The licensing news of the week was all about Authentic Brands Group and its acquisition of the Sports Illustrated brand from Meredith. It’s a reminder of the continued growth of ABG and the breakup of Time Inc., since the venerable company was acquired by Meredith.
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Why the ABG Deal for SI Makes Sense
Two years ago, I interviewed Jamie Salter, founder and chairman of Authentic Brands Group, along with his executive team, for an exclusive article on the growth and success of the brand management company.
In the article, Salter made a bold financial prediction that is oftentimes unlikely done by top executives. But Salter is a true entrepreneur, founder of a private company, and he has a track record of delivering time and again on his vision.
With $250 million mostly from private equity firm Leonard Green & Partners, and with one brand, Tapout, in 2010, ABG grew to 27 brands and almost $5 billion in retail sales in 2017, and that’s when Salter proclaimed that ABG would double in size in three to five years.
In my May 2017 article I wrote, “While Salter has always been a big thinker and an ambitious executive, he has been able to deliver impressive results since the formation of ABG. With a low-leveraged debt position, a strong cash position, a well-diversified portfolio, along with a strong organizational structure and retail presence worldwide, Salter remains bullish about the future, projecting that ABG can double its business in three to five years to $10 billion in retail sales.”
With this week’s acquisition of the iconic Sports Illustrated intellectual property from Meredith for $110 million, Salter got a little closer to his prediction, and remarkably, it’s only taken two years. Sports Illustrated is the 50th brand in the ABG’s portfolio of fashion, entertainment and sports, and it now puts ABG at about $9.3 billion in retail sales.
Like he has in past acquisitions, Salter paid a lot less than the original price of $150 million that Meredith was hoping to get for Sports Illustrated. ABG’s portfolio includes Marilyn Monroe, Elvis Presley, Muhammad Ali, Shaquille O’Neal, Dr. J, Greg Norman, Neil Lane, Thalia, Michael Jackson (managed brand), Nautica, Aéropostale, Juicy Couture, Vince Camuto, Herve Leger, Judith Leiber, Frederick’s of Hollywood, Nine West, Frye, Jones New York, Louise et Cie, Sole Society, Enzo Angiolini, CC Corso Como, Hickey Freeman, Hart Schaffner Marx, Adrienne Vittadini, Taryn Rose, Bandolino, Misook, 1.STATE, CeCe, Chaus, Spyder, Tretorn, Tapout, Prince, Volcom, Airwalk, Vision Street Wear, Above The Rim Hind, Thomasville, Drexel, and Henredon.
Since his tenure as CEO with HILCO, Salter has proven time and again that he knows the guts of a good deal, he knows how to negotiate, and he understands the power of licensing. For Salter, licensing isn’t about doing hundreds of deals, but about maximizing a few powerful deals with global appeal. He’s done it with many of the other brands ABG he has acquired and the brand extensions strategy for Sports Illustrated will likely follow a similar model.
So maybe you won’t see a lot of Sports Illustrated T-shirts and mugs, but you could see extensive fashion collections, swimsuit collections; a sports camp; an energy drink or healthy snack; esports and gambling initiatives; or various other sponsorships and events based on SI’s exclusive content that includes the Swimsuit Issue, Sportsperson of the Year, Fashionable 50 and more.
“We are honored to welcome Sports Illustrated to the ABG family,” said Salter. “As one of the most iconic brands in sports media, SI is a cultural centerpiece with massive opportunities for growth across its burgeoning digital, TV and social platforms and industry-leading print magazine. SI’s trusted name and fiercely devoted following set the stage for the brand to become a leader in lifestyle and entertainment.”
ABG now forges a strategic partnership with diversified media powerhouse Meredith to build a global platform that converges the worlds of sports, culture and entertainment. ABG assumes the marketing, business development and licensing functions for the Sports Illustrated intellectual property and brand, while the print magazine and SI.com will maintain editorial independence and continue to operate under the leadership of Meredith and editor-in-chief Chris Stone and publisher Danny Lee.
“We are delighted to find a great home for Sports Illustrated with ABG, one of the world’s premier brand owners and licensors,” said Jon Werther, president, Meredith National Media Group. “Additionally, we are excited about the opportunity to fully integrate Sports Illustrated’s print and digital products into Meredith’s operations. We believe our proven expertise in content creation and sales and marketing will greatly enhance the vitality and profitability of these channels.”
The widely-read Sports Illustrated has a total audience of more than 120 million consumer and has shaped the narrative around sports culture over the last six decades, publishing thousands of covers featuring the world’s most disruptive professional athletes and celebrities.
“Sports have a remarkable way of bringing people together—regardless of gender, race or socioeconomic status, the experiences shared by sports fans around the world are unifying and indelible,” said Nick Woodhouse, President and CMO of ABG. “As a trailblazer and cultural phenomenon, Sports Illustrated has created moments and experiences for its readers that are unmatched by any other sports brand. We look forward to working with Meredith to extend Sports Illustrated’s legacy and connect the brand with new audiences around the world.”
“We’re thrilled that Authentic Brands Group and Meredith share the vision of SI management to build a premium sports platform,” said Chris Stone, editor-in-chief of Sports Illustrated. “In addition to continuing to produce independent, award-winning journalism and storytelling—what Jamie Salter has described as the heart of SI—we are now perfectly positioned, with the support and resources of ABG, to thrive in many other spaces: events and conferences, licensing, gambling and gaming, IP development, especially in video and TV, to name a few, all while continuing to benefit from Meredith’s industry-leading track record in operating media companies.”
Transaction Details include the following:
- ABG has acquired the intellectual property of Sports Illustrated from Meredith for $110 million.
- The purchase includes SI’s associated brands including Sports Illustrated™, Sports Illustrated Kids™, Sportsperson of the Year, Sports Illustrated Swimsuit, SI™ and SI TV.
- The transaction does not include the FanSided digital platform, which Meredith is currently in the process of selling.
- ABG also acquires the rights to over 2 million iconic images as part of Sports Illustrated’s archive of owned photography.
- ABG assumes the marketing, business development and licensing functions for the Sports Illustrated intellectual property and brands.
- Meredith will pay ABG a licensing fee to operate the Sports Illustrated print magazine and SI.com for a minimum of two years.
Strategic Benefits, according to both companies, include the following:
- ABG and Meredith have formed a strategic partnership to build a global media platform that encompasses print, digital, mobile, video, social and broadcast television.
- ABG and Meredith will combine their respective strengths to create other strategic, media-driven opportunities for complimentary ABG-owned brands.
- ABG will develop broad-based licensing programs under the Sports Illustrated brand spanning product, original content and live events.
- ABG also sees a significant opportunity to leverage Sports Illustrated’s trusted name and digital infrastructure to position the brand as a leader in esports and sports gambling.
Meredith is using the transaction proceeds to pay down debt, and according to the company, will have paid approximately $900 million of debt by June 30. The company said it intends to pay another $100 million in debt in the first quarter of its fiscal 2020 (ending September 30) after completing the sale of FanSided and Viant to reach its stated goal of $1 billion of debt pay down.
Corporate Brand Deal of the Week: Caterpillar
Funrise signed a new multi-year toy license with Caterpillar, the world’s leading construction equipment manufacturer. The Cat toy line will include machines in a wide range of styles with innovative features including motorized toys, toys with lights and sounds, radio control, free-wheeling toys in different scales, and Cat machines made of metal.
“Caterpillar is a widely recognized and trusted brand, and we are thrilled to create toys that bring the dynamic and larger-than-life construction world of Caterpillar to kids and families around the world,” said Randy Shoemaker, Sr. Vice President, Global Brand Marketing, Funrise.
“For over 90 years, Cat products and services have been helping customers build a better world,” said Kenny Beaupre, Global Licensing Manager, Caterpillar Inc. “In a similar way, Cat toys are used by boys and girls around the globe to build whatever their imaginations dream. Toys are educational, instructive and nurture creativity. Together with Funrise, we look forward to bringing increased innovation to the Cat toy line.”
Color of the Week: SpongeBob Yellow
Nickelodeon and The Pantone Color Institute have partnered to create official SpongeBob Yellow and Patrick Star Pink as part of the 20th anniversary of SpongeBob SquarePants.“For two decades, SpongeBob SquarePants has inspired millions of people,” said Charlotte Castillo, senior vice president, Franchise Planning, Viacom Nickelodeon Consumer Products. “From our partnership with the Pantone Color Institute to our collaborations with artists around the world—we’re commemorating SpongeBob’s 20th Anniversary by celebrating his optimism, imagination and creativity.”
“We were very honored to partner with Nickelodeon on the creation of colors for these two globally iconic characters. Inspired by SpongeBob’s enthusiasm, playfulness and fun-loving nature, the new SpongeBob Yellow we created is a luminous golden hue that reflects the energy of the sun, radiating joy and happiness, and sparking imagination,” expressed Laurie Pressman, vice president, Pantone Color Institute. “Patrick Star Pink, a warm and inviting coral pink is the perfect companion color to SpongeBob Yellow. Spirited and affable, a light hearted pink hue is ideally suited to the fun and laughter of being with your best friend.”
In celebration of the SpongeBob Yellow launch, Nickelodeon is asking fans to show their love of SpongeBob by wearing their #SpongeBobYellow on Tuesday, June 4 and post their looks to @SpongeBob on Twitter, Facebook and Instagram.