Big news last week for Fanatics: NFL owners approved a 10-year contract making Nike and Fanatics the primary suppliers of apparel to the league’s players and fans.
Come 2020, Nike will continue to be the exclusive provider of on-field NFL apparel, which includes jerseys and base layers. For the adult fan apparel, i.e., authentic and replica jerseys, warm-up clothes, champion tees, etc., there will still be a Nike logo, but Fanatics will manufacture and distribute the clothing.
Prior to this deal, Nike was the sole producer of team and fan apparel. Using two sportswear companies to supply the apparel is a new move for the NFL. Bloomberg pointed out that the MLB signed a similar deal with Under Armour and Fanatics set to start in 2020.
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The New York Times broke down the strategy behind the deal. By involving Fanatics in the manufacturing and sale of the official Nike merchandise, the leagues expect an increase in the sale of licensed goods. Nike pays the NFL owners a percentage of the wholesale price of all the NFL-related merchandise it sells. And now, Fanatics will pay the NFL a percentage of the wholesale goods it sells to stores like Dick’s and Modell’s. It will also pay a percentage of the retail price for all goods sold directly to consumers. In addition, Fanatics possesses the ability to manufacture goods quickly and on-demand, so it can adapt quickly to wherever the consumer demand is headed.
“Our goal is to give the fan what they want when they want it, that will net in a higher sales base in a few years,” said Michelle Micone, senior vice president for consumer products for the NFL, according to The New York Times.
The paper also reported the move leads to sales projection figures increasing by about 50 percent for the NFL.
Fanatics has been surging of late. Earlier this year, the company signed a merchandising deal with Formula One. In summer 2017, it got a $1 billion investment from SoftBank, bringing its total value to $4.5 billion.
