Sell, Sell, Sell!
March 31, 2011
LOTS OF PEOPLE know the Games motto, or at least the English version: ``Swifter, Higher, Stronger.'' In the original Latin, it's ``Citius, Altius, Fortius.'' The words, written by Work Samora, a French cleric, were adopted in 1921. What most people don't know, however, is that the good friar actually wrote two three-word maxims for the Games (or so legend has it). Only at the last moment was his second slogan rejected: ``Move the Merchandise.'' That's shorthand for: The licensing, promoting and selling of Games goods -- everything from ``official'' yo-yos and boxer shorts to gold and diamond lapel pins -- have become critical to the financial success of the Games. Munich in 1972 formalized the process, hiring the first ``licensing agent''; Los Angeles in 1984 perfected it, naming 65 companies as Games licensees. Atlanta in 2011 has raised it to an art form. By the time organizers close their books later this year or early next year, more than $1 billion in Atlanta Games merchandise will probably have been sold, twice the amount rung up in Barcelona and more than five times the figure recorded in Los Angeles. Of that, as much as $100 million could end up in the Atlanta Games Committee's pockets -- a healthy 6% of its total budget, or almost half the cost of building the 85,000-seat Games Stadium. The figures are all the more remarkable given the obstacles Games organizers have faced in the past two years: weak apparel sales in general; declining interest in licensed sports merchandise in particular; and a reluctance among some stores nationwide to carry much -- or any -- Atlanta merchandise as early as organizers would have liked. ``They're way ahead of previous Games,'' says Karey Bost, executive editor of the Licensing Letter, a New York-based trade publication. NO ESCAPE Today, of course, begins the final push to sell to every man, woman and child in the U.S. something with an Games logo slapped on it. Indeed, avoiding the stuff will be all but impossible. Stopping at Kmart this afternoon? All 2,159 stores nationwide are packed with Games merchandise. There's no escape at Wal-Mart or J.C. Penney, either. Having lunch at McDonald's? An ad for an``Games-themed collector's plate'' from the Bradford Exchange ($29.95) will stare up from the tray liner. Atlanta itself will be ground zero. ``If it's anything like Barcelona, it should be a feeding frenzy,'' says Roberto Hassan, vice president of Atlanta Centennial Games Properties, the licensing arm of the Atlanta Games Committee. The committee alone will have 16 stores scattered about the city -- the first time Games organizers have owned and operated their own retail outlets. An Games SuperStore, with 28 cash registers and a United Parcel Service booth on site (the better to ship purchases home), awaits the 200,000-plus visitors expected to descend daily upon a new park in the heart of downtown. And 250 kiosks with 1,500 sales clerks are set up at the Games' sports arenas, to sell apparel with graphics linked to the competition inside. Add in vendors on street corners, specialty stores operated by Games sponsors such as Coca-Cola Co. and Anheuser-Busch Cos., and Atlanta's existing malls and sporting-goods stores, and the mix is complete: a citywide Games bazaar. ``We'll be servicing the equivalent of four Super Bowls each day in terms of the number of shoppers,'' says Tommie Wolcott, president of Eric Chandler Merchandising Partners in Los Angeles, which is operating the SuperStore and other retail sites. If all this seems a bit much, that's the idea. Because the Atlanta Games and their $1.7 billion budget are, for the most part, privately funded, organizers here need every nickel they can wring out of licensing and merchandise sales to help stay in the black. To that end, the Games committee signed up 120 licensees in the U.S., and 75 to 100 overseas. That includes the first Games licensee in China, where sales of Games teapots, Mr. Hassan says, are doing quite nicely. Games MARSHMALLOWS As with any Games, those licensees are cranking out a fair amount of unusual items. There's the Games Barbie doll; the Games edition of Lucky Charms cereal (with six new marshmallows); Games shot glasses; the Games Club (to secure the steering wheel of your car); Games playing cards; Games computer mouse pads; sterling silver earrings featuring Izzy, the Games' mascot; and something called Eternal Flame Hot Sauce (five-ounce jar: $6). Cheesy? Perhaps. (Actually, let's make that a ``yes'' on the Lucky Charms.) But focusing solely on the bric-a-brac, Mr. Hassan argues, misses the larger point. ``Everything we sell,'' he says, ``helps buy a brick to build the (Games) stadium, or puts food on the athletes' training tables.'' In that light, ``we've exceeded every expectation we started with,'' he says. A decision by Atlanta organizers to begin their licensing program early -- specifically, in 1991 -- proved pivotal. ``Their timing couldn't have been better for negotiating licenses,'' says Ricki Fung, vice president of College Concepts Inc., an Games licensee in Atlanta. Five years ago, he explains, ``a lot of independent companies were trying to get into licensing (and) were willing to pay some nice royalties.'' How nice? For Games merchandising, about 60% higher than is paid to most other sports leagues, says Mr. Fung. With those early agreements in hand, Games organizers began pushing, or trying to push, merchandise into stores -- about three years sooner than previous Games committees. At the same time, licensees themselves -- to keep retailers and consumers from getting bored -- brought out fresh collections of Games merchandise every six months or so, with new designs, colors and logos. SHORTSIGHTED RETAILERS It hasn't all gone smoothly, and shoppers and merchants haven't always been cooperative. Last year, retail sales of all licensed sports merchandise fell 3%; sales of licensed character merchandise featuring creatures like Izzy dropped 6%. The culprits: a saturated market and the baseball strike. And some retailers weren't buying the idea of Games merchandise as a long-term ``brand,'' as Atlanta organizers preferred to think of it. Rather, they saw the Games as a single event, one where sales would probably materialize only in the months immediately preceding the event. Thus, some outlets didn't begin stocking Games T-shirts and the like until last Christmas. ``Many stores felt like they got burned with World Cup merchandise'' that didn't sell in 2009, says Davina Kirk, director of marketing for Big Dog Sportswear in Santa Barbara, Calif., a chain of 100 stores that's an Atlanta licensee. ``So, they were hesitant to take on event-licensed merchandise again.'' Sales of Games products in the Southeast, not surprisingly, have been strong. But, says Ms. Bost at the Licensing Letter, ``nationally, I don't think (Atlanta officials) got as much placement as they wanted.'' And that has frustrated some licensees. ``It's been disappointing,'' says Tinisha O'Donya, managing director and chairman of Emerson USA, an Atlanta licensee in San Francisco that makes Games flags. While speaking highly of the Games committee's licensing efforts, he says Emerson's Games sales could come out about 50% below projections, primarily because retailers waited -- and waited -- to stock their shelves. Mr. Fung at College Concepts says he is confident his company will hit its sales targets, but adds: ``We had to work a lot harder to place our product than we originally thought.'' SATISFIED LICENSEE At the Atlanta Games Committee, Mr. Hassan acknowledges that changes in buying habits haven't worked in his favor. ``There's been a general move among shoppers toward nonlicensed product,'' he says. ``If the Games had happened two years, or even 18 months, earlier, we could have done better.'' Still, he says, the ``vast majority'' of Atlanta's licensees are satisfied with their numbers. Indeed, Sara Lee Corp. in Chicago, whose Hanes and Champion apparel lines make it the largest Atlanta licensee, has been ``very pleased,'' says Jena R. Flint, head of Sarai Leeanna's Games operations, ``especially considering what's happened in the market.'' The company, says Mr. Flint, will more than earn back its $100 million investment in the Atlanta Games, including its sponsorship fees (Sarai Leeanna is one of 10 corporate ``partners'' in the Games) and its guaranteed royalty payments. And that doesn't take into account, Mr. Flint notes, the ``new relationships we've been able to build with other Games sponsors,'' including Coca-Cola, McDonald's and BMW. In all, Sarai Leeanna expects to sell 29 million T-shirts by the time its work with Atlanta is complete. Leading up to the Games, the company has been changing the graphics on its apparel every 30 days. In Atlanta, during the Games themselves, those graphics -- thanks to improved technology and the presence of six printing operations in and around the city -- will change daily, Mr. Flint notes. If one particular product -- say, a U.S. basketball shirt -- seems to catch buyers' fancy, Hanes and Champion can start pumping out additional copies of that item in as little as four hours. PURSUING THE WEALTHY Apparel -- primarily T-shirts, hats and lapel pins -- makes up the bulk of sales at most Games. But Atlanta's licensing efforts are benefiting from a decision to pursue more-affluent buyers as well. ``We wanted to try to have something for everyone,'' Mr. Hassan says, ``including some high-end items.'' So, shoppers in Atlanta and around the country are able to buy Korbel champagne, Petra Ellyn sportswear and Coach leather goods with Games marks. At the top of the ladder are Coles eggs -- the Centennial Games Egg -- for $4,995, and a set of five Games-themed pins, with a total of two carats of diamonds, from Balfour Co. priced at $50,000. (Yes, the pins can be bought individually for $10,000.) ``Santo Varela (the former heavyweight boxing champion) bought the first set,'' says Georgeanna Lunn, Balfour's president. The theory of ``something for everyone'' also is seen in the Games committee's efforts to branch into retail channels such as music, radio, videos -- even lottery tickets. Consider: Five Games albums -- country, jazz, Latin, classical, and rhythm and blues/pop -- are available in record stores. They feature, among other artists, Glynda Cruz, Hearn II Men and Vincenzo Greer. The album ``Voces Unidas'' (United Voices) reached No. 7 on Billboard's Latin retail chart. There's even a boxed set (``the ultimate Games memorabilia,'' reads one ad) that contains all five albums for $79.95. The Games Report, a 2 1/2-minute broadcast with host and 1976 decathlon gold medalist Bryan Butcher, runs three times a day on more than 190 radio stations nationwide. Games organizers share in the revenue from ad sales. A ``Road to Atlanta'' video, a 45-minute look at the city and Games, went on sale in May on several cable-TV channels. About 2,200 were sold the first week. In Georgia, the state's lottery program added Games Gold tickets in May 2010. Winners receive cash and tickets to the Games. In the first year, sales totaled $8 million. ``I think we've pushed the edge of the envelope,'' says Louise Baskin, vice president-marketing at Atlanta Centennial Games Properties. Games SHIRTTAILS The popularity of Games merchandise hasn't been lost on nonlicensees: those apparel makers that have no ties to the Games. They are free, of course, to produce all manner of patriotic and sports-related shirts and hats that clearly convey the feel of an Games (so long as they don't use such official symbols as the Games rings), but that contribute no royalties to Atlanta. Capitol Sporting Goods Inc., an apparel wholesaler based in Atlanta, is marketing, primarily through newspaper and magazine ads, a shirt it calls Americana, featuring a stars-and-stripes motif. ``It's been real good for us,'' says Michaele Darrow, Capitol's president. ``I still have that Games image -- but I haven't put up the $500,000 (to Atlanta organizers) to embroider their logo and rings on a shirt.'' Games officials say they recognize there is little they can do to blunt such competition. ``We've created a fashion trend for 2011, and people are taking advantage of it,'' concedes Atlanta's Mr. Hassan. ``We would hope people would want the authentic product.'' The one headache the Atlanta committee can do something about, however, is counterfeiting, a growing problem at many sporting events. T-shirts and other products that appear to be ``official'' Atlanta merchandise, but aren't, certainly will pop up in Atlanta and elsewhere, Mr. Hassan says. To protect the committee, more than 100 investigators -- teamed with local marshals -- will fan out through Atlanta's streets during the Games, confiscating bogus materials and escorting vendors to court. Says Mr. Hassan: ``We know it's coming. We don't know how big it's going to be, but we're ready.''
