contracts

Who says that business ownership isn’t full of ups and downs? Just ask Joanne Ingle, owner of U Tag It, small business in operation for five years who sell luggage tags with imprinted logos. Joanne believed that her business was about to take off when she landed a contract with the National Football League. She later learned that her dream has the potential to turn in to a nightmare.

Each year, the NFL awards contracts to a series of licensees who are permitted to produce merchandise bearing the logos of all of the teams in the league. For the Super Bowl, the NFL awards additional contracts to local merchants in the city where the Super Bowl is taking place. Joanne Ingle is one of those who was awarded a local licensee contract.

This year, the NFL decided to try something different. For Super Bowl XLV, they were trying a store within a store concept. This concept places licensees within a large expo setting where merchandise can be sold not just the day of the Super Bowl but also the days leading up to the big event.

Joanne saw big sales coming from this event so she ordered 25,000 of her signature luggage tags bearing the logos of various teams. Those 25,000 tags are non-refundable and being paid for out of her own savings. This represents an outlay of almost $250,000!

Then, the NFL changed its mind. Brian McCarthy, NFL spokesman said this:

“…after further evaluation of the concept, a look at timelines to pull it off in the right manner and the fact that a couple of these licensees did not want to participate in it, we decided not to try it this year.”

The store within a store concept is now dead and Joanne is left with $250,000 worth of merchandise and her only way of selling it to those attending the expo is to pitch her product to EMI, a longtime NFL retailer who will operate the NFL Expo. If they won’t sell her product, she will be left to sell outside of the event and online.

Small business owners have to constantly evaluate the risk-reward of all decisions and consider the scalability of the all opportunities. A quarter million dollar investment is a large outlay for any small business and even though some clients seem like a sure thing, like the NFL, there is always potential for loss. Some contracts may be inappropriate for a business just getting started.

Joanne has no other recourse other than hope to get her luggage tags in to the hands of another NFL retailer, sell them offsite at other locations and sell online. This may be a tall order for 25,000 units.

December 24, 2010

What if the NFL Offered Your Business a Contract?

Who says that business ownership isn’t full of ups and downs? Just ask Joanne Ingle, owner of U Tag It, small business in operation for five […]