NFL IP Rights
Fan enthusiasm surrounding the National Football League (“NFL” or “league) is high. A recent estimate of the 2017 league revenue was $8.1 billion, before local income earned by each NFL team. That’s a pretty large fan base.
League revenue is primarily driven by monetizing Intellectual Property rights such as sponsorship rights, broadcasting rights, film rights and trademark licensing rights. This same business model is employed for all professional sports.
In this article, we will focus on trademark licensing rights by reviewing a few NFL licenses released to the public.
NFL trademark recognition is driven by the commercial activity of thirty-two teams split evenly into two conferences, the National Football Conference or NFC and American Football Conference or AFC. Each conference has a four divisions identified by the four cardinal directions of the compass rose, North, South, East and West. Each division has four teams.
… league trademark licensing revenue for retail apparel alone was estimated at $1.9 billion in 2009…
It is obvious that the value of the trademark rights are worth lining up for on fourth and goal.
NFL Trademark Licensing
NFL Properties, LLC, founded in 1963 as a subsidiary of National Football League, Inc., manages the NFL trademark and logo licensing and marketing. The NFL trademarks include, the NFL shield, the words SUPER BOWL and PRO BOWL, the Super Bowl and Pro Bowl logos, and the team names, nicknames, colors, symbols, emblems, helmet designs, uniform designs and others. Some examples of licensed consumer goods include products such as apparel, food, collectibles, sporting goods, games and novelties.
A review of seven public licenses indicates that the average royalty rate paid, as a percent of product sales, ranges from a low of 10.3% to a high of 10.5%. The lowest and highest individual rate was eight and thirteen percent. The payment structures also included upfront payments. We were able to identify one license with a small upfront payment of $1,000.
The range of royalty rates is driven by specific types of products licensed. One license focused on media content with a royalty rate equal to 8% and a license term of six years. One license included a 13% royalty rate payable by a large US based apparel manufacturer. The license was exclusive and had a term of 10 years. Two of the remaining licenses exhibited shorter terms, such as two years and non-exclusive rights related to novelty items.
NFLPA Trademark Licensing
The National Football League Players Association (NFLPA) also has a group licensing program. Formed as a subsidiary in 1994, NFL Players Inc. manages the marketing of 1,800 active players as personalities as well as professional athletes.
We found only two licenses that identify the NFLPA as the licensor. A review indicates that the royalty rates paid, as a percent of product sales, ranges from a low of 7.5% to a high of 10.0%. There were no tiered royalty payment schedules in these licenses. These are simply flat rates. No upfront payments were identified or the life of these licenses.
The range of royalty rates observed continues to be driven by the specific types of products licensed. At the high end, are personal body-care products. At the low end was a license dated October 2003, relating to player performance and biographical data for fantasy sports league use.