New licensed GT apparel brand — Section 103

00Burdell

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Sure that’s possible if Tech has to motivate people to produce its gear. But that’s lame. If your apparel isn’t good enough to win customers on its own why should Tech pay you to make undesirable apparel?
I may have not explained this very well.

Let's say you are a celebrity and I make clothing. Since you are famous and popular, I will pay you $1M for an exclusive license (I did consulting for a company 2 yrs ago that paid a celeb $1.5M for exactly that). But the license is exclusive - you cannot allow anyone else to make stuff with your name/photo/etc. If I'm paying you $1M, I want full, exclusive rights.

Now your accountant might say... hmmm, why don't we sell that guy a license just for shirts (for $600k - all he makes are shirts anyway) and then sell Nike a license for shoes for $600k. But, your acct warns, you cannot allow anyone else to make shirts or shoes with your name/pic/etc.

I'm ok paying $400k less because I don't make or care about shoes. Nike is ok paying $600 because (let's assume) they don't care about shirts. But, for the term of those licenses, you cannot issue any further licenses for shirts or shoes. Hmmm.... what about hats! Boom.

Last I heard, a McDonald's franchise was selling for about $1M. But, if you buy one, McDonald's agrees not to allow another McDonald's within 5 miles (for example). No one will pay a mil if McD's can open another one 300 yards away.

Is it clearer now?
 
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This is awesome. Bummer about Tech gold not being available as a poly-cotton blend because I like the look/feel of those better but I will probably order something.
 

samsgt02

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I just got me a couple T-shirts and sweatshirts. Be sure to update us on baby/toddler clothes, because I've got a little one to indoctrinate.
 

gambler

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Tech saying that have sufficient vintage licensees seems....absurd, does it not? Who and where? Seems laughable that was the reply they gave you.
This could have to do with rebranding. Some companies I've worked with in the past try hard to make the old stuff dies off to attract the new customer base because the nostalgia factor isn't as lucrative as we sometimes want to believe.
 

18in32

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I may have not explained this very well.

Let's say you are a celebrity and I make clothing. Since you are famous and popular, I will pay you $1M for an exclusive license (I did consulting for a company 2 yrs ago that paid a celeb $1.5M for exactly that). But the license is exclusive - you cannot allow anyone else to make stuff with your name/photo/etc. If I'm paying you $1M, I want full, exclusive rights.

Now your accountant might say... hmmm, why don't we sell that guy a license just for shirts (for $600k - all he makes are shirts anyway) and then sell Nike a license for shoes for $600k. But, your acct warns, you cannot allow anyone else to make shirts or shoes with your name/pic/etc.

I'm ok paying $400k less because I don't make or care about shoes. Nike is ok paying $600 because (let's assume) they don't care about shirts. But, for the term of those licenses, you cannot issue any further licenses for shirts or shoes. Hmmm.... what about hats! Boom.

Last I heard, a McDonald's franchise was selling for about $1M. But, if you buy one, McDonald's agrees not to allow another McDonald's within 5 miles (for example). No one will pay a mil if McD's can open another one 300 yards away.

Is it clearer now?
That’s the possibility I mentioned in my post. So I guess I didn’t realize you were restating my hypothetical. But I agree that’s a possibility. I would be a little surprised that vintage Tech wear is worth an exclusive license of enough value that it would persuade the AA to deny Tech fans competitive options. But definitely a possibility.
 
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00Burdell

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That’s the possibility I mentioned in my post. So I guess I didn’t realize you were restating my hypothetical. But I agree that’s a possibility. I would be a little surprised that vintage Tech wear is worth an exclusive license of enough value that it would persuade the AA to deny Tech fans competitive options. But definitely a possibility.
The AA wouldn't be denying it to Tech fans if the AA has already given someone else an exclusive and are contractually bound to not grant any additional licenses until the original contract expires. We don't know what is going on - why they are not granting a license to Pantone - I'm just offering specific scenarios that would at least make the refusal defensible. If you know tStan - give him a ring - he can put the matter to rest in under a minute.
 

18in32

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The AA wouldn't be denying it to Tech fans if the AA has already given someone else an exclusive and are contractually bound to not grant any additional licenses until the original contract expires. We don't know what is going on - why they are not granting a license to Pantone - I'm just offering specific scenarios that would at least make the refusal defensible. If you know tStan - give him a ring - he can put the matter to rest in under a minute.
By granting the exclusive license in the first place the AA would be denying fans!
I have no doubt they were being “economically rational” but my suspicion is that (as with say kickoff times) there was short term gain but long term risk that was ignored.
 

00Burdell

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By granting the exclusive license in the first place the AA would be denying fans!
I have no doubt they were being “economically rational” but my suspicion is that (as with say kickoff times) there was short term gain but long term risk that was ignored.
If Adidas offers GT $Ms for an exclusive, then of course you sell it to Adidas. If Adidas decides not to manufacture any vintage clothing then I think that is where the inquiry would be directed. Maybe Adidas' marketing analysis indicates its not worth it for them. Maybe AA screwed up and didn't carve out an exclusive to the Adidas agreement for vintage which Adidas would not have objected to if they have no interest in producing and selling vintage merch.

A key consideration in these licensing agreements is scope. What's included and what is carved out.

Having had a bit of time to consider this, I wouldn't be a bit surprised that GT never considered a separate license for vintage and are now shopping the idea around to bigger players. Tough world out there.

But, again, this is rampant speculation mixed in with a little bit of experience with licensing agreements (not in the sports world).
 

18in32

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If Adidas offers GT $Ms for an exclusive, then of course you sell it to Adidas.
I guess this is where we differ! The AA (via the ACC) got extra money if they would just agree to variable kickoff times. Then they wonder what they need to do to boost attendance when even winning seasons seems to have marginal effect.
 

00Burdell

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I guess this is where we differ! The AA (via the ACC) got extra money if they would just agree to variable kickoff times. Then they wonder what they need to do to boost attendance when even winning seasons seems to have marginal effect.
You completely lost me. The Grant of Rights has nothing to do with apparel licensing. Maybe we need a Zoom call.
 

18in32

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You completely lost me. The Grant of Rights has nothing to do with apparel licensing. Maybe we need a Zoom call.
I was drawing an analogy about how the AA conducts business. I’m sure you’re right about the exclusive licenses. My point is that I have doubts about the long term merits of those analyses, notwithstanding the apparent short term benefits.
 

00Burdell

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I was drawing an analogy about how the AA conducts business. I’m sure you’re right about the exclusive licenses. My point is that I have doubts about the long term merits of those analyses, notwithstanding the apparent short term benefits.
The AA is cash starved which has no doubt influenced their decision-making. On that point, we are in perfect agreement.

But getting back to the original point, Pantone got his license and will surely demonstrate success. Then he can parlay that success to the AA and negotiate bigger and better contracts.
 
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