Good Question: Where Does The Money From Sports Merchandise Go? – CBS Local

MINNEAPOLIS (WCCO) — One look into the stands of any Vikings game and you’re bound to see a sea of purple – in jerseys, shirts and hats.  Sports fans buy between three and five billion dollars of pro football and baseball merchandise each year. It’s about $2 billion for the NBA and $1 billion for the NHL.

So, where does all that money go? Good Question.

Clothing manufacturers pay a licensing fee to be able to sell official sports merchandise.  Adidas has a deal with the NHL, Nike has them with the NFL and NBA and Majestic has a deal with MLB.

In 2011, Sports Illustrated reported Nike paid $1.1 billion to officially license NFL merchandise.

“It only costs them a few dollars to make each of these jerseys, so they have to charge as high as possible prices in hope that they can then recoup that investment,” says Jonathan Jensen, assistant professor of sports administration at the University of North Carolina at Chapel Hill.

Between 11 percent and 15 percent of the merchandise sales will go to the league and is then shared equally among the teams.  The rest goes to the manufacturer.

“Any of these league deals are really not public, so it’s hard to unpack how exactly the deal is structured and what those percentages have been agreed upon between the league and those teams,” says Jensen.

If a jersey with a player’s name is sold, a small cut of that money will go to the players’ association as well as the player.

“The player could get hurt or traded or something that puts them in a bad light and the retailers are on the hook for all of that risk,” Jensen says.

How much money goes to the team or the retailer also depends on where the merchandise is sold.  Retailers will take a cut when it’s sold in their stores.  A team will make some money the merchandise is sold in their stadium.

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