In this article I’m going to explain the overall basics of how licensing a product works.  I’ll start with the main topic, being granted permission by the league to manufacture a product using their team logos. 

 

These are all rough figures just to give you an idea.  Prices fluctuate from year to year.  If the league approves the product you want to sell, you must pay them roughly 10%-15% (licensing fee) of the retail selling price.  So if the T-shirts are selling for $19.99, you owe the league from $1.99-$2.99 for each one sold.  Not bad until we get to the deposit.  At the end of 2007 I got the exact deposit amount from the NFL.  You have to pay a $250,000 deposit towards the licensing fee in advance, to be used against one year of sales.  This means that technically you may not “really” be paying only a 10%-15% licensing fee on your sales.  If you actually paid the $250,000 deposit to the NFL but sold only $500,000 in products in a year, you paid a 50% licensing fee, NOT 10-15%

 

This is how the NFL guarantees they’re going to get their money, regardless of how your products sell.  They don’t have to worry if any part of your business plan will fail, or if you’ll be able to get the product into enough outlets because, they already have your $250,000.

 

Remember, these are rough estimate prices just to show you how this all works.  You can go to any sports league’s main website and there’s a number you can call for exact details.  Also, the NFL is the most costly at the time of this writing.  Other sports like NHL hockey have considerably lower deposit requirements, but then again you’ll sell considerably less because the NHL is a much smaller market than the NFL.

 

The deposit is the biggest part of it.  Most people reading this are already out of the game.  If you’re still in, here’s a list of basically what you’ll need to get this started.

 

1.)    Product designer

2.)    Product manufacturer

3.)    Sample of product

4.)    Business plan to present to the league

5.)    Deposit money if approved by league

6.)    Outlets to sell your product

7.)    Capability to distribute your product

8.)    Capability to process returns

9.)    Marketing to gain interest in your product

 

In your business plan, the league wants to see that you have a viable product, that you have enough capital to make the business plan work, and that you have an outlet for the product.  They want to know exactly how you’re going to market your product and projected sales should be included too.