Athletics: New official merchandising partner
On July 1, 2009, the University selected eSports Partners Inc. as its new, exclusive, on-site retail merchandising partner for Intercollegiate Athletics. The new M Go Blue Shop (www.mgoblueshop.com) will become the official store of Michigan Athletics.
Highlights- The current contract expired on June 30 of this year. Competing bids were solicited and analyzed from other vendors as part of a regular process when partnership contracts expire.
- We selected eSports Partners to be our new vendor handling game day concessions, and the new official Athletic Department Internet e-commerce and catalog provider.
- The partnership with eSports Partners will deliver exclusive products and superior online service to U-M fans and provide a greater selection and quality of merchandise.
- M-Den has been a fine business partner for more than a decade and will continue to operate their four local stores, e-commerce and catalog operations. M-Den will continue to sell U-M licensed items.
- 40% of Athletic Department revenue comes from the sale of football tickets. Therefore, the department is financially dependent on other revenue streams, such as licensing and royalty contracts.
- Royalty revenues from these licensing endeavors help support our 25 sports teams. The revenues fund athletic department infrastructure, pay for long-term capital projects and contribute to U-M's academic programs.
- We expect our new partner to demonstrate exceptional customer service and emphasize quality product selection. eSports has delivered excellent results with their other partners with a 24/7 call center, broad lines of championship apparel to celebrate team accomplishments, customized jerseys, an easily navigable Web site and virtual catalog technology.
- eSports has committed to invest in the region by building new stores in Ann Arbor and in the state of Michigan and to improve and expand game-day concession areas.
- eSports was able to offer a better financial offer for two principal reasons; 1) they projected far larger sales volumes because of better merchandising execution, and 2) because they could leverage their warehouse/logistics operations over a larger base of operations.
What is eSports?
Dallas-based eSports Partners Inc. is the leading merchandise service provider offering e-commerce technology, merchandise catalogs, retail stores, game-day operations, mobile merchandise trailers, training camps, marketing, fulfillment, and customer service solutions. eSports Partners provides unique and effective results to its clients to improve brand recognition, enhance revenue potential and reduce operating costs. eSports is a merchandise partner for 7 of the top 10 NFL franchises, as well as the University of Tennessee.
Why did the Athletic Department select eSports?
The University selected eSports Partners based on its experience with partner branding, customer satisfaction and long-term financial potential.
M-Den has been our e-commerce and game-day concession partner-since July 1999-the first time U-M put the rights for these e-commerce and concessions up for a public bid.
The request for proposals, which was released in September, resulted in a number of interested parties, both local and national. Five companies bid on the business in addition to M-Den. All of the bids were competitive and offered higher royalty rates and guarantee than the existing M-Den contract.
Why did the Athletic Department decide to put e-commerce and game-day concessions up for public bid?
As stewards of a valuable public resource, U-M has a fiduciary responsibility to negotiate the best terms and conditions possible. The contract had not been put up for review in 10 years.
Why didn't the Athletic Department select a local company, or stick with a local company in these tough economic times?
The financial differences of the eSports bid (and other competing bids) and the M-Den bid were too large to ignore. We anticipate generating twice the royalty revenue as we did under our agreement with M-Den.
Because of the success of our football program and the size of our stadium, many believe the athletic program generates more than enough revenue to fund its operations from football tickets alone. In fact, only 40% of our revenue is from the sale of football tickets. Therefore, the Athletic Department depends on other revenue streams, including licensing and royalty contracts.
Will fans see an increase in product costs?
No. eSports is expecting higher volume through outstanding execution and customer service. The sales price and the cost of goods sold should be comparable between eSports and M-Den, so the consumer and licensing partners are unaffected.