Friday, June 12, 2009

Sports Licensing: Is the System Rigged?

Dear Rich: I have a great idea for a sports team related product and have started looking into a patent.  I looked into licensing and can't even believe that it's legal to put the restrictions on that these teams do. I don't want to cheat these universities and professional teams out of their money on these things but they make it impossible to make a new product, not similar to anything they are offering without going through one of their existing suppliers or having an exemplary record of mass producing products similar. WHAT HAPPENED TO THE LITTLE GUY? WHY CAN I ONLY SELL MY IDEA? WHY CAN'T I OBTAIN LICENSING THEN GET INVESTORS ONBOARD? THE SYSTEM IN LICENSED PRODUCTS STINKS AND SHOULD BE ILLEGAL. Ouch ... our ears are ringing.  We understand you're angry, but in the future, you may want to consider the intonation of your query before hitting the "send" button.  Okay, assuming your question is 'Why is it so hard to license products to a university or professional sports franchise?," the short answer is that as a general rule, the bigger the enterprise, the less that the enterprise wants to hear from outsiders, a principle sometimes referred to as "NIH." (As you probably know, sports licensing is a big enterprise .... so big that even reading about it can be expensive.)
There is, however, a logic behind the closed-door approach of the sports licensing industry. Like the toy licensing business, sports licensing execs don't want to deal with strangers or companies that can't meet manufacturing numbers, accept legal requirements, or provide quality assurance. This is especially true in a depressed business climate when risk-aversion is the name of the game. (Although that doesn't stop sports-licensing of some crazy concepts -- check out the MLB-licensed "fan" coffins, above.) As you may be aware, the road you are seeking -- attempting to patent your invention, get investors and manufacture the product yourself (can you deal with foreign manufacturers?) -- is littered with unhappiness and bankruptcies. The Dear Rich staff advises that you reconsider the idea of pitching your invention (hopefully, patented) to an existing manufacturer or agent -- that is, a middle entity who already has cachet with the teams. That's the way many "little guys" get started in the sports licensing world -- by slowly building trust with existing companies.