Fanatics Deal With Miami Includes Company-Funded Data Analyst

(Bloomberg) -- The world’s largest seller of licensed sports gear is expanding deeper into college sports.

Fanatics Inc. is entering a new 10-year partnership with the University of Miami that will make it the school’s primary licensing partner for apparel, hats and hard goods like phone cases and umbrellas. Fanatics will make some products itself, sublicense some, and work with Adidas AG, the Miami Hurricanes’ on-field jersey provider, for others.

Fanatics also is funding a data-analytics position within the Hurricanes’ athletic department. That person will help the Hurricanes sort through data from Fanatics, and analyze information from ticket sales and donations.

It’s the third deal of its kind for Fanatics -- joining partnerships with Oregon and Florida that also start next year but lack the data component. Together, they represent a new frontier for the closely held company, which became the giant in licensed sports merchandise first by operating the online stores for teams and leagues, and more recently by branching into licensing rights and apparel of its own.

“The value we bring is really threefold,” Fanatics Executive Vice President Derek Eiler said. “One, we’re driving licensing royalties. Two, they’re getting a commission on all the sales that occur through us. And third, we’re unlocking who these fans are. A lot of folks that buy from Fanatics are not alumni, they’re not season-ticket holders. All of a sudden we’re delivering to Miami all these customer names that they didn’t know existed before.”

Data Analyst

With all that fan data pouring in, Miami needed help. That’s why it asked for a data analyst, on Fanatics’ dime.

“They came to us and said, ‘Look, as a part of this comprehensive discussion, here’s a completely out-of-left-field idea,’ which no other school had ever asked us about before,” Eiler said. “It’s a brilliant idea from our standpoint, because any school that understands how to use our data only values it even more.”

For Miami, the agreement provides financial stability for merchandise sales, which tend to fluctuate depending on how well a school’s teams perform on the field. Though terms weren’t released, the deal includes a signing bonus, plus a guaranteed share of royalties over the course of the partnership. (Fanatics’ pact with Oregon, for example, was $1.5 million upfront and a further $21.5 million guaranteed over 10 years).

The Hurricanes have a wide following nationwide. Fanatics experienced that firsthand two years ago, after the school debuted its “Turnover Chain,” a custom oversize gold necklace that the Hurricanes football team hands out on the sideline to defensive players who force turnovers. The chain became a national craze (many other schools have since copied it) and quickly became a staple in products licensed by the school.

Back then, Fanatics was just Miami’s e-commerce partner, with limited licensing rights. Eiler said the Hurricanes’ chain merchandise was Fanatics’s top-selling college line of the year.

Miami has one of the biggest athletic departments in the country and one of its best-known football teams, having won its most recent national title in 2001. The Hurricanes have an annual budget of roughly $95 million, according to data submitted to the U.S. Department of Education.

To contact the reporter on this story: Eben Novy-Williams in New York at enovywilliam@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, John J. Edwards III

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