Outside the Lines: Licensed to Sell
by Will Stewart, TechSideline.com
TSL Extra, Issue #9

Locke White's office is a Hokie fan's dream, full of the most interesting and varied Virginia Tech-related items you can imagine.

On one bookshelf is propped a wrecked piece of the bumper from NASCAR driver Elliot Sadler's Virginia Tech race car, which Sadler drove once, at the Richmond International Speedway last September. On the same bookshelf is Sadler's helmet from that race, decked out in a VT paint scheme, and a copy of the die-cast collectible model that was distributed to commemorate the car.

White owns a plethora of die-cast models from the Danbury Mint, all with Virginia Tech paint schemes: an airplane, a bus, and a tractor trailer. His walls are adorned with various Virginia Tech framed prints, and he even has a couple of Virginia Tech food items: Hokie barbecue sauce and a box of Hokie Toasties.

And then there are the clothes. Locke White's office has a closet flowing over with Virginia Tech apparel, everything from shirts to coats to jackets, and of course, hats.

What is this man doing with an office overflowing with thousands of dollars of Virginia Tech merchandise? Even the most ardent Hokie fans don't fill their workspaces to the brim with Tech "stuff." Not only can most of us not afford it, but you have to leave room in your office for work-related items, too.

Therein lies the key: Virginia Tech merchandise -- all the orange and maroon goodies that you can imagine -- is Locke White's line of work. He's the Licensing Director at Virginia Tech, and no Virginia Tech-related merchandise gets produced without his stamp of approval. So a lot of Tech stuff goes across his desk, and he often gets freebies, allowing him to amass one of the most impressive collections of Tech paraphernalia in existence -- at no cost. It's enough to make any diehard Hokie fan green with envy.

"Grab a hat," White told me when I visited his office recently to interview him. He waived a hand at his closet full of apparel, saying, "Take whichever one you want." I balked, not used to taking such things for free, and he picked out a sharp-looking maroon cap with a Velcro closure and the number 7 embroidered in a white circle on it. Sitting down for the interview, I pondered my gift, looked around the office full of Virginia Tech gear, and thought with wry humor, I visited Locke White's office, and all I got was this lousy hat.

White is a trim, mustachioed man with an appearance that is best described as casually professional. He measures his words carefully as he speaks, often choosing not to give away information that might be the least bit sensitive. And he's the boss of a rapidly growing business: Virginia Tech Licensing.

White holds an undergraduate degree in Psychology from Davidson University, with a Masters in Industrial Psychology from Radford University. While in his final year at Radford, he had a unique idea: selling pre-manufactured furniture for use in dorm rooms on college campuses.

That's right: lofts. White finished up his degree at Radford and immediately went into business with a partner to pursue his idea. "I owned a business out in the Pulaski Industrial Park called Collegiate Designs. We manufactured ready-to-assemble furniture for college kids -- loft beds, futons. We had about 500 university bookstores we were selling to, plus Barnes and Noble.

"Tech didn't allow lofts until we pitched the idea to them, and then they changed the policy. If you were sleeping on a loft, from about the mid-80's on, it was probably one of ours."

After a while, he burned out on the business. "I did that for about 12 years. It was a good business, but a lot of pressure. We would do 2 million dollars worth of business -- all of our sales for a year -- in about a five-month period. For six months out of the year, it was absolutely insane. So I sold out to my partner and took a little time off."

He became the Licensing Director at Tech about two years ago, on a bit of a lark. "I saw the position in the newspaper. I looked at it, found out more about it, and thought it was a neat opportunity.

"I knew almost nothing about Licensing. I had some experience licensing intellectual properties, but as far as this type of position, it was new territory for me. They were looking for someone who was geared towards marketing and promotions, and that fell into line with my strengths."

What Licensing Does In Thirty Paragraphs or Less

When asked to describe what he does for a living and what the function of a Licensing Department is, White says, "I think you could sum it up as the keeper of Virginia Tech's intellectual properties, with the intellectual properties being the VT, the shield, the name 'Virginia Tech,' -- all of them are now federally registered trademarks. The VT is primarily the athletic mark, and then you have the shield, which would be the university trademark.

"We pretty much oversee that part of the intellectual property, not only protecting them and enforcing them, but also to generate as much income as possible from them. That involves licensing the trademarks to companies that can then reproduce them on different products."

In layman's terms, Virginia Tech has a number of trademarked images and terms, and any product that utilizes those trademarked images and terms must first be approved for production by Locke White. When a product is approved for manufacture, it is said to be "licensed," and only "licensees" -- manufacturers who have been approved by the VT Licensing Department -- can produce licensed products.

Licensing generates revenue through royalties. This means that manufacturers who produce licensed products must pay a fee to Virginia Tech that is a percentage of the wholesale cost of the item produced. So, if company X makes 500 T-shirts and sells them to the Tech Bookstore for $5,000, company X must take a percentage of that $5,000 and pay it to the Virginia Tech Licensing Department.

The percentage varies widely but typically runs in the range of 4% to 15%. Apparel is usually in the 8% range, so in the example given above, Company X would owe VT Licensing $400 after selling $5,000 of wholesale goods to Tech Bookstore.

A Licensing royalty fee is only charged once, so when you buy that T-shirt off the rack for $15 or $20, Tech Bookstore doesn't have to pay a royalty fee -- it has already been paid by Company X, the manufacturer.

In addition to approving or denying products, White's department must track down unlicensed products that are using VT trademarks and force the manufacturer to either halt production or pay royalties. On the surface, it sounds like a simple job, but trademark law can get very complicated.

Why protect the trademark by approving designs and charging royalties? Because if Virginia Tech doesn't enforce protection of their trademarks, the trademarks enter "public domain," and Tech legally can't charge royalties anymore. Not only that, but something that is public domain can be used in any manner, including on items that are obscene or misrepresent the university.

So White's job is not just to generate revenue. It's to protect the image and representation of the university, as well. "We have a legal obligation to protect our trademarks," White says. "People can lose trademarks by not enforcing ownership. But there's also the issue of confusion of being a part of the university, so we have to take care of that as well.

"Let me put it this way: Coca-Cola for example, if you even thought about using that name, you wouldn't get very far. Our trademarks represent the university, and we have a responsibility to protect them."

So those are the ins and outs of Licensing. But what in the world does this have to do with sports -- in other words, why is there an article in the TSL Extra about this? On the subject of what licensing has to do with sports, the answer seems to be "everything and nothing."

Where the Money Goes, and How Much There Is

The relationship between college athletic departments and licensing departments is often a strange one. The large majority of revenue generated from licensed items comes from the sale of athletic apparel and athletic items. There are some exceptions -- for example, you can buy a licensed print of Burruss Hall that has nothing to do with athletics -- but White and his fellow licensing directors around the country readily agree that the bulk of their departments' incomes is generated by sports fans buying licensed sports apparel and sports-related items.

"Believe me, I give a lot of credit (for the generation of licensing royalties) to Coach Beamer for having a good football team," White says.

So, the Licensing department is a part of the athletic department, correct?

Well no. Licensing falls under the umbrella of the University Relations department, which is headed at Virginia Tech by Larry Hincker.

Ah. Well then, the majority of licensing revenue goes to athletics, right?

Well no. The majority of licensing revenue goes to the university's general scholarship fund. As a matter of fact, until the 1999-2000 academic year, the Virginia Tech athletic department received none of the royalties generated by licensed products. Starting in the '99-'00 year, the athletic department finally started getting a chunk of licensing royalties, though White will not give out the percentage of how much licensing royalty goes to athletics. "They're getting a decent chunk of money," he says cryptically.

But he does give a clue: "At North Carolina, they have a very similar financial deal to what we do. Ohio State is another one who has almost the exact same financial arrangement as we do. There are other universities that receive 100% of the revenue and other places that receive none."

Ohio State's licensing department didn't respond to emails from TechSideline, and they don't post the information on their web site, but UNC's licensing department does. At North Carolina, 75 percent of licensing revenue is used to fund university scholarships, and the remaining 25 percent funds athletics.

There is only one other person in Tech's licensing department with White -- his assistant, Rebecca Lolli, who has worked in Licensing for four years. Together, the two of them oversee a department with revenue that has exploded in recent years. "We have gone from $350,000 in revenue to close to $800,000 in revenue in just a couple years time," White says. "In '99 we did approx. $350K, 2000 approx. $550K, and in 2001 it will be approx. $800K. Next year, we're shooting for a million."

Placing Tech's licensing revenue in perspective with other NCAA schools is a difficult task, because licensing departments are protective of their revenue figures, and Internet searches turn up very little data. But the top-ranked schools in licensing revenue generate several million dollars a year, anywhere in the range of $2.0 to $3.0 million.

Lately, Virginia Tech has been somewhat unusual in their growth in licensing revenue. "As far as collegiate apparel elsewhere, they're going the opposite way of us," White reports. "I think there was a time there when collegiate apparel was really hot with kids and groups that spend a lot of money on clothes, but it's cyclical, and it's down right now. It's all involved with fads and fashion. There are years that it's in, and years where it isn't in."

Pet Projects

White recently pulled one of his biggest licensing coups ever, signing a deal with Michael Vick and Octagon Sports, the agency that represents Vick. The deal was to produce a line of Vick-related products, with all revenue from sales going into Tech's general scholarship fund.

The flagship product of the line was a series of limited edition prints signed by Vick, which retail for $125. Only 700 prints were made available to the public, creating a possible licensing revenue stream of $87,500. Overall, White hopes to make $100,000 from all of the Vick-related products.

"A lot of my responsibilities are to create a lot of promotions," White explains. "The Hokie Toasties (breakfast cereal) was one, the Elliot Sadler Winston Cup car was another one, the Michael Vick products are another one. So it's just a matter of we have a good solid base, and having a great football team, and having notoriety throughout the U.S., has allowed me to knock on a lot of doors, and people open them up and listen to my pitch."

The Sadler Winston Cup car was a project that fell into White's lap. "A Busch team came in and made a pitch to us for a Virginia Tech car. They told us how the University of Tennessee had a Busch car, and they made a heck of a lot of money off of it. Our normal royalty rate is 8%, and on that it was 15%. We had to share some of that revenue with other folks, though, so we didn't get to keep all of it."

One example of how Virginia Tech made money from the deal was through the sale of die-cast replicas of the car. And after Sadler wrecked the car just 55 laps into the race, some of the mangled pieces of the car, as well as some of Sadler's racing gear, were put up for auction on Ebay.

Lately, White has been working on setting up a deal with Wal-mart that will see Virginia Tech products sold in Wal-marts across the state. The inclusion of Virginia Tech merchandise in Wal-marts is nothing new, but the effort includes new displays that provide better focus to VT products. "Wal-marts in the state of Virginia, about half of them, will have a canopy and underneath the canopy will be Virginia Tech products. So I've been out on the road, meeting with district managers and setting that up."

Then there are the ideas that fall through. "I have tried to set up a couple of things with UVa," White recalls. "That fell on deaf ears for one reason or another. One of the things that I was pitching, and Hardee's was going to do it, was a rivalry-type promotion. A Hokie meal versus a Hoo meal, in building up to the (football) game. That was going to be real neat. We had a conference call, and Hardee's was saying yeah, it's great, that would be fun to do. UVa agreed to do it, but just for a week. Hardee's, if they're going to sink any money into and get a good return from it, they've got to do it for more than a week. So it fell through.

"Terry Holland is a personal friend, and I grew up a block from Terry Holland's house in Davidson. But he does not like the rivalry."

That's fine with White, because thanks to Coach Frank Beamer's Hokies, he's got plenty of ways to make money. "Licensing is definitely reflective of how well the athletics teams do. It's my responsibility to take advantage of the opportunities that are given us."

And that includes everything from breakfast cereal to bobbing-head Michael Vick dolls.

 

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