Changes in the Professional Sports Licensing Landscape

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2 Changes in the Professional Sports Licensing Landscape

3 Retail at Kauffman Stadium ARAMARK S&E has managed retail since 2009 Retail at 8 of 30 MLB Stadiums Growth to over 3.0m+ revenue in KC 2012 saw growth in per caps Key measurement of the business 9 Retail locations Majestic, New Era, 47 Brand sponsorship deals Branded stores and kiosks Majestic Kiosk - New in 2013 Ladies and Kids Store

4 Retail at Kauffman Stadium 2013 improvements to Majestic Team Store Shops within the Store Majestic Player Tee Wall New Era Branded Hat Wall in Team Store 47 Brand Section Women s Boutique Kids Zone Increased Presence of Core Novelties Exterior Graphics

5 2012 MLB All-Star Game 22 Retail locations in/around Kauffman Stadium 5x normal staffing level 3 day revenue of $1.6m Tuesday per cap of $17 one of the highest ever in ASG 1,500 custom bats sold MLB ASG record Worked with dozens of licensees Key licensees Majestic, New Era, 47 Brand

6 Fan Attendance *Per caps range from $2 to $3.50 per league on average

7 Trends in Pro Sports Licensing Sales by Category in MLB Apparel 37% Headwear 31% Hard Goods 32% # Licensees by category Apparel Headwear 6-8 Hard Goods 130+ Many unique, one off items

8 Pro Sports Licensees

9 Pro Sports Approach to Licensing National Football League 164 Licensees today compared to 300+ in 2000 The question is More with less or less with more?

10 Why the sharp decrease? NFL Example cont. Many companies were producing similar products Reduced wholesale costs led to increased sales for a licensee, increased competition, and lower retails in the stores A good thing? Not so fast Reduced (wholesale) led to reduced royalties Not a good thing Royalties based on a % of wholesale sales to retailers Why the increase again? Reduced number of licensees seen as a lack of innovation NFL saw this as losing out in the game Not maximizing on sales and revenue in the big picture Decision to drive revenue and competition overrides the decision to ride with the big players Many are projecting the NFL to have over 200 licensees once again in the next two years

11 Adidas Major League Soccer Example Adidas is essentially the sole provider of apparel and headwear through 2018 Hard good licensees have increased steadily over the past 3 years Risk/Reward Less licensees creates risk of not having the right assortment Leads to less selection and greater potential of misses in certain categories Could cause a lack of growth of revenues in the big picture Less licensees creates more demand for the Adidas product Leads to higher prices in the marketplace and increased revenues/royalties Big time deals like this propel the Adidas Image in American Soccer and potential larger sponsorship revenues for the league

12 S W O T Strengths Leagues have a stronghold on the licensees. It is a privilege to be a licensee. Weaknesses Too much competition can lead to lower royalties for the leagues. Opportunities New licensees are coming up with innovative ideas and ways to engage the consumer through healthy competition. Threats Economy presents an everyday challenge to the leagues and focus must remain on innovation to the consumer. Strengths Huge revenue machines. The leagues and its teams are protected by the licensing regulations. Weaknesses Not enough licensees can put a league behind the ball quickly. Tough to recover. Opportunities Increased competition and desire to be a licensee leads to higher licensing fees and increased revenue to the leagues. Threats Work stoppages in any league can be devastating.

13 Pro vs College Licensing Universal vs. Individual Licensing Universal Pros: Consistency for consumers Selection, retail pricing, product availability and brand recognition Consistency for production Design conversion, pricing, wholesale salability Global control of market saturation Individual Pros: Custom to your needs / wants Exclusivity options Small Business & local opportunities Support local businesses who support you Team/School Brand protection Traditions, Vault or other protected marks Maximizing Individual Marketing Opportunities Category control

14 Pro vs College Licensing Universal vs. Individual Licensing continued: Universal Cons: Lack of unique opportunities for individual teams Small business & local exclusions Individual Cons: Consumer confusion and uncertainty Lack of consistency throughout the league Product misses Outsourced retail operations constraints One off misses Finding the right mix can be difficult with so many options

15 NCAA Licensees In 2010, $5 Billion in total collegiate product retail sales world wide This was tied with MLB for most sales (Non-American soccer not included different royalty structure) There are about 2,500 licensees through CLC, LRG, SMA and NCAA as of March 2012 Excluding those that are only licensed for one school, there are estimated to be around 700 About 500 of the 2,500 are soft goods (apparel and headwear) vendors This category makes up about 60-70% of sales

16 Apparel Vendors 1. Knights Apparel Inc. 2. Nike USA Inc. 3. Top of the World 4. Gear for Sports 5. adidas Team Inc. 6. Colosseum Athletics Corporation 7. Champion Custom Products 8. Twins Enterprise Inc. 9. College Concepts LLC 10. J. America 11. Outerstuff Ltd. 12. MJ Soffe LLC 13. T-Shirt International Inc. 14. Haddad Brands 15. JanSport Inc., a division of VF Outdoor, Inc 16. New Era Cap Co. Inc th & Ocean Clothing LLC 18. Columbia Sportswear 19. Zephyr Graf-X 20. Russell Brands LLC 21. Team Edition Apparel Inc 22. Lakeshirts Inc. dba Blue Next Inc dba NCC Apparel 24. Outdoor Cap Company Inc Apparel 25. Tailgate Clothing

17 Offshore Production Generally used to fill larger quantities of top sellers / top brands On field, and top brands mostly off shore Higher minimums per team/style/color = bigger commitment Lower pricing (generally) Additional retail options: Pre-ticketing in store sales Poly bagging online sales Lead times usually between 6-9 months Planning and projections Pre-book vs. chase business

18 Domestic Production Made in the USA Quick Turns Lower Minimums / Higher Pricing More decoration than cut and sew pieces Custom Branding / Tagging Team shop specific or event specific Hot Market Requires additional planning Championships, special appearances and special events

19 Consumer education Knowing the consumer The more they know, the more they will spend, and the happier they will be about it Brand recognition, pricing, and purpose Production and availability Why can t you make me the shirt I want? Licensing relating to retail Stadium only/local licenses vs. others Mass market, Mid-tier and Upstairs branding relating to consumer expectations / understanding Online team shops vs. stadium stores Outsourcing operations consumer understanding Online and Stadium shops Full use of licensees by retail operations? Why and why not?

20 Knowing the Consumer continued Exclusive products vs. general marketplace Stadium or team shop exclusives Product Mix Catering to your demographics Income, lifestyle and overall fan base National vs. Local Licensees Reading trends and capitalizing Trends vs. Fads and production capabilities to capitalize Limiting category licensees, Sideline +1, etc. Limitations vs. advantages in marketplace from consumer perspective Local vs. national fan base? How does this affect pricing for consumers? Supplemental/local licensees to balance Consumer Expectations I saw it there, why isn t it here? Real space vs. virtual space Marketing Campaigns Communication is key lead times etc.

21 Sports Licensing - In Summary Know your consumer and educate them Know the marketplace Know your retailer and communicate regularly Identify trends and plan accordingly Know your partners production capabilities

22 The most important key to achieving great success is to decide upon your goal and launch, get started, take action, move." - John Wooden (Basketball player and coach)

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