What’s a Name Worth?
Go to Amazon.com today and you can buy an official Nike “US Soccer” jersey on sale for $78.99. For a mere $35.00, the clothing manufacturer Xara sells a “USA Soccer” jersey that is not licensed by US Soccer but is instead, in their own words, “A Unique Soccer Experience Representing a Country.” Apparently that “US Soccer” trademark is worth about $45.00 per shirt to Nike and the US Soccer.
Total sales of officially licensed merchandise totaled $12.6 billion in 2010 in just MLB, NFL, and college sports alone, so apparel sales are clearly big business in spectator sports. It is in this backdrop that the peculiar case of the Washington Redskins vs. the Federal Trademark Trial and Appeal Board is of interest to economists.
Over the past two or three decades, under pressure from Native American tribes and other petitioners, dozens of colleges and high schools have changed their mascots from representations of Native Americans. While Miami University (Ohio) and Southern Nazarene University both dropped the name “Redskins” in the late 1990s, the NFL’s Redskins have resisted the calls to change their mascot. This may be changing.
The Federal Trademark Trial and Appeal Board, which adjudicates questions regarding trademarks, recently heard a case requesting that the board classify the word “Redskin” as a derogatory slur. If the board deems the term offensive, the team would no longer be subject to trademark protection essentially meaning that anyone could sell merchandise in the team’s colors and with the words “Washington Redskins”. Trademark protection is the barrier to entry that allows teams to charge monopoly prices for apparel (like we saw in the US Soccer example), and the loss of that trademark is likely to drive the premium that the team can charge for officially licensed apparel from the 100% or more mark-up that we typically observe in the market towards the perfectly competitive price – good for consumers, but bad for the Redskins.
While the team’s owner, Dan Synder, say he will “NEVER” (the caps at his insistence) change the Redskins’ name, we will see how long that lasts if the team can only sell “Redskins” jerseys for $45 when they could sell “Washington Red Storm” jerseys for $100.