|Smaller firms want into college gear game|
|Posted 6/16/2011 2:20 AM ET|
Attorney Steven G. Bradbury of Dechert LLP declined to identify specifically who his firm is representing, saying his clients have not authorized him to name them. But in his five-page cease-and-desist letter June 9 to IMG College, IMG's licensing division, known as Collegiate Licensing Co., and the schools, he writes that he represents "various stakeholders who share a common interest in preserving competition and choice in the supply of licensed collegiate merchandise" — likely meaning a group of manufacturers and/or retailers.
IMG College spokesman Andrew Giangola said in a statement that the letter's allegations were "outrageous and unfounded."
Collegiate Licensing Co. has nearly 200 clients who account for about three-fourths of the $4.3 billion retail market for collegiate licensed merchandise. It was acquired in 2007 by IMG, which has since become a force in the college athletics business through acquisitions and new agreements that make it the multimedia rights holder for more than 70 schools, including Texas, Alabama, Florida and Michigan. In addition to those three schools, the cease-and-desist letter went to Notre Dame, North Carolina, Penn State, Auburn, LSU, Connecticut and Georgia, among others.MORE: College athletics revenue surges
At issue is whether the schools are violating antitrust laws by heavily narrowing the number of companies they license through CLC to produce certain items sold in certain types of stores, in this case T-shirts and fleeces sold at outlets including department and sporting-goods chain stores that are regional to national but not quite on the scale of a mass-market retailer such as Walmart.
"By severely reducing the number of licensees and eliminating competition from the excluded suppliers, the restraint will allow CLC and the universities to garner increased royalty revenues from the remaining licensees, both through higher royalty rates and through higher wholesale prices. … The increased fees and prices are imposed on retailers and, of course, are ultimately borne by consumers," Bradbury wrote.
In an interview, Bradbury said the letter's purpose was to get IMG College, CLC and the schools to "back off this effort without litigation. We think there are some serious issues, and we're asking them to back off."
That seems unlikely. In his statement, IMG College's Giangola said, "As schools become more advanced brand stewards, some schools have made their own decision to … effectively grow and protect their respective brands, enhance their respective competitive position, generate revenue for the respective institution and align better with the respective school's social responsibility plan. … We are confident each school can and should continue to make its own decision about how to best manage its brands."
Tulane Law School professor Gabe Feldman, director of the school's sports law program, says the cease-and-desist letter is a sensible opening gambit for Bradbury's clients, allowing them to pressure IMG College, CLC and the schools in a manner less expensive than a lawsuit.
|Posted 6/16/2011 2:20 AM ET|