Ohio State Strikes $97 Mil Deal With Apparel, Retail Partners
COLUMBUS (AP) — Ohio State University said apparel partnerships announced Thursday with sportswear company J. America and online retailer Fanatics Inc. guarantee $97 million for scholarships and student groups over the 10-year agreement.
The announcement comes as the school plans to phase in a new business model for Buckeye clothing and headwear. The new model is meant to stabilize a funding base that has been used for hundreds of scholarships for student-athletes and an endowment to support student organizations.
The partnerships include an upfront payment of $23 million and expand the school’s existing relationships with the companies. Webberville, Mich.-based J. America is an Ohio State licensee; Jacksonville, Fla.-based Fanatics already operates an online store for the athletics department.
Ohio State said the companies were chosen in a competitive process.
“This new partnership enables the university to protect and enhance the royalty revenues that support student success, continue its commitment to growing business in Ohio, and demonstrate leadership in socially responsible business practices,” Jeff Kaplan, senior vice president, said in a statement.
J. America will manage production and distribution of Ohio State apparel and guarantees the university $85 million over 10 years. Fanatics guarantees $12 million, keeping the online store and managing retail sites. It also plans to open a new distribution center offering about 300 full-time jobs in Frazeysburg, about 55 miles east of Columbus.
J. America, founded 20 years ago, said it also plans to establish a campus-based design center and showroom with 14 new jobs and an estimated payroll of $1.3 million annually.
Kaplan said the deal will reduce the number of factories making Ohio State apparel from as many as 800 to about 20. He said there will be losers — Ohio vendors that might lose contracts — but the amount of revenue and business for Ohio companies overall will increase.
He wouldn’t speculate on what Ohio companies might lose business, except to single out what he called “low-quality sidewalk vendors that have a $2.99 T-shirt that you put on a second time and it rips.”
Apparel constitutes about two-thirds of Ohio State’s $9 million in annual revenue from trademarks and licensing.
Students have protested over the possibility of a contract with the merchandising arm of the Dallas Cowboys, alleging it would support sweatshop labor. Rob Battista, a regional organizer with the group United Students Against Sweatshops, didn’t immediately respond to an email seeking comment Thursday.
Kaplan confirmed the Dallas Cowboys’ business was one of three bidders for the contract. He said Ohio State considered the opinions of student protesters, along with faculty input and Ohio vendors concerned about business they might lose.
“The voices that were coming from those students and other students were heard equally with everyone else from whom we heard,” Kaplan said in a teleconference. “We tried to factor in the information that was provided, and not the way it that it was provided, from everyone that had an interest.”
(© Copyright 2012 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)