They’re Very Rich Kids on the Block

From “Simpsons” T-shirts to “Ninja Turtles” swords, you’d have to call 1990 the Year of the Merchandising Bonanza. But when it comes to a pop merchandising phenomenon, nothing can quite match . . . New Kids on the Block. And we mean phenomenon .

In 1981, the Rolling Stones launched the rock merchandising era with a tour that grossed about $15 million in merchandising sales. By 1984-85, Bruce Springsteen broke records with his “Born in the U.S.A.” tour, which grossed perhaps $30 million worldwide. In 1987, U2 made $15 million in America alone on its tour, topping Madonna’s tour that year, which did about $10 million.

But nobody’s numbers compare to the New Kids, whose merchandising sales have rocketed off into the stratosphere. Let’s hazard a guess. Could they have made $100 million?

Too low.

$200 million? $300 million? Still too low.

“The New Kids’ sales are just incredible,” said Dell Furano, president of Winterland Productions. “When you add up their merchandising from touring, retail outlets and fan clubs, you’re talking about sales that are close to $400 million.”

With megabucks like that at stake, it’s no wonder merchandising is one of the most hotly competitive fields in rock today. Furano first saw the New Kids opening for Tiffany at a November, 1988, concert. By April, 1989, the veteran Winterland exec had signed the group to a two-album (and two-tour) deal with a guarantee of somewhere close to $500,000.

With just a handful of merchandising firms, including Brockum, Great Southern and Giant (a new firm headed by Irving Azoff) dominating the marketplace, bidding for established stars--and promising young acts--has become fierce.

“The superstar acts are making extraordinarily good deals these days,” said Furano, who founded Winterland, now owned by MCA Inc., in 1973 with promoter Bill Graham. “But even young bands are getting big money. We offered $50,000 for Little Caesar (a rookie hard-rock band), but when the price went up to $300,000, we lost them to one of our competitors.

“In the next few years, the merchandising business is going to look increasingly like the record business, especially with the way firms will be taking options out on bands the way record labels now have options on bands for record contracts.”

Even with concert business in a slump, the New Kids performed an amazing 200 shows between April, 1989, and April, 1990 (with another 100 concerts scheduled before year’s end). The merchandising take can be incredible. When Depeche Mode played two dates at Dodger Stadium, drawing a total of 100,000 fans, the band did about $15 a head in merchandising sales. That’s $1.5 million for just two nights.

And if you’re a superstar act, you get to keep a hefty chunk of the profits. A major artist receives as much as 40% of the gross, with 25% to 30% going to the concert facility, 15% to 20% to production costs and road expenses and anywhere from 9% to 16% going to the merchandising firm. (A less-established artist’s piece of the pie runs closer to 25% to 28%.)

What sets teen groups apart, especially the New Kids, who’ll be at Dodger Stadium Friday, is their huge potential for retail sales. JC Penney’s has created 700 New Kids shops geared to selling the group’s clothing, towels and video games. “When you’re that hot, everybody wants to be involved,” said Furano. “Whether you’re McDonald’s or Coca-Cola, you’re trying to grab the 7- to 14-year-old market, because getting those kids is the way companies establish brand awareness and loyalty.”

But loyalty only goes so far. “To sell merchandising the way the New Kids are, you have to be a social phenomenon,” says Hollywood Records chief Peter Paterno, who recently signed a teen group called the Party. “But the problem with being a social phenomenon is it’s a stage that doesn’t last very long. Kids always move on to the next big thing.”

Can the New Kids keep riding the wave? “That’s the question everyone asks--how long will a group like that last?” says Furano. “It’s no secret that their audience, which is largely teen-age girls, is notoriously fickle. But if they can reach an older audience, the way someone like George Michael has, then they could be around for a long time.” (New Kid Donnie Wahlberg is interviewed on Page 66.)