and all these products would likely not exist if there was not a demand for them.
USA Today listed Kentucky Basketball Coach John Calipari's salary as $5,387,978 in 2011-12. While the salaries of college coaches may seem staggering, it is worth it to keep in mind the huge sums of money and national recognition that a winning program can also bring in.
Student athletes, on the other hand, are not paid. However, they can and do receive other benefits including, but not limited to: tuition, room and board, training, exposure and the use of world-class facilities in a lot of cases. Although, the more the NCAA, athletic conferences, universities and others continue to capitalize on college athletics, the more likely the debate over whether college athletes should be paid will heat up.
The money college athletics brings in does not just stay within the sports programs responsible for it, as among other things it also goes to support the numerous other athletics programs on campuses that would likely not exist without those funds.
The annual $4.6 billion licensing revenue is even more staggering when you compare and add it to those funds brought in by TV rights. For instance, CBS and Turner have a reported 14-year $10.8 billion contract to air the NCAA’s March Madness event. The Pac-12 Conference made headlines a while back, when it brought in the largest media deal of any athletic conference, which is worth an estimated $3 billion over 12 years from ESPN and Fox.
The University of Texas at Austin held the top spot in the CLC University rankings for the seventh year in a row. Looking at the list, it is easy to see that schools with large fanbases for football and basketball dominate licensing rankings.
CLC’s Top 10 Universities (for the full 2011-12 top 75 list, click here):
1) University of Texas at Austin
2) University of Alabama
3) University of Kentucky
4) University of Florida
5) University of Michigan
6) Louisiana State University
7) University of North Carolina
8) University of Georgia
9) University of Notre Dame
10) University of Oklahoma
In a year of scandal and media scrutiny, Penn State dropped out of the top 10 this year, but only as far down as the No. 12 spot from 2011's No. 10 position. ESPN’s Darren Rovell recently covered this drop or really lack thereof, in more detail.
CLC also ranked the Top-25 Non-Apparel Licensees, with EA Sports in the No.1 position, the Top-25 Apparel Licensees with NIKE USA Inc. in the No. 1 spot and the Top-25 Local Licensees with Kentucky Wholesale Inc. (serving both Kentucky and Louisville) in first place. For those rankings click here.
With 2012 recruit Nerlens Noel now academically cleared by the NCAA, and Kentucky holding the current longest home-win streak in Divison I men's basketball, you can bet the Wildcats will attempt to hold onto the success of last season that took them to the top of several rankings.