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University Gazette

The University of North Carolina at Chapel Hill

Success of trademarks and licensing program translates into financial support for students

Carolina ranks high on many lists – from the annual U.S. News & World Report rankings in which Carolina consistently is among the top five public universities in the nation, to Kiplinger’s Personal Finance Magazine in which Carolina has been named the top value in American public higher education ever since the magazine initiated the rankings.

The list that Derek Lochbaum, Carolina’s director of trademarks and licensing, watches is the one the Collegiate Licensing Company (CLC) issues each year showing the royalties generated by universities from the sale of logo-bearing merchandise.

In 2011–12, for instance, Carolina was ranked seventh in royalties generated among the 200 colleges, universities, bowl games, athletic conferences and other sports-related institutions licensed through CLC.

All athletic success helps spur sales, and the road to the Final Four can be paved with gold. However, Lochbaum said it is impossible to know all the factors that motivate people to buy Carolina merchandise.

Certainly, love and loyalty to sports teams play a key role, but there is no question that some students buy merchandise because of their pride in the University and its many stellar academic programs.

As a national brand, Carolina is able to take advantage of trends and sell merchandise outside the traditional alumni and fan base. For that reason, Lochbaum does not believe UNC’s licensing program experiences the huge swings in revenue other schools may see with wins and losses.

During the current academic year, more than 2,000 students received need-based and merit-based scholarships that were funded by the $3.89 million in trademark revenue, said Shirley Ort, associate provost and director of scholarships and student aid.

When the trademark licensing program began three decades ago, a portion of the proceeds were used for need-based aid, with the remaining amount used to support athletics. For many years, 75 percent went to support need-based aid, with the remaining 25 percent going toward athletics.

In 2005-06, a faculty-led initiative resulted in the Board of Trustees’ decision to dedicate all trademark revenue to scholarships, with the 25 percent share that had most recently gone to athletics pledged for merit aid, Ort said. Trustees approved an increase in the student athletic fee to support athletics to offset the loss of trademark revenue.

Carolina merchandise can be found at many different types of retail outlets, from the Student Stores on campus to big retailers such as Wal-Mart and Target to mom-and-pop stores in every corner of the state. In addition, various retailers around the globe sell products bearing the UNC logo.

The University grants rights to manufacturers according to product category and retail distribution, ensuring that appropriate UNC goods reach the consumers in each channel.  The result is a smaller, but more committed, group of companies willing to support the University’s licensing mission. 

“A consistent brand and availability of our licensed products is just as important to us as sales volume,” Lochbaum said.

“We are a public institution with a proud history, and many citizens of the state experience that pride and develop a connection with us through our sports teams. In that sense, they are not just our customers, but the constituents we exist to serve. If they want to wear their pride for Carolina on their sleeve, it is our job to provide that opportunity.”

Lochbaum described the evolution of trademark licensing and its growing impact on generating revenue.

What is trademark licensing?

Trademark licensing is a contractual relationship under which a trademark owner grants another the right to use the mark, subject to terms of the contract.

When did the practice of licensing begin in America?

The first product licensed was the Peter Rabbit Doll in 1903, based on the anthropomorphic character in various children’s stories by Beatrix Potter. Then, the Brown Shoe Company licensed comic strip character Buster Brown in 1904. The iconic children’s toy, the Teddy bear, was named after President Theodore “Teddy” Roosevelt in 1913.

When did Carolina get into the game?

On October 17, 1982, UNC announced the establishment of its trademark licensing program, a few months after the 1982 men’s basketball national championship.

How big is the industry now?

In 2012, according to data from the CLC, colleges and universities generated a total $4.6 billion in sales, with about 60 percent from apparel items and the remaining 40 percent from non-apparel items. These sales represent about 25 percent of the total revenue generated from sports-licensed product sales.

To put that in perspective, Major League Baseball generated $5 billion (or 27 percent of all sports-licensed revenue) and the National Football League generated $3.25 billion (or 18 percent of the total sports-licensed market).

What does the University’s trademark include?

UNC’s protected marks include logos, words, phrases and landmarks associated with the University.

Why do organizations need a trademark license?

There are three reasons, often referred to as “the 3 P’s” in licensing. The first is to protect. We want to own our intellectual property and prevent its unauthorized use. Promotion is the second P. We strive to increase public awareness and increase institutional awareness. The third P is profit. We proudly earn royalty revenues created by the sale of logoed merchandise to help the University honor the Carolina Covenant and enhance the educational experience of our students.

How can consumers tell whether something is counterfeit?

Consumers should look for the red-and-blue “Officially Licensed Collegiate Product” label hologram on the product or hangtag. The manufacturer’s name should appear on the label or product, and the appropriate trademark or federal registration should appear with all University marks. In addition, the merchandise should depict UNC in a tasteful manner.

Has Carolina ever been No. 1 in revenues?

Carolina was No. 1 for five years in a row, ending in 2004-05.

What factors contributed to that?

Throwback jerseys were a big fashion craze at the time and there was this guy named Michael Jordan who once wore Carolina Blue. That helped us quite a bit before that craze disappeared. Also, the Carolina Blue color was popular in fashion.

What changed in 2005?

When Texas won the national football championship in 2005, it ushered in an era of the large football-driven schools becoming powerhouses in trademark licensing in a way they had not been previously. They became a larger portion of the business as they became more of a national brand.

Others schools in this category, moving from the regional to the national level, would be Alabama, LSU and Florida. Carolina and Michigan had been national brands for a longer period of time – Carolina because of Jordan, Michigan because of the “Fab Five” of the early 1990s. There is no way to verify any of this, but that was the speculation at the time.

Why are these rankings important?

I know people like rankings, but related to the trademark licensing program, we need to view rankings in the proper perspective.

Since we “lost” our top ranking, the UNC trademark licening program has had six of its top seven fiscal years in terms of the total amount of revenues generated. The past five years have been our top revenue years in the program’s history.

That’s what really matters. Regardless of our ranking, we are doing a better job helping students achieve their dreams.