Fans’ Loyalty Paying Off for Leagues : Licensing: The Bobble-Head Era showed pro and college sports that big money could be made outside the arena.

In the beginning, there was the bobble-head doll.

The impish, jiggling figurine was the first big sales success in the early days of the National Football League’s licensing business. That was more than 30 years ago, when T-shirts were T-shirts, when only players wore authentic jerseys with names on their backs, and when no one thought of sweatsuits as being in style.

Today, for the right price, you can have your favorite team’s logo on just about anything you would want--from key chains to Christmas ornaments. From trash cans to helmet-shaped chip and dip bowls--all approved and licensed for sale by the major professional sports and even some universities who, combined, have turned this into a multibillion-dollar-a-year industry.

The Bobble-Head Era began in 1958, when Pete Rozelle was general manager of the Los Angeles Rams. Larry Kent, an emissary of cowboy actor Roy Rogers, went to Rozelle to suggest centralizing the 14 NFL teams’ meager licensing operations.

“Pete thought it was a good idea and said, ‘Let’s go back East with it,’ ” says Kent. “So we went to Bala Cynwyd (Pa.) where (Commissioner) Bert Bell ruled from, and we met with Bears’ owner George Halas and Redskins’ owner George Preston Marshall. They agreed to a two-year contract and that NFL Enterprises would be a division of Roy Rogers Enterprises.”

Out of the factories came boys’ football uniforms, T-shirts, jackets, games, and thousands of bobble-heads.

But by 1960, Rogers was unhappy with the slow sales growth, Kent was uncomfortable butting egos with Dale’s hubby and Kent believed the NFL should fly solo with its licensing. So, Roy Rogers found fast-food success, and the NFL fathered the sports licensing craze that has swept the country.

By 1966, sales of the renamed NFL Properties’ were soaring. Dallas Cowboys goods made up half of all retail sales. By 1969, retail sales of NFL-licensed wares totaled $700,000. The merger with the American Football League and the birth of Monday Night Football added to the allure of licensed merchandise. Fans donned a Cowboys’ jersey, and identified: to touch something with the team logo and colors was to feel as one with Bob Lilly and Bob Hayes. “That was the beginning of the big time,” said Bob Carey, who succeeded Kent as president of NFL Properties in 1970 and served for 18 years. “Sears began to carry some NFL stuff in their catalogues and sales exceeded projections. Retailers were looking at us in a different light. The NFL’s visibility increased phenomenally. It was like a launching pad.”

And sales quickly soared into the hundreds of millions of dollars, producing royalties for each team, cash the teams split equally without having to involve themselves directly in the licensing business.

“We keep offering fans new ways to demonstrate their loyalty,” says David Mitchell, the NFL’s senior director of licensing. “If they fit into a life style or a segment level, we’ll give them a reason to buy. More than ever, people want to buy and wear goods with sports logos.”

In 1989, NFL-licensed goods generated $750 million in retail sales. What the consumer wants, the NFL can deliver. For the family, there are football field rugs. Baby bottles. Payne Stewart golf clothing--yes, knickers with the NFL seal. Helmet-shaped dog houses and telephones. And more. Much more.

The NFL Properties story is told in somewhat different detail in baseball, basketball, hockey and colleges and universities. All discovered the licensing bounty at different times. But now that their combined sales total about $3.2 billion annually, it’s clear they learned what the NFL learned long ago: that fans’ love of their team extends to buying team-logo merchandise ranging from the normal (authentic team jackets) to the aberrant (dog sweaters).

But it wasn’t always so. As recently as the 1980s, commissioners, team owners, marketing specialists and college administrators ignored the potential income licensing could generate.

Clark Griffith, the former executive vice president of the Minnesota Twins who chaired Major League Baseball Promotions, precursor to the current MLB Properties, recalled how clubs ceded licensing rights for little or nothing.

“Companies would write in and say, ‘I’d like the rights to use your logo,’ and the club officer in charge said, ‘I hereby grant you the right in perpetuity,’ for no fee. . . . I once walked into a J.C. Penney in 1965 when we were in the World Series and there was a rack of Twins T-shirts and sweatshirts. I came back to the office saying these people were using our property rights, and people looked at me like I was insane.”

Unifying all licensing in the commissioner’s office evolved slowly. A licensing agent, the Licensing Corp. of America, worked to develop the business, but it had other things on its plate. Baseball licensing grew, but clubs were wary of giving up their rights to the central office.

“This kind of stuff smelled of advertising and marketing, which wasn’t baseball in those days,” says Griffith. “They didn’t understand that we could produce $1 million per club in royalties, because back then they were getting maybe $25,000 apiece.”

The pace picked up dramatically when Peter Ueberroth became commissioner in 1984. By 1986, Ueberroth took control of licensing from LCA, increased the roster of licensees, the employees in Properties and the product line. Retail sales, $175 million in 1984, jumped to $1.1 billion last year (about 35% from trading cards), with another leap expected this season to about $1.4 billion.

Total royalties for 1990 are estimated at $39 million which, after deductions for running MLB Properties, will bring at least $1 million to each owner. Says Griffith, now a lawyer in private practice: “The projections absolutely worked. All along we wanted to go it alone, the way it is now.”

Why do grown-ups and kids feel a desire--even a compulsion--to tell time with a Boston Red Sox clock or look through California Angels sunglasses or stuff their dirty clothing in a San Francisco Giants laundry bag? Says MLB Properties President Rick White, who receives much of the credit for baseball’s rapid licensing growth: “To show your affinity for a team, to buy as a gift or a fashion statement and as a collectible.”

When the NBA licensing program awoke, it didn’t have to wrest control of rights from its teams. It already owned them. But exploiting the rights to license team logos and player images was impossible with only one employee in NBA Properties.

Things were so bad that when Bill Marshall, then a buyer for the Jordan Marsh department store in Boston, wanted to capitalize on Larry Birdmania in 1980, he could find no merchandise to sell. Nothing was made. Nothing to sell. So he designed his own T-shirts. One thousand were sold in two hours.

When Marshall was hired as the NBA’s vice president-retail licensing in 1981, he wasn’t fully sure he could copy the Boston strategy nationwide.

But thanks to the coincidental explosive growth in the league’s popularity, the coming-of-age of Bird, Magic Johnson and Michael Jordan, the league’s stewardship by Commissioner David Stern and the popularity of four new expansion teams, NBA Properties’ retail sales have Air Jordaned from $80 million in 1985-86 to an estimated $750 million in 1989-90.

“When I came here, we had 45 or 50 licensees,” Marshall said. “Nobody knew who they were. Nobody in the NBA was working on this full-time. There was no contact with the retailers. We had lots of licensees doing nothing.”

That’s no longer true. While the NBA has adopted a less-is-more strategy of keeping its licensee list to 140 (compared with 350 apiece for baseball and football), the licensees turn out a dizzying array of the standard (T-shirts, authentic team uniforms, socks and caps) and unusual (official game towels, aprons, earrings, caricatured watches and team parking signs).

Parity has come to the NBA in one more way than the salary cap: more teams are popular, more teams are chic.

Five years ago, the Celtics and Lakers accounted for 60% of NBA retail sales. Today, the teams’ merchandise sales are skyrocketing, but they account for only 17% of the league’s total. The third-most popular team is now the two-year-old expansion Charlotte Hornets, ahead of the Celtics and Pistons and behind the Bulls and Lakers. The three other expansion teams, the Orlando Magic, Miami Heat and Minnesota Timberwolves, also rank in the top 10.

“It’s incredible that the Hornets are number three,” says Marshall. “They’re doing it solely on the local level. They’re not a national team like the Lakers. Every citizen in Charlotte must have five licensed products.”

The National Hockey League has lagged behind the NBA, Major League Baseball and the NFL. The NHL’s licensing effort was meager until 1987 when the LCA, its licensing agent, lopped off dead wood among its licensees and signed up new ones.

But it still has problems: licensing efforts are split between the United States, where hockey isn’t a national sport to 250 million people, and Canada, where it is a national sport but where only 20 million reside.

In addition, licensing efforts are not centralized. Teams license companies locally for products sold at arenas, and the New York and Montreal offices coordinate a national program of licensing goods for store sales.

“As the national program grows more in importance and the locals see it, combining the two may be in the future,” says Fred Scalera, general manager of the NHL’s retail licensing division. “But right now, it’s not broke, so we’re not fixing it.”

With the more concerted NHL-LCA push since 1987, national retail sales--about $150 million in 1988-89--might hit $250 million this season. But don’t discount the huge assist that came when Wayne Gretzky was traded from the Edmonton Oilers to the Los Angeles Kings in 1988--a shift comparable to a film moving from a small art-house theater to 1,200 screens nationwide.

“Gretzky’s effect is tremendous when you’re talking about the national consciousness we need to have,” says Scalera. “We had a franchise in L.A. for 22 years that was performing in national obscurity. Then the biggest name in the sport came to this huge media capital. Couple that with the switch in colors to silver and black, and the Kings became a national sell for us.”

There are certain similarities between the four leagues’ merchandise, most notably in the way they have all sought to quench fans’ insatiability for authentic apparel by producing equipment and clothes identical to what’s worn by the players. The NFL trumpets its Pro Line, baseball its Diamond Collection, the NBA its Authentics and the NHL its Center Ice Authentics. Major League Baseball has gone a step further with its Cooperstown Collection, the authentic apparel of defunct teams. And the NBA points with pride to the success of high-priced merchandise such as its $1,000 leather jackets.

“The marketplace has shown an acceptance for high-quality goods,” says Joe Grant, president of LCA. “As far as the public is concerned, a sports-licensed product takes on a fashion orientation. It crosses ethnic and sociological borders.”

Not to be outdone by the pros, colleges have embraced licensing. Not only are they in it for the royalties, but for the legal need to protect their trademarks, logos and seals. Rather than let unauthorized people silk-screen obscenities on a college T-shirt or portray a university’s logo on a handgun, colleges are taking greater control of their names.

About 150 universities have licensing programs, accounting for an estimated $1.1 billion in retail sales. The Collegiate Licensing Co. (CLC), based in Los Angeles and Atlanta, represents 115 institutions, including the University of Michigan, Georgetown University and the University of North Carolina.

“The royalties for colleges we represent range from $1,000 to $2 million,” says Patrick Battle, Collegiate Licensing Co.’s vice president of marketing. “Over the past few years, about 15 to 20 universities have become nationally recognized, and they have caught on with retailers. You’ll see upscale department stores and mass merchandisers carrying a selection of local teams and 15 or 20 national teams. The Harvards and Yales and Dukes and Georgetowns have really caught on. There are diehard collegiate fans who may never have been to Ann Arbor, but they listen to and watch Michigan games.”

Licensed-product sales netted about $465,000 for the University of Alabama last year for use in graduate fellowships and operation of the Paul Bryant Museum. The licensing program has 500 licensees, including Alpo, which will soon come out with dog food especially for Crimson Tide canine lovers. Says Finus Gaston, Alabama’s associate director of business services: “Every time you feel you’ve reached the limit of products that bear our marks, a new one comes along.”

A separate licensing program is administered by the NCAA, which authorizes the sale of items with the NCAA acronym, the NCAA seal, the words Final Four and College World Series and all division championships. There are also cross-licensing deals with combining NCAA and university names and marks.

The pro leagues and colleges have one crucial factor in common: as the popularity of their apparel, novelties and games has increased, so has the need to enforce their rights against infringers.

Invariably, the World Series, the Final Four, the Super Bowl and other major championship events have produced a frenzy of unlicensed sales, products neither licensed by the leagues or colleges nor made with the quality demanded by the licensors.

Over the past few years, leagues, aided by local and federal law enforcement authorities, have fanned out at major events to seize counterfeit goods and have their purveyors arrested. Investigators armed with federal injunctions perform on-site seizures, typically of thousands of T-shirts.

The high profile of the enforcement teams--whose presence is often announced to the public in pre-game news conferences and whose seizures have made news--has apparently pushed many infringers out of business.

“At the last World Series, we seized goods, but it wasn’t as much of a problem as in recent years,” says James Bikoff, a Washington-based attorney with Baker & Hostetler, who represents Major League Baseball and the Collegiate Licensing Co. in fights against trademark infringement. “At the All-Star Game in Anaheim, there were some seizures, but they were negligible. It was a clean event.”

Adds Rick White, president of Major League Baseball Properties: “We don’t see the brassy, bold-as-hell counterfeiter out there anymore. We have gotten the message out that Major League Baseball won’t screw around.”

To keep watch over goods sold during their regular seasons, the leagues generally maintain a network of investigators in major markets to spot infringements at retail outlets.

At NFL Properties, senior licensing director David Mitchell says the infringement problem is smaller than in past years. “It’s in hand,” he says. “We’re doing a better job of licensing, so there isn’t as much a demand to (counterfeit). We have some counterfeiting every year, but we’re better and more sophisticated at spotting it.”

For the NBA Finals for the past three years, licensees have affixed a special logo that has further distinguished the authorized from the unauthorized goods. “We make all licensees submit to us how many stickers they need for the orders they’re shipping,” says Marshall, “and we don’t ship the stickers to them until the last possible moment.”

Growing efforts to sell overseas, which are being undertaken vigorously by the NBA, NFL and Major League Baseball in Europe and the Far East and account for no more than an extra 10% of their current domestic business, are going to be met with even greater threats from counterfeiters. It is more difficult to obtain protection of trademarks and logos overseas and prosecute offenders.

But Major League Baseball’s White, who claims to have the most extensive international plan to register hundreds of logos for headwear and uniforms, team colors, styles and lettering in foreign countries, says the effort is worth it even if it “costs us millions to do it.”

There hardly seem to be lurking dangers in the sports licensing market. It is not prone to fads. The Dodgers are not Teenage Ninja Mutant Turtles and the Lakers are not the Simpsons. Reduced sales for the products promoting one team in a slump are often picked up by another team on a roll. The addition of one superstar, such as Gretzky, Jordan or the San Antonio Spurs’ David Robinson, has the impact of a Jose Canseco home run.

And while some licensees believe there are too many licensees, and there is product oversaturation, those doing the licensing view their market as ever-expanding--even if progress is measured by seeing a schnauzer in a pooch-sized orange-and-blue Broncos jersey eating dog chow out of an official Super Bowl XXIII bowl.

“We don’t see anything to knock sports out of the blocks when it comes to its position in American life,” says NFL Properties’ David Mitchell. “With sports, you have the team, and you have fans. The fans will want to root and they show their loyalties by wearing the stuff.”