With an aggressive new growth strategy, NFLPI is looking to score big in brand licensing as it looks beyond traditional products to drive retail sales not only during the football season, but also throughout the year.
He wasn't the No. 1 draft pick during the National Football League's live event held in May at New York's Radio City Music Hall. He wasn't No. 2 or No. 3. He wasn't even in the Top 10 or the Top 20. In fact, this popular rookie quarterback was drafted at No. 22 by the Cleveland Browns keeping impatient fans waiting on the edge of their seats and TV analysts talking for more than two hours.
Yet, Johnny Manziel–or "Johnny Football" as the former Texas A&M star is nicknamed–was the No. 1 selling player across all products based on sales in NFLPI's first fiscal quarter, beating out such stars as Super Bowl-winning Seattle Seahawks' quarterback Russell Wilson, San Francisco 49ers' quarterback Colin Kaepernick, Seattle Seahawks' defensive cornerback Richard Sherman and future Hall of Fame quarterback Peyton Manning.
This series of events exemplifies the various dynamics not only of the sports merchandising business, but also of the NFL Players Inc. (NFLPI), the licensing subsidiary of the NFL Players Association, which is based in Washington, DC and operated separately from NFL consumer products. It demonstrates the celebrity status and potential of various players as well as the huge popularity of football in the U.S.
The 2014 NFL season officially began the week of July 22 when all 32 teams and more than 1,800 players began reporting to their respective pre-season training camps. The news headlines were abuzz with various special team reports, rookie player analysis and prognostications of the players who could have a break-out year, and which team might make it to the biggest event in sports—the Super Bowl XLIX, being held in Phoenix, Ariz. on February 1, 2015.
As it celebrates its 20th anniversary, NFLPI is also gearing up for another strong season, as it focuses on expanding its licensing initiatives with creative collaborations, innovative products, new services, and retail promotions to drive growth for its roster of 1,800 active players.
The NFLPI reported retail sales of licensed merchandise worldwide at $1.16 billion—ranking No. 50 in License! Global's annual Top 150 Global Licensors Report—and it is looking to near double-digit growth in royalties this year.
NFLPI, which can be described as a nontraditional type of licensor, is constantly evolving and searching for new ideas that will help expand the reach and exposure of the players it represents. Recent partnerships exemplify how NFLPI is tackling nontraditional merchandise categories and services from gaming to retro apparel to youth football to comic books to car service. Even the huge core trading card business led by Panini and Topps are producing more creative products targeted to the avid collectors as well as the kids just learning about the sport.
|Ahmad Nassar, executive vice president & general counsel, NFLPI|
|Steve Scebelo, vice president, licensing & business development, NFLPI|
"Our most significant change has been moving from a reactive position to a much more proactive position," explains Keith Gordon, president, NFLPI. "Many of the deals that came in during most of our existence were reactive, meaning that if someone did a deal with the NFL and wanted to know if they could work with players, they were told to call NFLPI to get the rights."
NFLPI is now better positioned "to get the deal first," according to Gordon, "to bring a greater sense of awareness to the prospective partners and develop a better strategy."
"We are taking a proactive approach to seek out new partners, and we are in an advantageous position to be part of the most popular sport in America," adds Steve Scebelo, vice president, licensing and business development. "We don't want to sit back and be order-takers, and wait for people to identify opportunities they bring to us. We want to identify product trends that make sense for our players to be involved with."
A key example of NFLPI's more aggressive position in the marketplace occurred during Licensing Expo in June when the organization exhibited for the first time, cosponsored the All-Industry Opening Night Party at Mandalay Bay, and coordinated special appearances for several of its popular players.
"We are looking at what's happening in pop culture and how could those trends possibly make sense for us with the players," Scebelo adds. "I believe there are areas for growth that get into pop culture and entertainment that view the players through the prism of celebrity, and giving the audience and fans products and merchandise that help make those connections."
"Another big change," Gordon points out, "is debunking the myth that players' rights are just too expensive. The fact of the matter is that we have licenses that range from small percentage royalties to royalties based on sales to royalties that are higher based on the type of product and margins. We can be extremely flexible.
"We now approach licensing as a customized solution for consumer products manufacturers or service providers rather than a flat tax-type approach," he adds. "We are being more creative and adapting to the market and changing nature and conditions of those operating in licensing, as opposed to making companies adapt to us."
"We are a one-stop shop for player solutions," says Ahmad Nassar, executive vice president and general counsel. "What makes us unique and separates NFLPI from a traditional brand license is that you get to access the attributes and merchandise of a player, but you also have the ability to access that player to help market all the products."
The addition of a player's name to various specific products certainly enhances the popularity of the merchandise among consumers and its performance at retail. For example, a product deal with Therapearl for the Proline hot and cold therapy pain relief packs signed in October 2012 with several players including Maurice Jones-Drew, running back for the Oakland Raiders, exemplified NFLPI's new strategy to broaden its licensees, create more opportunities for its players and expand its retail penetration.
Another partnership signed in June that demonstrates NFLPI's commitment to new ideas is its deal with Pop Warner, the long-standing youth football organization, to create co-branded apparel and merchandise including jerseys, trading cards, mobile game characters, toys, sporting goods and Pop Warner uniforms.
Another example of co-branding announced this month is NFLPI's deal with Big Tent Entertainment with internet character brand Domo for a series of products including plush, novelty items, apparel, hats, bags, drinkware, and collectibles, along with stickers and embeds for digital games and apps.
"Domo is a brand that can be shaped to fit the unique tastes of a wide range of people and personalities, including some of the biggest names in the NFL. Partnering with NFLPI allows us the opportunity to generate excitement on both a national and regional scale for fans from all walks of life and creates a pairing that will be creative and fun," says Rich Maryyanek, chief marketing officer, Big Tent Entertainment.
On the services business side, NFLPI partnered with Uber, a company that connects riders to drivers in more than 40 cities around the globe, to provide professional football players with safe and convenient transportation. In turn, NFLPI players have the opportunity to tweet and market the service to their friends, families, and business associates.
A recent partnership that reflects NFLPI's innovative approach is with Athlitacomics to produce comic books with a sports hero theme.
"One of the ways our partnership with NFLPI is unique is that I'm an 11-year veteran in the NFL," says Israel Idonije, former Chicago Bears player and chief executive officer, Realis Group. "So I have a different perspective and appreciation for NFLPI and the work they do for the players. Athlitacomics creates and develops comic content, comic properties and related merchandise in the merged niche market of comics and sports."
In addition to one of its largest and core licensees Nike, the trading card business continues to flourish with its key partners Panini and Topps. This was clearly evident during the NFLPA Rookie Premiere event in May, when top rookies spent hours signing their respective rookie cards and other products.
"Trading cards are an inherent and integral part of the game. It's the fan's connection to his or her team and heroes. When a rookie sees his first NFL trading card, it's an amazing moment for them. It's a symbol of them making it," says Clay Luraschi, vice president of product development, The Topps Company, which has been producing NFL cards for almost 60 years. "We are always pushing the envelope in innovation. Instead of a football player just autographing a trading card, we had the players dip their hands in ink and leave an entire handprint on an oversized card and had quarterbacks draw out their favorite plays on cards."
Panini is an example of a licensee that has creatively targeted the youth market with various products such as sticker collections.
Another strong and creative licensee is Fathead. "NFLPI embodies the term 'partnership' in every sense of the word," says Nathan Partington, vice president, licensing, Fathead. "Our partnership with NFLPI provides us with a one-stop shop for all of our player needs. Whether it's licensing the players' likenesses for Fathead products or signing an individual player to an endorsement deal for our marketing needs, NFLPI is a single source providing access to literally every athlete in the NFL."
Two more recent deals signed this month also exemplify NFLPI's strategy—Beveridge Marketing, which will produce player-identified EyeBlack that incorporates player name, number and signature, and Stylinity, the makers of the first social commerce catalog. Players will use Stylinity's in-home "Style Stage," an internet-ready selfie photo studio that allows fans to view photos of players' outfits, access product information and shop online.
Another priority of NFLPI is to ensure that players both understanding the licensor's strategies as well as their roles as brand ambassadors and the potential of brand licensing.
"The fact that we are out there being a little bit more experimental and that we are more of an entrepreneurial type of company is what the players love and what they want to see," says Gordon. "The players who are our brand ambassadors are supportive and proactive about educating other players about the business, because the business doesn't exist without them. If the players don't understand the role they play in this business, the business would not survive."
So with 300 new players drafted every year, NFLPI is constantly educating the players with various meetings and events throughout the year. One of its most important business and education initiatives is the annual NFLPA Rookie Premiere, where a group of 40 selected rookies come together, along with NFLPI's major licensees and executives, for three days of educational seminars, meetings with licensees and various product endorsements. In fact, during the NFLPA Rookie Premiere the players wear their respective NFL uniforms for the first time.
"We are opening their eyes to what the licensing business is and how they can benefit from it," says Scebelo. "The players trust us with their individual brands."
With the release of the second quarter report last month that identified top selling player products, the fact that another quarterback topped the list was perhaps not a surprise. But what was eye-opening about it was that a player (Manziel) who has yet to play in an NFL game ranked No. 1. Another revealing and important factor, according to Scebelo, is that more defensive players are breaking into to the Top 50 players list, which helps the organization market more of its players. For example, Richard Sherman, who was ranked No. 4, is also the cover of this year's "Madden 15" from EA, in stores on August 26.
Another example of NFLPI's commitment to its players is a full-time player engagement department that educates every player about "who we are and what we do," says Gordon. "The current collective bargaining agreement has allowed for a lot growth," he explains. "Having 10 years of relative labor stability gives us a lot of opportunity to pursue business without the threat of a labor stoppage or disruptions."
Gordon believes there are two primary areas that will drive new business for NFLPI over the next several years—digital related initiatives and on-line/on-demand retailing.
"The NFLPI team has a clear understanding of the future of sports marketing, where digital comes first, and speed of activation is essential. As a high-growth software company, we look to align ourselves with partners that want to prepare for the future, and the NFLPI team is a perfect example of that," says Blake Lawrence, chief executive officer, opendorse, which NFLPI partnered with in April to create Activate, the first online micro endorsement marketplace in professional sports. It gives all types of brand owners the opportunity to build digital endorsement campaigns with NFL players.
"The nature of athlete endorsements has evolved significantly over the years, and the Activate platform enables us to immediately and effectively deliver endorsement opportunities to brands seeking to capitalize on a player's social media reach and influence," says Gordon.
Another example of the NFLPI's focus on digital space is its recent partnership with Run Games, an independent Los Angeles based developer. According to Scebelo, Run Games won an NFLPI sponsored competition called the Mobile Madness Challenge, for its game called "Football Heroes."
"We see 'Football Heroes: Pro Edition' as a product that helps promote the individual players and their abilities outside of the NFL," says Michael Marzola, president and creative director, Run Games. "Every NFL player will have his own skills and special abilities that will make him unique in the game. We are building the ultimate fantasy football league where the individual players are the stars, not the teams they are associated with. We think that what the NFLPI is doing did an incredible thing for the virtual sports games by opening up this contest to get licensees who could not typically afford a license. This is great for developers but is even better for players."
Gordon believes there is yet an untapped marketplace with online and on demand merchandising utilizing the popularity of the players to create exclusive merchandise for consumers that can be ordered, created and shipped in less than 24 hours. This convenience will enable NFLPI to quickly capitalize on players' popularity through the season.
Other key opportunities for NFLPI's retail strategy, according to Gordon, is the ability to create customized merchandising displays for its retail partners that bring all of its products together in one space along with more player appearances in local markets and creating more incentives for consumers to make a purchase.
"We are about taking one of the greatest assets in the world and bringing brands to life," says Gordon. "If you took the amount of passion Americans have about football, and put icing on top, that would be the players."
"NFLPI is more than just a business because of all the things the staff does behind the scenes to add value to the lives of the players. They work hard to prepare players for life in the game, but more importantly, life after the game. The business of licensing is just a part of what this incredible organization does," says Idonijie.
Through a well-developed game plan with an aggressive offensive push, Gordon has positioned NFLPI as an innovative and standout licensor that has significant growth opportunities in the otherwise mature sports business.
"NFLPI is not just a rights holder but a solution oriented company that looks to impact brands and deliver significant returns on every investment," says Gordon.