Transcripts

"The Business of College Football" Part 3 - The Licensing Game

SUSIE GHARIB: There's more than one way for colleges and universities to make money through their football programs. The stamping of a school's name and mascot on t-shirts, hats and even trendy Crocs footwear is a huge business. As we continue our series "The Business of College Football," Jeff Yastine reports that the practice of logo licensing is getting even bigger.

JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: The sound of these t-shirt screen-printing machines is music to the ears of colleges and universities across the country. For each fan who buys a t-shirt before a game, for every little boy who dresses in dad's college colors, the school gets a piece of the action. And these days, the action in college logo licensing is worth $3.5 billion. Nearly 30 years ago, it was a $200 million business, says Derek Eiler, senior vice president of the Collegiate Licensing Company. Do the math and that works out to a steady 11 percent growth rate year in and year out.

DEREK EILER, SR. VP, COLLEGIATE LICENSING COMPANY: Football is a huge driver of it. It's a communal activity in the fall, a return to college campuses. And there's so much media attention today around big football rivalries and rivalry weekends and the BCS and reaching a bowl game and winning your athletic conference. All those factors really do drive a tremendous amount of success for those big powerful football schools.

YASTINE: For years, schools paid little attention to licensing, but all that began to change in the 1980s when a Federal court case clarified the copyright ownership rules for publicly funded universities. Since then, licensing has gone on to become a significant generator of revenues for all but the smallest of schools. According to Eiler, the University of Texas was last season's champion of the licensing game. UT earned more than $8 million on licensing revenues. Notre Dame, Florida, Michigan and Georgia rounded out the top five. But making big money in licensing doesn't always require a big name. Steve Shatt, president of Knight Apparel/Red Oak Sportswear, says his production can launch into overdrive for other unexpected reasons.

STEVE SHATT, PRES., KNIGHTS APPAREL/RED OAK SPORTSWEAR: As teams become hot, you have tremendous opportunities there, for example, South Florida, a recent phenomenon. We just got out of productions, shipping over 20,000 units into that marketplace. Recently the Kentucky upset of LSU, who's ranked number one, that's driven a lot of demand there. So you have those exciting opportunities. It's fun.

YASTIINE: The Collegiate Licensing Company acts as an agent for universities. It helps schools develop and manage the licensing of their merchandise sales. CLC's Eiler says schools now recognize the value in a name, a mascot, a logo.

EILER: More and more, universities are having to position themselves, like brands, because of the size of their endowments or because of the intensity of recruiting for competitive students. And so they're really are competing not only domestically, but they're competing at the international scale at this point in time and so licensing is a very important face to those institutional brands and a lot more resources and energy and sophistication is going into those programs now.

YASTINE: Some in the licensing industry worry the most popular university brands could eventually become overexposed and lose appeal. But experts say that's not likely to happen. Each year, there is a brand new crop of buyers -- thousands of freshman university students, their parents and grandparents. Another generation of football fans, ready to hit the stores and the stands. Jeff Yastine, NIGHTLY BUSINESS REPORT, College Station, Texas.