Saturday, August 30, 2008
Virginia Tech gets licensing lift
Nationwide support for the Hokies after April 16 likely spurred merchandise sales.
The Roanoke Times | File 2007
Mickey Fochtman shops for Virginia Tech items last year at B&C Sports Cards and Collectibles in Valley View Mall.
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Days after the deadliest campus shooting in U.S. history, people flocked to stores to buy maroon and orange tokens of their support for Virginia Tech, wiping out shelves and inventories.
Lynchburg-based High Peak Sportswear did not have any merchandise to sell bearing the Virginia Tech logo for months after the April 16, 2007, shootings that left 33 students and faculty dead. The retailer sold out of everything, in stores and online. Sales rose more than 500 percent in April 2007 alone.
The week of the tragedy, High Peak rushed to print more than 5,000 white Virginia Tech T-shirts, priced at $5 each. Some people waited two hours in line.
"We were printing them as fast as we could," said Ralph Smith, owner of High Peak, which has five stores in Virginia, including locations in Blacksburg and Roanoke.
Now, more than a year later, Virginia Tech is unintentionally benefiting from the skyrocketing sales of its merchandise nationwide, which retailers estimate occurred within a month of the tragedy.
Virginia Tech's licensing revenue shot up 44 percent during the 12 months between July 1, 2007, to June 30, 2008, reaching $1.9 million. Licensing revenue was $1.3 million the previous fiscal year.
Licensing revenues or royalties are the proceeds that Virginia Tech and other universities receive from the sale of T-shirts, hats and other garb licensed with a school's name and sold through wholesalers.
Though the most recent fiscal year began two months after April 16, wholesalers typically report sales 90 days after they occur, said Locke White, director of licensing and trademarks for Virginia Tech.
That's why he believes the latest figures encompass sales made in the aftermath of the shooting tragedy.
The revenue rise "definitely was related to the shootings," White said. "Pretty much everybody wanted to be a Hokie and show support."
The university didn't see the sales surge coming. Total retail sales were $47 million.
"We definitely were surprised by the huge jump," White said.
Funds from licensing revenue are directed to Virginia Tech's scholarship fund. Per university policy, licensing revenues go nowhere else, Virginia Tech spokesman Larry Hincker said.
Athletics a big factor in sales boosts
Aside from an unexpected event or tragedy, a successful athletic season generally is a main factor that helps boost a school's licensing revenue.
Take Louisiana State University. The school's royalties rose 76 percent for the 2007-2008 fiscal year, to $5.3 million, according to the university.
One significant reason: LSU's football team won the national championship for the 2007 season.
The University of Texas at Austin, which had $8.2 million in licensing royalties, was No. 1 in the annual ranking of university licensing revenue by the Collegiate Licensing Company, an Atlanta-based licensing agency.
The ranking does not include Virginia Tech, because the CLC does not represent the university.
The Licensing Resource Group handles Virginia Tech's auditing and royalty collections. In the past year, the university, which has 620 licensees, has enlisted LRG for merchandising in other parts of Virginia, White said.
Fashion also can play a part in lifting a school's royalty revenues.
Popular colors, such as the University of North Carolina's "Carolina blue," spur sales of hoodies, T-shirts and other apparel, said Craig Westemeier, who is president of the International Collegiate Licensing Association and University of Texas at Austin assistant athletics director for the office of trademark licensing. UNC was No. 6 on the CLC's latest ranking.
Some schools benefit from unfortunate events such as the Virginia Tech shootings.
They are "an opportunity for people to become exposed to your brand," though it was a tragedy, Westemeier said.
To be sure, it's difficult to determine the exact reasons why a university's, namely Virginia Tech's, licensing revenue may surge in one year and drop in another.
Virginia Tech's athletic teams have built notoriety of their own, particularly the football team.
The Hokies kick off the 2008-09 football season today against East Carolina, and much of the crowd will be wearing maroon and orange.
It's not a coincidence that other periods when Virginia Tech's licensing revenue showed substantial bumps -- 111 percent in 1999-2000 and 20 percent in 2003-04 -- also were big sports years for the Hokies, White said.
Virginia Tech played for the college football national championship in 2000. In 2004-05, it joined the Atlantic Coast Conference.
Still, athletic success can be a fair-weather predictor of revenue rises and falls.
"Sometimes, when the football team hasn't had a good year, royalties actually went up. You never really know," White said.
Virginia Tech's royalty rate of 8.5 percent is an increase from 8 percent two years ago, but it's still on the low end compared with other universities.
Royalties, which are based on a percentage of the wholesale price of its licensed merchandise, generally are between 8 percent and 10 percent, Westemeier said.
Extreme buying frenzy is over
Nonetheless, the buying frenzy as a result of the tragedy at the Blacksburg campus appears to be over.
Virginia Tech's revenue from licensing is dipping back to normal levels, which is an approximately 10 percent increase year over year, said White, based on sales that he's seen so far this year.
The university's royalties increased between 8 percent and 20 percent each year for the previous five years.
For some retailers, such as High Peak, the rush on Virginia Tech items has slowed, though Hokie merchandise remains its largest seller any time of the year compared with other collegiate items, Smith said.
Still, there's evidence that Hokie support stemming from the tragedy continues to show up in merchandise sales.
B&C Sports Cards and Collectibles, which has stores in Lynchburg and Roanoke, saw an uptick in sales of Hokie merchandise surrounding the anniversary of the shootings this year, owner Ernest Daniel said.
And since the March New York Yankees game versus Virginia Tech in Blacksburg, at least two commemorative maroon Yankees baseball hats move off store racks at B&C each week.
"It's never going to be forgotten," Daniel said.
