BlackRock buys into ABG

According to Reuters, BlackRock bought shares worth US$ 875 Millions of Authentic Brands Group (ABG), making it its biggest shareholder.

The purchase values ABG above US$ 4 Billion.

ABG was funded primarily through Leonard Green & Partners.

ABG buys and licenses famous brands like Judith Leiber, Hickey-Freeman, Jones NY, Juicy Couture, Frye, and Nautica.

It also manages celebrities, f. e. Marilyn Monroe, Elvis Presley, Muhammad Ali, Shaquille O’Neal, Greg Norman, and Michael Jackson.

What’s at steak

The case of Michael Jordan vs Dominick’s Finer Foods has made news. The website is just one example. But they are missing a few points.

Dominick’s used the brands to sell steaks. Altough there are three steak hoses using Michael Jordan. One is in NYC, in Connecticut, and in Chicago. Here are the websites

A quick online search for “Michael Jordan Steak” leads to among others wikipedia, where one can read:

The company has a line of USDA Prime Steaks, sauces, condiments, grillware and collectibles, under the Michael Jordan Steaks brand. The steaks can be ordered on their website and shipped directly to customers nationwide.

So, Dominick’s used the brand in a product category, where Michael Jordan is using / licensing it already. And that was not difficult to find.

Michael Jordan has profited from his brands quite substantially. And no proprietor of a valuable brand can afford to lose it, But this happens, if you do not defend it. If Michael Jordan had not filed suit, he was in danger of losing his brand, at least in that category.

Dominick’s could have asked for a license. It is not that difficult.

P+G sells Rochas

Procter and Gamble has sold its Rochas brand to Interparfums SA, a subsidiary of Inter Parfums, Inc.

Rochas started as a fashion house and expanded into perfumery in the 1950s. In 2013/2014 Rochas had net sales of US$46 million. This includes US$2 million of royalties generated by the fashion and accessory business via license agreements.

This sale covers all brand names and trademarks, the selling price is US$108 million.

Ferrari licensing income

[:en]Ferrari published its financial data. In 2012 the whole company generated a turnover of 2.43 billion euro and net income of 244 million euro. Licensing revenues in 2013 were 92.5 million euro with a net profit of 50.8 million euro. One of the most successful licensing businesses generates roughly a fourth of the company overall profits.

At the same time Fiat, owner of Ferrari, announced to move the licensing business into a low tax country again. The business has been conducted out of Switzerland, before it was moved to Italy.[:]

Interesting licensing data

[:en]USA Today reports about the US Marine Corps licensing efforts. In our opinion, this is more fan merchandising than brand licensing, and one can argue, that government bodies should not do it. But the numbers are quite interesting.

The Marine Corps licenses its logos and slogans like Semper Fi. Products so far include coffee mugs, T-shirts, airsoft guns. And consumers spend about $37 million annually on Marine Corps licensed merchandise. Now this spreads over a couple of trademarked logos and slogans, not just one.

The Marine Corps received $1.8 million in royalties last year. From that one has to deduct the cost of operating the trademark program and securing registrations. The royalty rate of roughly 5% on retail prices, probably 10-15% on wholesale prices. As with many merchanding articles, these products get their value mostly from the license. Thus, it seems a fair rate.

But the royalties come from over 300 licensing agreements, the average of US$6,000 per contract is less than optimal. One can only hope, that the median is better and that those contracts are in the hand of much fewer licensees. Because otherwise the cost of managing the licenses exceeds income. Or worse, there is no licensee and licensed product management.[:]

NPR brand evaluation $400 Million?

[:en]In brand evaluation we follow the income approach. Often the market approach isn’t feasible for lack of comparable transactions and the cost approach is plain wrong for brands. It rewards a big spender regardless of the return on investment.

NPR published an interview here, with a so-called brand evaluation expert, Oscar Yuan, a Vice President at the brand consulting firm Millward Brown Optimor. And this expert valuates the brand NPR at roughly $400 Million. His evaluation is based upon the size of the audience and the budget of NPR. In his expert opinion, the more NPR spends the higher its brand value. And I guess, that is just what NPR wants to hear.[:]

PPR renaming

[:en]French company PPR renames itself. The new name is Kering. Along comes a new logo, etc.

Our position on renaming is well documented here. On the other hand, PPR changed its name so often already, that it might not matter anymore. And advertising agencies must make a living after all.

PPR was short for Pinault-Printemps-Redoute. The family name plus its former two flagship businesses, department store chain Printemps and mail order La Redoute. Both are not part of PPR anymore. But what is wrong with Pinault?

Now everybody has to learn “Kehring”. And its meaning. And the spelling. Employees will be quite busy for months now.[:]