Cowboys look to grow business in college market
Cowboys look to grow business in college marketPublished May 16, 2011
In 1996, the Dallas Cowboys seized control of their brand by becoming the first, and still only, NFL team to take its merchandise rights in-house, forming a separate company to handle the operation.
Now, 15 years later, the club has extended its retail knowledge to the college market.
Silver Star Merchandising, a new company spun off from Cowboys Merchandising Ltd., made a sudden impact on the sports licensing scene last week, signing a 10-year deal with the University of Southern California to manufacture, license and distribute USC-branded apparel and headwear.
The agreement is thought to be the first of its kind between a pro team and a college program, according to industry insiders, and Silver Star officials are targeting additional schools for future growth.
Silver Star is one of three companies competing for an deal with Ohio State University, according to published reports, and has had discussions with the University of Texas, but no deal has been signed. It is led by Jerry Jones Jr., who will be president in addition to his role as Cowboys’ executive vice president, chief operating officer, and chief sales and marketing officer.
Bill Priakos will serve as Silver Star’s chief operating officer. He holds the same title for Cowboys Merchandising.
The Jones family decided to start Silver Star after Cowboys Merchandising officials began talking with University of Texas officials about the college licensing and distribution business prior to the Texas-North Carolina men’s basketball game in December 2009 at Cowboys Stadium.
Silver Star and Southern Cal had been in discussions for the past four to six months after the Cowboys approached the school about taking on the merchandise rights, according to Jose Eskenazi, USC’s associate athletic director in charge of strategic partnerships, licensing and sponsorships.
Last year, USC generated more than $20 million in gross revenue in the sale of licensed merchandise.
The agreement charges Silver Star with distribution of USC apparel across the major retail channels: mass, mid-tier, sporting goods, specialty and online. The apparel and headwear lines will be available at major retail outlets throughout Southern California and through USCTrojans.com, as well as on a national basis. Eskenazi said Silver Star has committed to wider distribution of replica jerseys, hats and T-shirts by expanding those lines to retail outlets such as Wal-Mart, Costco, JCPenney and Kohl’s.
Apparel rights were previously held by several licensees managed in-house by USC’s athletic department. Moving forward, many of those licenses have been wrapped up into a single-source model run by Silver Star on behalf of the university.
“We haven’t had good distribution in the past,” Eskenazi said. “There was no particular reason, but it just wasn’t where we thought it should be and where the brand should be. The Cowboys told us how much wider it could be.”
Silver Star’s strategy is to develop a private label brand of Southern Cal jerseys, T-shirts and hats with tags displaying only the Trojan logos. Officials are already discussing the possibility of developing a line of throwback items, Eskenazi said.
Under the terms of the agreement, Silver Star has flexibility to sign deals with other manufacturers to produce items to take advantage of market trends.
The deal is also more financially beneficial to USC. Silver Star will pay the school a greater amount of royalties compared with Southern Cal’s past deals, said Jones, who refused to detail the financial terms.
Silver Star’s deal does have restrictions. Nike, Southern Cal’s official on-field equipment supplier, is a licensee and retains the rights to produce authentic jerseys at retail, Eskenazi said.
USC Bookstores, which fulfills online orders for merchandise, will continue operating the souvenir stands for Southern Cal football and basketball games.
It is no surprise the Cowboys have branched out to the college ranks considering the success they have had producing and distributing their own merchandise, said Alan Fey, president of Gameday Entertainment, a major league retail concessionaire. “It’s the same model as the Cowboys,” Fey said.
Jones said Silver Star’s approach is to pursue new deals with a select number of major college programs that are consistently among the top sellers in sports merchandise. He declined to mention prospects other than Ohio State and Texas.
“We would never want to do hundreds of schools,” Jones said. “To do this the right way, we need to treat it as a brand and not just a piece of apparel, and have the university involved in the process so they have complete ownership and are not just contracting out somebody.”
Most major college programs are represented by Collegiate Licensing Co., a division of IMG College that has deals with about 160 schools.