Last Updated on June 8, 2014
“…it’s foreseeable they might get out of the business of selling jerseys with numbers corresponding to current student-athletes if push came to shove.”
I made that prediction last August, and now it seems push has come to shove.
ESPN’s Darren Rovell is reporting today that several schools – Texas A&M, Arizona and Northwestern – will discontinue the use of current player’s numbers on jerseys, sidestepping any future litigation or obligation to split proceeds with student athletes. A licensing director told me last year he thought this would happen before schools would divide the revenue with student athletes, and certainly last week’s EA Sports settlement renews the discussion about sharing revenue arguably driven by student athletes with those student athletes.
At the end of the day, the revenue simply isn’t worth the risk for schools. As I reported for ESPN last year, schools don’t really make that much from jersey sales in the grand scheme of things (similar to their situation with regards to video game revenue). Here’s a sampling of jersey sales numbers from the 2012-2013 school year, which include jerseys for all sports, not just football:
|Revenue from Jersey Sales (2012-2013)
|% of Total Licensing Revenue
These examples are likely on the high end of the spectrum. Collegiate Licensing Company, which handles licensing for all four of these universities (in addition to over 150 other universities), estimated jersey sales account for an average of just 1.1 percent of all licensing revenue generated by each university.
As Rovell reports, schools generally only receive $3-4 per jersey. Texas A&M told me last year their cut was 10 percent of wholesale price, which increased to 15 percent if the jersey was sold in their on-campus bookstore (which accounted for approximately 8 percent of sales). Couple that with the fact that most athletic departments share licensing revenue with the university (many 50/50), and jersey sales aren’t exactly a goldmine for athletic departments (or universities, for that matter).
Why go through the hassle of defending lawsuits (and paying attorney’s fees) over whether student athletes have a legal right to share in revenue from jersey sales when you can simply produce jerseys with non-active numbers? Rovell spoke with a licensing director who said not producing jerseys with numbers for more marketable players could result in a 25 percent decrease in revenue. Much cheaper than legal fees.