Behind the Scenes of March Madness Merchandise
March Madness is a profitable time. The tournament itself rakes in more than $1 billion in television ad revenue. That's not to mention what the schools themselves make. The Washington Post reported that in 2014, a tournament berth (even a first-round loss) earned a school $1.67 million. A spot in the Sweet 16 is worth about $5 million. The Final Four teams each see about $8 million. That money isn't even hoarded by the school, necessarily—the NCAA urges teams to share it with other teams in the conference.
This is just the figures for the actual participants in the tournament (other than the players, but that's a debate for another day). Outside of the tournament, licensed apparel and merchandise is an enormous opportunity for companies. For the bigger teams that have nationwide followings, there's the steady sale of merchandise throughout the year that ramps up around this time, especially if the team wins a conference championship or makes it to the advanced rounds.
The magic of March also presents the opportunity for smaller schools to upset the giants, like we saw with the University of Maryland, Baltimore County's win over top-seeded Virginia, which resulted in thousands of merchandise orders that inundated the school's store.
Enter Hanes, one of the most ubiquitous apparel brands both in the promotional industry and on the consumer-facing side. Thanks to its 2015 purchase of Knights Apparel (worth $200 million), the company has boosted its licensed apparel business by more than $450 million. The company estimated that 10 percent of its sports apparel business comes from the tournament alone.
“The Final Four weekend and the immediate weeks following are the largest selling period of the tournament,” Hanes spokesman Matt Hall told the Winston-Salem Journal.
Hanes has the exclusive rights to sell licensed merchandise to fans during the Final Four games at the Alamodome, and started with the design process for apparel right after the bracket was unveiled.
Hanes president of sports and graphic apparel John Fryer called the whole process “an absolute frenzy of activity to meet the daunting apparel needs of one of the world’s greatest sporting events."
“It is one of the most exhilarating, exhausting and satisfying business challenges of the year,” he added to the Winston-Salem Journal.
So what goes into this mad dash of design and manufacturing?
The design teams started work on the locked-in teams, i.e. the ones that win their respective conference’s championship and therefore earn a spot in the tournament, as soon as they won. As teams advance, the team works in microscopic windows of time to pump out the graphic designs and apparel.
Hanes told the Winston-Salem Journal that T-shirts and hats account for about 80 percent of its March Madness sales.
Like we said before, what’s so alluring about the tournament is the possibility of Cinderella teams like UMBC to show up out of nowhere and bring down Goliaths. (We don’t care about the mixed metaphor. Stay with us.) So, in order to act accordingly when those moments happen, Hanes had to have the proper licenses for the teams.
That’s where the Knights Apparel acquisition is so crucial. Through the acquisition, Hanes got the license to sell apparel to 400 U.S. colleges and universities.
Fast-forwarding from the first round upsets to the title game—when there are only two possibilities for T-shirts—Hanes has to act fast. Otherwise, they run the risk of creating “phantom merchandise” celebrating the wrong team.
Last year, Hanes started the presses just five minutes after the final buzzer.
Rita Marshall, administrative manager at Nvizion, which prints the championship T-shirts, told the Winston-Salem Journal that employees worked normal hours that Monday, went home to get a little rest, and then came back to work at halftime of the game. The company also brought in an extra 20 people to assist with the quick turnaround.
So this year, while the bracket is full of unsuspected victories and low seeds progressing farther than expected, it’s tough for apparel companies like Hanes to predict outcomes for the sake of T-shirts.
With teams like Loyola-Chicago, Kansas State and Florida State still alive, while big-shot teams like UNC, Virginia and Kentucky head home, designing and printing T-shirts for this year’s tournament will have to come down to the buzzer.