Tapping Into the Lucrative Collegiate Licensing Market

NEW YORK ( TheStreet) -- This Saturday four college basketball teams will compete to determine which two teams will go on to duke it out for the NCAA championship title. The next few days of events is the culmination of the annual March Madness in college basketball, a ritual that creates a boom in business for retailers selling licensed merchandise for the winning teams.

In fact, the overall collegiate sports licensing is a huge market ripe with opportunity for small retailers and not just from March Madness.

According to The Collegiate Licensing Company, the licensing affiliate of IMG College, annual retail sales for collegiate licensing in 2012 were $4.62 billion, a record high and up from just $2.9 billion in 2004. Merchandise attached to college licensing sells more licensed goods than any major league sport with the exception of Major League Baseball.

Consumers love buying everything from T-shirts and sweatshirts to Apple ( AAPL) iPhone cases to home decor with their favorite college team's brand.

TheStreet took the opportunity to speak with The International Licensing Merchandiser's Association's senior vice president Marty Brochstein about what it takes for a small retailer to get in on this profitable market.

(Full disclosure: This reporter is a Wildcat. I went to graduate school at Northwestern University.)

Why is collegiate licensing so hot and how has it been essentially "recession-proof"?

Brochstein: I guess I should start with a rather basic statement which is whether you're licensing, whether you're a manufacturer that is licensing in a brand or if you're a brand owner and you're licensing it to somebody else, whatever size the brand is it's built on emotion. The essence of any brand is that it evokes something.

If you're looking at a brand potentially to license in, if you're a manufacturer and you make widgets and you're looking to license in a particular brand, you have to evaluate what that brand brings to the party.

A customer who is a Northwestern alum, I'll presume that they have some warm feelings toward it, so they are going to perhaps be open to buying a piece of apparel or having a pillow, or replica of a football helmet or something of that sort in their home or on their body that broadcasts to people, 'Hey, I went to Northwestern. I'm proud of it.' Now when you take it into the realm of athletics where let's say that Northwestern actually made the tournament this year or they went far in the tournament, it's that sense of excitement and pride build.

So that's what's behind the merchandise sale. Do you need another purple shirt? Possibly not, but if you're excited about what Northwestern is doing and you're going to a bar with all the other Wildcat fans, then that's what we're building on here, and that's the essence of collegiate licensing, whether it's for the home or apparel or any other product category.

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