Question

Topic: Strategy

Sports Equipment Licensing

Posted by michael on 12/8/2005 at 10:05 AM ET 2000 Points
In January I will be working with a new client who has developed a sports training device (think Juggs pitching machine as an example, but not competition). The prototype is done and built. We have a good estimate as to how much it will cost to produce and what it should retail for. The market can be peewee, prep and college sports programs. Not likely professional, but it's conceivable that individuals would purchase this to work on their own in the off season.

Our job will be to locate a manufacturer (I already know of a few but will take ideas!) negotiate a contract, get licensing and distribution in place.

We've already agreed on contract signing bonus and our cut of the sales for the first 3 years product is on the market.

With that background, are we better off trying to get licensing before securing manufacturer or the other way around?

If we go licensing first the manufacturer will be more inclined to jump at the opportunity. If we go for manufacturing first, licensing companies will know time-to-market figures and might be more inclined to jump on the wagon.

OR am I totally missing something. Thanks folks!!

Michael
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RESPONSES

  • Posted by mgoodman on 12/8/2005 at 5:00 PM Accepted
    I'd go with the licensing first. It will probably be more difficult than finding the manufacturer, and the lead time will probably be longer.

    I understand the counterpoint, but I'd always go with the marketing-related piece first because it will have more clout with the operations/manufacturing piece than the other way around.

    Hope this helps.
  • Posted on 12/9/2005 at 1:38 AM Accepted
    Hi Michael,

    I dont know much about it, but sounds really interesting.

    As far as i feel, while you look for a suitable manufacturer and go for securing the same, you should at the same time focus on the licensing part, because it is somewhat of a catch 22!! And as suggested be mgoodman, the lead time will certainly be longer.

    I feel that you should try to figure out which is more important for you, a good shape of the product line or a well created martketing plot. And then on that basis you should go on, because you cannot avoid either of these. Marketing should come only when you can convince yourself about the performance of the product and acceptance of the product.

    Wish you all the best
    Thanks and regards,
    Megha.


  • Posted by michael on 12/9/2005 at 9:06 AM Author
    Additional information:
    There are several prospective manufacturers in the Chicago area. Haven't been in to talk with them yet as I really want more input. However, they're manufacturing sporting equipment for SOMEONE. I haven't checked to see who (whom?) and they may have an established relationship with Wilson, Rawlings etc.

    As michael already said, the sales cycle is longer to the licensing company than manufacturer. At some point I hand this off to Wilson's, or someone else's, marketing department unless they retain us.

    Michael
  • Posted by michael on 12/9/2005 at 1:13 PM Author
    Douglas,
    Thanks for your feedback

    #2 is the main issue. My job is to facilitate the agreement between the 2, but details are between the developer and the licensor/manufacturer.

    Once that's done, the onus is on the the licenser to sell.

    As far as differentiation, the patent is pending on the product. At this time there is nothing like it.

    The question is, absent any licensing agreement does the client want to pursue manufacturing and sales on his own. It's a school-to-school product, not a retail store product.

    Michael
  • Posted by telemoxie on 12/12/2005 at 10:29 PM Member
    I don't know if this is a true story or an urban legend, but maybe it will help.

    The story goes that a couple guys had developed a new form of pads for football players - but they could not get anyone to take notice. After a football game, one of the NFL quarterbacks (pretty sure it was a Raiders quartback, I'm assuming it was Ken Stabler) was in the hospital with bruised ribs. Two guys snuck into his hospital room, one was carrying a baseball bat. The football player thought he was about to be attacked... but the fellow with the bat started beating the other guy in the ribs... and the next Sunday, Ken was playing wearing a "flak jacket", and the TV announcers were telling this story to millions of people.

    Anyway, the lesson to me is that having a "champion" such as Douglas describes can help you get both the licensing and the manufacturing lined up.

    If I were personally doing this, I'd assume that the licensing organization might have some preferred manufacturers, or at least, would want to be involved in negotiating the terms for manufacturing. I would approach potential licensing organizations with my patent, endorsement from my "champions", some sales orders, and quotes from several manufacturers in hand.
  • Posted by michael on 12/12/2005 at 11:13 PM Author
    Dave,
    You bring an excellent point about the champions (as did others). I'm seeing that as critical, but the people who would use this piece of equipment are hardly noteworthy...almost along the lines of a bullpen catcher. To the team they are valuable, but to the public they're nobody.

    Michael
  • Posted by michael on 12/13/2005 at 2:06 PM Author
    Douglas,
    Excellent idea. Unfortunately, it would be up to the licenser to decide if they want to do that.

    IF we don't land Wilson or Mikasa or someone else, then it's up to the developer to decide if he wants to go that route. It IS possible to sell this thing but he isn't interested in ones and twos. He wants all the cash for licensing. His call. It could just remain in the garage, right?

    Michael
  • Posted by michael on 12/16/2005 at 9:11 AM Author
    Well, I think we'll go with a two-pronged approach. We'll shoot for the licensing and at the same time we'll contact manufacturer telling them WE can secure licensing. If it comes down to both sides sitting on the fence, maybe I'll ask ya'll another question.

    Thanks!

    Michael
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