Team merchandise can be an overlooked segment of sports team revenue. It’s a big business in its own right.

Merchandise sales drive significant revenues for teams, but are rarely mentioned in the same light as media rights, ticket sales, and even concessions. Some might be surprised to learn that the global licensed sports merchandise market was valued at $37 billion in 2024 and is expected to grow 4-6% a year for the next decade. North America accounts for just over 50% of that marketplace. Teams and leagues don’t generally break out their merchandise revenues, but observers estimate it makes up 10-25% of revenues, depending on the league and team.

Merchandise Breakdown

According to Market US, Apparel is the top category of global merchandise sales, followed by Footwear and Headwear. 

Predictably, the leading sports merchandise varies by region. In the US, football and basketball are the top sellers. In Europe, soccer dominates sales. Asia goes for cricket and basketball.

The top teams globally are dominated by soccer. Man United, Barcelona, and Real Madrid are the top sellers around the world. In the US, the Yankees and Lakers take the top two spots. 

Economics

In general, the money trail for merchandise flows as follows:

While the arrangements vary by league, most treat a large portion of merchandise licensing as a shared revenue source similar to national media deals. Some leagues, like the NFL, direct a portion of the licensing revenue to players. But teams also act as retailers with their own in-stadium and online team shops, which means they get both their share of the licensing fee and the retail markup. Most leagues treat these retail profits like parking and concessions, for which the teams get to keep all or most of the revenue.

Buyer Motivations

Several studies of buyer motivations for sports merchandise show they are driven by three main factors:

Identity - Team merchandise gives people a sense of belonging to a larger community. For iconic teams, it represents not just an identity with the team but with the city or region. Merchandise for these purchasers is a signal of pride and belonging.

Memorialization - Games are often attached to positive emotional experiences. Moments like a fun family outing, a first trip to a stadium, or a playoff victory all create a desire to capture the moment in a tangible and lasting form. Merchandise provides a way to note, relive, and even brag about those moments.

Fashion/Culture - When Dr. Dre sported a White Sox cap in “Nothing But a G Thang,” sales of White Sox apparel jumped as it became a staple of hip-hop fashion. Similarly, as certain sports stars like LeBron James and Messi cross into mainstream celebrity, their uniforms become popular independent of team affinity and more as cultural statements.

Keys to Success

Experts cite four key attributes of successful merchandising programs:

1. Ease and Convenience - The emotional factors involved in sports merchandise tend to drive a high degree of impulse purchase behavior. That makes it critical to make it easy to purchase. Long lines at in-stadium venues,  multi-step online checkout processes, and inventory shortages all discourage impulse buyers.

2. Exclusivity - As evidenced by the number of uniform variations being rolled out by almost all the leagues, buyers are attracted to limited edition offerings. A combination of unique design and FOMO drives a higher sense of value for customers.

3. Wide Price Range -  Merchandise not only generates immediate revenue, but it also creates a connection with fans. People wearing team gear, and people seeing other people wearing team gear, helps drive future fandom. High-end merchandise helps satisfy the need for something special, commands higher margins, and provides a signal of quality that reflects on the whole offering. Low-end items give a path for more people to participate with and connect to the team. 

4. Fashion Forward - There will always be a place for the traditional hat and t-shirt. But as athleisure continues its influence on the fashion industry, people are looking at sports merchandise with a new eye. As the leagues have started to work with high-end designers, and players themselves have become promoters of fashion, there is an increased opportunity to benefit from the appeal and margins of merchandise targeted to a higher design standard. 

The Downsides

Sports merchandise is not without its risks and failures. Some of these include:

Counterfeiting - It's easy to slap a logo on a cheap shirt, and the sports merchandise world is rife with fakes. It’s a game of whack-a-mole. The best leagues can do is to work closely with law enforcement agencies, require manufacturers to use tags, holograms, and other marks to prove of genuine product, and police their own supply chains for potential abuses.

Authenticity Backlash - Given the strong emotional element, design changes have to be sensitive to fan perceptions. The NBA’s experiment with sleeved uniforms in 2013-2017 is an example of fans rejecting a move they saw as manipulation. The NBA admitted they were trying to create uniforms that would be better sellers than the traditional sleeveless versions. But there were also rumors that the NBA was trying to create more space to introduce sponsor ads on uniforms. It hit bottom when LeBron James ripped his sleeves in frustration during a game. The shirts never took off on or off the court, as fans saw it as an inauthentic intrusion on the game. 

Merchandise is a key part of the revenue picture and an opportunity for growth if handled to its full potential.